Loan amounting to Sh.30 million
- Go through the board of directors‘ minutes to ensure that the loan was acquired with proper authority from the board.
- Ensure that the loan was obtained on behalf of R R Paper Mills and not for a third party. To determine this, seek evidence regarding the utilization of the money within the company.
- Verify that the loan was utilised for the approved purpose
- Determine whether the loan is being properly serviced in terms of interest and principal repayments. If no, consider the impact of the consequences of default to R Paper Mills, e.g. sale of the security, possible liquidation (hence no longer a going concern).
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