Which of the following factors likely to be identified as a fraud factor by the auditor?

The company is planning a initial public offer of quality shares to raise additional capital for expansion

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Bank reconciliation statement includes deposits in transit

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Plant and machinery is sold at a loss

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The company has made political contributions

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Solution

The correct option is D The company is planning a initial public offer of quality shares to raise additional capital for expansion
Fraud is an intentional mistake which is done to deceive anyone.
Of all the given options, the chances of fraud is higher in case of a planning of initial public offer by the company since company may mislead the auditor with false information, window dress the financial statements, etc.
All these are not possible in bank reconciliation statement, sale of plant and machinery, political contribution by company.

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Fill in the blank:

The company which raises its capital by issuing shares to public is a __________.

Q. State whether the following statements are True or False.
(a) There is no chartered company in India.
(b) LIC is a statutory company.
(c) At least five persons are needed to form a public company.
(d) The minimum paid up capital of a private company must be Rupees five lakh.
(e) A private company can invite public deposits.
(f) The shares of a public company are transferable.
(g) A subsidiary of a public company is also a public company.
(h) The concept of private company deemed to be public no longer exists in India.

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