CLIENT:
AUDIT PROGRAM
NATIONAL BANK OF PAKISTAN
PERIOD:
December 31, 2007
SUBJECT:
SHARE CAPITAL
Est.
Hrs.
Phase/
Level
W/P
Ref.
Procedures
AUDIT OBJECTIVES
To determine whether:
A.
B.
C.
D.
E.
Share capital accounts and advance against future
issue of share capital represent all amounts paid in for
preferred or share capital issued and amounts paid in
for preferred or ordinary share capital to be issued.
The amounts in the share capital accounts are in
compliance with the requirements of the
Memorandum of association or similar grant of legal
authority and with the applicable statutes and are
properly recorded.
All transactions within the capital and other equity
accounts during the audit period are properly
authorized and recorded.
Capital and other equity accounts are properly
described and classified in the financial statements
and adequate disclosures with respect to these
amounts have been made.
The Company has complied with all applicable
corporate law requirements particularly those relating
to equity.
SUBSTANTIVE PROCEDURES
1. Overall Procedures
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
T/AP/1
Obtain or update a summary of information about
capital ownership, stock options, warrants, conversion
rights, dividend restrictions and other matters.
Obtain an analysis of equity accounts for the period.
Obtain and test significant entries and tie balances to
the lead schedule. Trace dividend declaration, stock
issues, bonus shares, stock purchases, etc., to minutes,
as applicable.
Compare the balance of each significant capital
account to the comparable balance for the preceding
period. Investigate unusual or significant fluctuations.
Agree total of balances on the share registers with the
issued capital at the balance sheet date.
Obtain listing of shareholders/pattern of shareholding
from CDC and compare it with the details available
with client to work out the actual pattern of
shareholding.
Ensure CDC compliance procedures.
Fill out Company Law Compliance Checklist.
Fill out checklist for Stock Exchange Listing Rules.
Page: 1/5
By
Comments/Explanations
CLIENT:
AUDIT PROGRAM
NATIONAL BANK OF PAKISTAN
PERIOD:
December 31, 2007
SUBJECT:
SHARE CAPITAL
Est.
Hrs.
Phase/
Level
W/P
Ref.
Procedures
2. Memorandum, Articles and Corporate
Records
2.1
2.2
2.3
2.4
2.5
Obtain or update memorandum and articles of
associations, corporate minutes and other relevant
documents and place it in Permanent file.
Review Memorandum and Articles of Association and
investigate any non-compliance thereof. Particularly
ensure that the object of the entity allow all specific
transactions incurred during the year.
Agree authorised and paid up capital with the
Memorandum and Articles of Association.
In case of any changes in the above, verify the
changes with:
(a) Minutes
(b) Form 3
(c) Members’ register
Review minutes of Board’s meetings and general
meetings during the year and subsequent to year-end
and consider any impact on risk assessment and our
approach.
3. Share Transfer Audit
3.1
3.2
3.3
Test-check transfer of shares with Transfer Register,
members’ register, Directors’ minutes and CDC
record.
Inspect cancelled (de-faced) old certificates and
counter-foils, or other record, of new certificates
issued, in respect of transferred shares.
Ensure that duplicate share certificates are issued in a
timely manner in accordance with the requirements of
Section 75 of the Companies Ordinance, 1984.
4. Issue of Share Capital
4.1
4.2
4.3
T/AP/1
For shares issued for cash, check entries in bank
statement.
For shares issued for consideration other than cash,
check amount of consideration with supporting
documents.
Ensure compliance with the provision of Companies
(Issue of Capital) Rules, 1996 for:
 Shares issued for cash consideration;
 Bonus issue;
 Issue of share for consideration other than cash;
and
 Right issue of shares.
Page: 2/5
By
Comments/Explanations
CLIENT:
AUDIT PROGRAM
NATIONAL BANK OF PAKISTAN
PERIOD:
December 31, 2007
SUBJECT:
SHARE CAPITAL
Est.
Hrs.
Phase/
Level
W/P
Ref.
Procedures
5. Annual Return and other Statutory Forms
5.1
5.2
5.3
5.4
5.5
Verify that a return (Form `A’) made up to the day of
the general meeting during the year or last day of
calendar year if general meeting is not held, has been
filed with the Registrar of Companies by inspecting
filing receipt.
Agree particulars of authorised and issued capital,
details of shareholdings and names of Directors with
the books and records of the Company.
Verify that the directors’ holding of shares comply
with the Articles of Association as to minimum
shareholding and that they were acquired within the
prescribed time.
Note changes in Directorships with Register of
Directors and Managers and inspect Form 29 filed
with the Registrar of Companies and also consequent
transfer of shares (if any).
Examine all the statutory corporate records and
Forms.
6. Bonus Shares
6.1
In case of issue of bonus shares by listed company:
i) Ensure that the decision of the directors is
communicated to the SECP and the representative
of Stock Exchanges on the day of the decision
and intimation letter as accompanied by auditors
certificate;
ii) Ensure that the free reserves of the company are
sufficient to issue the bonus share after retaining
in the reserves 25% (all contingent liabilities
disclosed in the audited accounts and any such
liability which may have been created subsequent
to the audited accounts shall be deducted for this
purpose) of the increased capital and auditors
certificate to that effect has been obtained.[See
Companies (Issue of Capital) Rules, 1996].
7. Advance against future issue of Share Capital
7.1
7.2
T/AP/1
Obtain schedule of advance against future issue of
share capital and match totals with general ledger
control account.
Consider circularization of confirmation and prepare
confirmation summary.
Page: 3/5
By
Comments/Explanations
CLIENT:
AUDIT PROGRAM
NATIONAL BANK OF PAKISTAN
PERIOD:
December 31, 2007
SUBJECT:
SHARE CAPITAL
Est.
Hrs.
Phase/
Level
W/P
Ref.
Procedures
7.3
Ensure that all receipts are through banking channels,
particularly those from foreign nationals and trace in
bank statement. Match with “Proceeds Realisation
Certificate”, if applicable.
8. Movement in capital and profit accounts in NBFCs
8.1
8.2
8.3
8.4
8.5
8.6
8.7
T/AP/1
Review documents for any inward remittances made,
by the Head Office to comply with the capital
requirements of the Banking Companies Ordinance,
1962 for branches which are being audited.
Ensure that the statutory capital maintained with State
Bank of Pakistan is not less than 7.5% (the
requirement of Section 13(3) of B.C.O.) of the total
demand and time liabilities at the year-end.
Obtain direct confirmation of closing balance at yearend with the State Bank of Pakistan.
Ensure that capital appreciation is made by State Bank
of Pakistan on statutory capital. Obtain a copy of
advice received from SBP. Also ensure that the
balances confirmed by the SBP of statutory capital
match with the client’s records.
Enquire about the remittances made by the Head
Office to the branches and vice versa and obtain
intimation from Head Office regarding such
remittance.
Obtain analysis of unremitted profit from client.
Review relevant client files and workings to ascertain
accuracy of unremitted profit balance and details
thereof.
Other tests as deemed necessary
Management Letter
Prepare management letter points including:
 Internal control weaknesses;
 Business improvement opportunities;
 Legal non-compliance;
 Accounting system deficiencies; and
 Errors and irregularities not material at the
financial statements level.
Page: 4/5
By
Comments/Explanations
CLIENT:
AUDIT PROGRAM
NATIONAL BANK OF PAKISTAN
PERIOD:
December 31, 2007
SUBJECT:
SHARE CAPITAL
Est.
Hrs.
Phase/
Level
T/AP/1
W/P
Ref.
Procedures
By
Comments/Explanations
Disclosure
Ensure appropriate disclosure have been made in
accordance with the reporting framework and fill
relevant portion of Financial Statement Disclosure
Checklist (FSDCL).
Supervision, review and conclusion
1.
2.
3.
4.
Perform Senior review and supervision.
Resolve Senior review points.
Resolve Partner and Manager review points.
Conclude response to the audit objectives.
Audit conclusion
Based on the substantive test procedures, I/we performed as outlined above, it is my/our opinion that the audit objectives set forth at
the beginning of this audit program have been achieved, except as follows:
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
Date:____________
______________
Signature
____________
Job Incharge
Page: 5/5
________
Manager
_______
Partner