Know How The Renting Schemes And Received Interest Are Made Liable To Auditing
A business company has its own renting strategies and these contribute to the income source of the company itself. However, during an auditing session, an auditor needs to
- Evaluate the nature of the agreement made by the company with the party and also, about the terms and conditions made on the asset type that is addressed for renting out.
- It is the duty of the auditor or his assistants to verify all the document details regarding the original amount and interest charged on the rented property along with the duration for which the property is rented. It is also important to make note of the mode of payment like direct cash or cheque is given by the party in return.
- Further, all the unsettled rent of the previous years and the respective receipts needs to be analyzed to have a detailed knowledge of the pending ones.
- All the cash entries have to be tallied against their pay slips or the receipts issued by the firm.
- Make sure if all the unresolved rent of the previous year is dealt with the provision to solve it in the coming year. Further, the next year’s stock book must be verified to list out the payment receipt of the same.
The interest received on various accounts also contribute to the profit section of the company while the dividends made by the company account for revenue remaining back with the same firm. So, all these details require to be detailed for knowing the net income of the business organization. For making the analysis more efficient, the auditor needs to consider
- If the income stated in the record book matches with the year’s profit and loss account.
- Keep note of the cash transaction occurred on account of the previous year and also, the balance that still is pending to be made by the party to the company.
- Track all the cash book vouchers or entries listed in terms of payments made.
- Further, it is also vital to check out for the tax deductions made by the TDS source for calculations and analyze the effect on the remaining ledger to know is it a safe and profitable method for the revenue calculation.
- Moreover, it is also advisable to compare in detail the total income received from
the previous year’s account to know about the variation gap. If it is wide, enquire about it.
- Finally, get the full details on the various investment made by the company and other deposits or securities pledged together with the verification from the bank.