CA Ayush Agarwal (Kolkata-Pune-Mumbai) (27186 Points)
18 September 2013I Invite All to have a Discussion on Auditing u/s 40A iii for Cash expenditure exceeding 20000/-.
How One Will do Audit if payment Made in Excess of 20000/- Through Bearer Cheque.
I am expecting smart replies from smart peoples.
Lets see How Many of you can able to reply on this smartly.
Rajesh
(student)
(193 Points)
Replied 18 September 2013
Hai,
My perspective :-
1) I will see which company iam auditing ( construction / garments / manufacturing)
2) if construction and garments are bearer cheque of Rs.20K . it is ok. because you cannot expect everybody has bank account. since they have to pay their wages on saturdays. So, construction and garments if we given it is ok.
3) if manufacturing companies gives cheques of Rs.20K through bearer cheque. I will ask them to made withdrawn entry. I will ask to prepare 2 vouchers Rs.10K on 2days
Correct me if i am wrong.
CA Ayush Agarwal
(Kolkata-Pune-Mumbai)
(27186 Points)
Replied 18 September 2013
Sorry Rajesh, I am not asking for precaution to be taken...
I am asking as a auditor, how you will audit this.....
Incorrect Reply....
Venkat
(Accountant)
(37 Points)
Replied 18 September 2013
I think.... Obtain certificate from management and rely on the same as no external evidence will be availbale for this.
Shelsa
(.Articled Assistant)
(29 Points)
Replied 18 September 2013
It's possible through ledger scrutiny in case of small business concerns by highlighting the same in case if it is found. But in case of big companies and all it's impossible to go through all transactions and find it easily. So it's better to obtain a certificate from the management and rely upon the same.
CA Ayush Agarwal
(Kolkata-Pune-Mumbai)
(27186 Points)
Replied 18 September 2013
@ Venkat, @ Shelsa - Not satisfactory Answer...
I Think just taking Management certificate will not get away from auditors responsibility....
& this Reply i am not Expecting....from You Guys .........
Incorrect Reply.....
Shelsa
(.Articled Assistant)
(29 Points)
Replied 18 September 2013
Ok sir.. So sorry for that reply. It will be better to do concurrent audit in case there is huge cash transactions. The auditor should ensure that there is proper internal control as well as proper maintanence of book of accounts. So that he can go through the legders to ensure the same. He should go through all payment vouchers to ensure that no payment is made in cash exceeding 20000. All payments should be carefully scrutinised and if the same is found it should be highlighted in his audit report.
But sir my doubt is that if the transactions are made through dd by directly going to the bank how can we find it.?????
CA Ayush Agarwal
(Kolkata-Pune-Mumbai)
(27186 Points)
Replied 18 September 2013
@ shelsa...My Question was When payment made by Cheque Bearer, then how auditor will catch that transaction......
jayant gupta
(ARTICLESHIP)
(34 Points)
Replied 18 September 2013
Parvez Ali
(Internal Auditor)
(265 Points)
Replied 18 September 2013
jayant gupta
(ARTICLESHIP)
(34 Points)
Replied 18 September 2013
$ achin @grawal
(ahmedabad)
(39 Points)
Replied 18 September 2013
Sunish
(Freelance)
(168 Points)
Replied 18 September 2013
the ACT says account payee cheque and not a bearer cheque isnt it?
SATHISH
(PROFESSIONAL)
(118 Points)
Replied 18 September 2013
Dear Ayush,
One should have to varify with Bank statement. Generally bank recoded the name of bearer in statement in case of bearer payment. If it is individual, watch the transaction carefully with respective head. check the accounting entry and relation with bank entry.
In most cases, payment through bearer chq. and finding of such transaction depend on general intelligency/awarness depend on how you cross check the transaction with each other.
rgds
sathish
CA Ayush Agarwal
(Kolkata-Pune-Mumbai)
(27186 Points)
Replied 18 September 2013
Satish & Sachin had Given some examples to track....
Rest all are Even not reading question properly, just replying.....
CAclubindia
