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:
- Verify authorization from Board of Directors for advances and loans to stockholders and officers by checking duly approved minutes of meetings.
- Identify company officers and stockholders who are granted advances regularly.
- Check payments of advances to the company if such loan re-payments earned interest for which no withholding tax was deducted.
- Verify entries and supporting documents on cancellation of advances if the same do not originate from cash receipts.
Reference: RAMO 1-2000