Audit of Drawing Power (DP) w.r.t Working Capital

If the discrepancies are materially larger in compared to the quantum of the loan then it's better to withhold and report and disclose as per standards.

Nice Queston.

To verify following points must be taken into consideration:

1. Verify the opening balances of Books of Accounts with the Audit report of borrower.

2. Check bank statements to ensure that entries have been passed into correct party account.

3. One may also check party balances with the Thirty party statements or balance confirmation certificates.

4. Check whether physical balances of stocks tallied with Books.

5. Check other elements of Current Assets and Current Liabilities to ensure their correctness level.


If after checking any discrepancies appears, then one must report to the bank or lender. But before that, as a professional courtesy it must be discussed with the management first.