Capital

In this lesson

1. 0:00 Understanding capital and equity components
2. 0:35 Dividend recognition and timing in accounts
3. 1:19 Audit procedures for capital accounts
4. 2:36 Rights issue audit example walkthrough
5. 4:04 Directors' emoluments and disclosure requirements
6. 5:05 Testing directors' pay and bonuses

About this lesson

You'll explore how dividends are treated differently depending on whether they're proposed or declared, and understand the key audit procedures for verifying capital transactions—from agreeing opening balances to prior year accounts, to recalculating share issues and tracing dividends to board minutes and bank statements. The lesson also covers directors' emoluments, which are material by nature and require specific disclosure and verification procedures including agreement to employment contracts and recalculation of bonuses. This is essential knowledge for audit work, particularly for papers like Audit and Assurance. You'll see a practical worked example of how to split share capital and share premium from a rights issue, and learn the audit procedures needed to ensure capital and director payments are accurately recorded and fully disclosed in accordance with accounting standards.

Duration: 6m