i am conducting audit of company. I have to check the Margin Money and Bank Guarantee. so, which documents is required to check the above.what shuold i keep in mind to complete checking of Margin Money and Bank Gaurantee. What is margin money and bank gaurantee.
15 July 2008
Bank Guarantee is a non funded facility granted by a bank against the deposit of margins and collateral securities. It is granted in favour of a person who may invoke and cash the amount of guarantee undertaken in the event of non-performance. It is issued for a fixed term and commission is charged accordingly. The terms and conditions are reduced in writing and signed by bank and the person who has taken the guarantee. A chart of guarantees may be prepared and margins given for each guarantee in the form of FDR or otherwise may be noted thereagainst. The service charges/commission may also be noted. This will help in adjusting the expenses on mercantile basis and giving a note under the head of contingent liabilities.
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