Accounts Notes: Verification of assets and liabilities included in the financial statement submitted by the applicant:

Friday 25 March 2011

Verification of assets and liabilities included in the financial statement submitted by the applicant:

The investigator should prepare schedule of assets and liabilities in them the particulars given below:
1. Fixed Assets:
(i) Description of the item.
(ii) Gross value
(iii) Depreciation rate used
(iv) Total depreciation written off
(v) Nature of charge on assets created
(vi) Revaluation of the assets if carried out recently
(vii) Basis of revaluation.
2. Inventory:
(i) The different types of raw material and finished goods held.
(ii) Basis of valuation of the inventory.
(iii) Slow moving and obsolete items.
(iv) In case the stock has been pledged or hypothecated the fact should be stated.
(v) Assessment of the redundancy of stock consequent to changes that occurred after balance sheet.
3. Sundry Debtors:
(i) Composition of debtors.
(ii) Age wise classification debtors.
(iii) The adequacy of the provision if any created.
(iv) Classification as follows –
a. Debts due in respect of which the credit has not expired.
b. Debts due in respect of which the credit has expired.
c. Debts due from directors and employees.
d. Debts due from subsidiary companies or affiliated companies.
e. The subsequent recovery of debts after the Balance Sheet date.
4. Investment: The schedule of investment should be prepared showing date of purchase, cost, nominal value, market value and in case it is pledged for a loan, the details of people.
5. Secured Loans: The loans should be classified between debtor and other showing there in the secured and unsecured classification. The particulars of the assets pledged for securing the debt should be clearly stated.
6. Provision for Taxation: The breakup of the year wise provisions and a note on the adequacy of a each provision shall be provided.
7. Other liabilities: A statement to the effect that all the liabilities have been properly disclosed showing the age wise analysis of trade creditors.
8. Insurance: A statement of insurance policies giving details of the risk covered and the particulars of the prepayment
9. Contingent liabilities: A list should be provided giving a break up of the contingent liabilities existing.
Finally, the investigator should ascertain whether any other application has been made by the applicant for loans to other institutions or agencies and if so the result of such applications on the date of review.