It is not necessary to carry out share transfer audit. It is also not a part of annual financial audit the auditor’s responsibility is to obtain evidence as to the amounts and disclosures relating to share capital in the balance sheet.
As a special assignment, the auditor may be asked to carry out share transfer audit. The auditor bills for the job separately.


a) Study the Articles of Association to obtain understanding of the company procedures for transfer of shares.
b) Check that where an application for transfer has beer, made, entry has been made in the register of members.
c) Ensure that the entry in the register of members has been made only after proper instrument of transfer duly stamped and executed by the transferor and the transferee has been received by the company along with the scrip.
d) .Check that a register of transfer of share has been maintained at
registered office.
e) Trace transfer fee to bank statement.
f) Ensure that the transfers have been duly stamped.
g) On a test basis, verify signatures of the transferor with application form.
h) Check transfer with the share register.
i) Determine that the transfer has been ‘advised to transferor and in
case the shares were held by joint holders each of them are advised.
j) Ensure that no objection has been made by the transferor.
k) Check that the old share certificates have been cancelled to prevent their reissue.
1) Is shares have been transferred to company, examine its memorandum and articles of association to check whether the
company can invest in such shares.
m) Where transfer has been executed through an agent, compare agent’s signatures with the specimen signature on power of attorney.
n) In case of bank: transfers, determine that it is not outstanding for more than six months.
0) Reconcile transfer fee with number of transfers during the year.
p) In case shares are transferred on account of death of the holder, examine succession certificate granted by the court, and the
application of which the executor has made that the shares may be transferred to him. q) If shares have been mortgaged, are transferred, check that the notice of transfer has been given to mortgagee.
r) Check that if the transfer has been refused, the company has within thirty days after the date on which the instrument of transfer is lodged with the company, sent to the transferee notice of the refusal indicating reasons for such refusal.

Posted on November 3, 2015 in Verification (Substantive Procedures)

Share the Story

Back to Top
Share This