State the evidence, which you, as the auditor, would like to find in place and pay attention to when vouching the following payments made by RR Paper Mills Ltd., during the financial year ended 31 October 2002 ; Loans to three employees totaling Sh. 6 million

  • Loan to three employees
  • Proper authorization for the loan by the responsible official and in accordance with company policy.
  • Supporting evidence as to whether the employees are bonafide employees of the organization.
  •  A repayment schedule of the loans. The period of repayment should not exceed the employees term of office
  •  Security given by the employees to secure the loan.
  • Evidence to satisfy himself that the debt is good and recoverable at the balance sheet date. This will include evidence of repayments by the employee.
  •  Interest on the loan should be charged on normal commercial basis or where there is a concession that this is within the company‘s policy.

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