Audit of Shipping Company

An auditor requires to conduct audit of shipping company maintaining the Ind AS Financial statements, in accordance with the provisions of the act for safeguarding assets of the company and for protecting the company from any frauds and irregularities.

Company requires to maintain the following:

  • A separate account for each account has to be maintained for each voyage.
  • In case of purchase of assets, it should be checked that such expenses are treated as capital expenditure and not revenue expenditure.
  • Proper depreciation should be charged on the same.
  • Freight charges, commission charges and brokerage should be charged and should be accounted in the system properly.
  • Company should maintain the insurance policy documents in proper records along with legal requirements.
  • For outstanding liabilities, proper accounting has to be done.
  • Title deeds of ships and other documents with purchase document should be kept in document form.
  • Internal control system of the company should be in such manner that no collusion takes place.
  • Transactions related to shipment should be recorded on daily basis.

It is the duty of an auditor to provide true and fair view on the financial statement of company, he should ensure that code of ethics and conduct are properly complied with.

Duties of an auditor are as follows:

  • Auditor should carefully study the articles of association and other incorporation documents.
  • Auditor should ensure that contracts are made properly between captain of ship and third parties.
  • Accounting of purchase/ sale of ships to be recorded accordingly and depreciation should be charged correctly.
  • It is an auditor’s responsibility to verify the freight charges, commission etc. Such charges should be accounted in proper head.
  • Auditor should ensure that all documents are kept in custody of the company and should be renewed timely before expiry of such documents.
  • Separate cash and bank ledgers to be maintained and reconciled on daily basis.
  • Proper allocation of expenditures should be made and verified by auditor.
  • Auditor should ensure that the internal control system of a company should be proper and on belief of that internal control system proper audit to be conducted.
  • Deferred revenue expenditure should be maintained as amount of heavy amount of repair and expenditure in the books.
  • Balance of any unexpired insurance should be carried forward and verified by auditor.
  • All transactions related to foreign exchange in case of shipping company should be incorporated in the books of accounts.
  • In case of any change in relevant laws and regulations in the related act, should be communicated to the company by auditor.

 

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