Describe substantive procedures the auditor should perform to obtain

sufficient and appropriate audit evidence in relation to:-

- Share Issuance (capital and premium)
- Reserves and dividends

Share Issuance (capital and premium)

Substantive Procedures – 10 1 By:- Haris Hanif

Answer:-
- Agree the authorized share capital from the statutory documents
governing the company’s constitution.

- Inspect the resolution minutes to ensure that changes in the capital is

properly authorized & also read the minutes of BOD meetings to ensure
that issuance of share capital is authorized.

- Agree the amount received from the issuance of shares in the bank
statement.

- Inspect the equity records and agree the share capital valued at par and
ensure the excess amount in the share premium account to verify the
classification.

- Inspect the register of shareholders register and agree the completeness

of details including the total list with the amount of share capital.

- Re do the calculations of share capital/premium account to verify the

accuracy of the figures.

- Inspect and read the notes to the accounts to ensure the necessary and
complete disclosures of issuance of shares as per the local law
requirement.

Substantive Procedures – 10 2 By:- Haris Hanif

Reserves and dividends

Substantive Procedures – 10 3 By:- Haris Hanif

Answer:-
- Inspect the records of reserves and confirm that company has complied
with the legal requirements of reserves and distinguish between
distributable and non-distributable reserves had been made.

- Ensure that movements on reserves do not contravene the legislation

and the company’s constitution by reviewing the legislation.

- Inspect and read the minutes of BOD meeting to ensure the BOD
approval and the amount of dividends.

- Inspect the reserves records to verify that dividends were paid from the
distributable reserves.

- Obtain the sample of dividends warrants (receipts) to confirm the

amount of dividends as decided in the BOD meetings and properly
recorded in the accounts of dividends and payables and bank/cash.

- Agree the amount paid of dividends in the post year end bank
statement.

- Recalculate the dividends paid and entire movements in the equity to

confirm the mathematical accuracy.

- Inspect the notes and read the disclosures to ensure the completeness
of disclosures of reserves and dividends.

Substantive Procedures – 10 4 By:- Haris Hanif