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ADVANCES TO STOCKHOLDERS/OFFICERS

This receivable account may represent an outright advance of money by the corporation to officers and/or stockholders. Usually, these advances vary in amounts over a period of time, consequently building up the current amount. The following verification procedures on this account should be conducted, if warranted:

  1. Verify authorization from Board of Directors for advances and loans to stockholders and officers by checking duly approved minutes of meetings.
  2. Identify company officers and stockholders who are granted advances regularly.
  3. Check payments of advances to the company if such loan re-payments earned interest for which no withholding tax was deducted.
  4. Verify entries and supporting documents on cancellation of advances if the same do not originate from cash receipts.

 

Reference: RAMO 1-2000