1. Examine the articles of incorporation, the bylaws, and the minutes of the board of directors from the inception of the corporation to determine the provisions or decisions regarding the capital stock. the authorization for the sale of new issues or additional sales of unissued stock, declarations of stock splits and dividends in the form of cash or stock, and granting of stock options or stock rights. recording the sale of shares is better when conducted using footnotes and done with making the right decisions
2. Examine the stock certificate stub book and determine whether the total of the open stubs agrees with the Capital Stock account in the general ledger and try to make an examine of cancelled stock certificates to make complete information for the end of the information. Make a test check is important to determine the proper amount of original issue and capital stock transfer to be verified and compared with the original file.
3. Make an Analyze for the Capital Stock account from the corporation's inception and verify all entries. Make a clear state for all transaction relating with the cash disbursements records. To record transaction of exchanging capital stock with other property and not by cash, the property is record as the proper assets account and it consider as the reasonableness of the valuation placed of property. If the capital stock was sold at discount price or premium, it must be traced to the Capital Contributed in Excess of Par Value account. The increase decrease in net asset won’t be placed in the retained Earnings accounts.
The audit procedures to be applied to the audit of the Capital Contributed in Excess of Par Value account are usually applied at the same time that the Capital Stock account is being audited because the two accounts are...