The auditor should :
- ascertain that the Articles authorise the Board of Directors to forfeit shares and that the power has been exercised the Board in the best interest of the company;
- verify the amount of call or instalment of calls which was outstanding in respect of each of the share forfeited;
- ascertain that the procedure in the Articles has been followed, viz., the notice given (14 days, according to Table A) to the defaulting shareholders, warning them that in the event of nonpayment, a specified date, of the amount of call already made on the shares standing in their names, together with interest, if any, the shares shall be forfeited; see that the proper resolutions of Directors, first as regards issuance of notice and afterwards in respect of forfeiture of shares; and
- verify the entries recorded in the books of account consequent upon forfeiture of shares to confirm that the premium, if any, received on the issue of shares has not been transferred to the Forfeited Shares Account.
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