Ramirez, Mark I.
3BSA5B
What are the pieces of information of interest to the auditor in reviewing the following
non-financial records?
1) Articles of Incorporation
2) Corporate by-laws.
Non-Financial Records means the non-financial records of the Corporate Group,
including formulas, plans, specifications, data, surveys, contracts and non-financial
documents; business, engineering and consulting reports; research and development
information, including information relating to Nu-Trax, results and data from field trials
and other testing; patents, patent applications, results of and information relating to
patent infringement and other patent related searches; business and marketing plans,
and other non-financial records relating to the Corporate Group.
Articles of Incorporation – is the document prepared by the persons establishing a
corporation and filed with the Securities and Exchange Commission containing the
matters required by the Code. It usually contains the following matters.
1. Name of the Corporation
2. Purpose or purposes of the Corporation
3. Principal office of the Corporation.
4. Term of the Corporation
5. Names, nationalities and residences of incorporators
6. Number of directors or trustees, which shall not be less than 5 and not
more than 15.
7. Names, nationalities and residences of the persons who shall act as
directors or trustees until the first regular directors or trustees are duly
elected and qualified in accordance with this Corporation code of the
Philippines.
8. If stock corporation, the amount of its authorized capital stock in lawful
money of the Philippines.
9. If it be a non-stock corporation, the amount of its capital, the names,
nationalities and residences of the contributors and the amount
contributed by each;
10. Such other matters as are not inconsistent with law and which the
incorporators may deem necessary and convenient.
This content of Articles of Incorporation is needed by the internal auditors in obtaining a
concise picture of the plans of the management. Through this the internal auditors can
examine all the necessary information needed in auditing such for example, the number
of shares of the incorporators in case the shares are par value shares. All of this
information is needed by the internal auditor even though they do not involve financial
matters.
Ramirez, Mark I.
3BSA5B
Corporate by-laws – defined as the rules of action adopted by the corporation for its
internal regulations and for the government of its stockholders or members. Its primary
function is to prescribe the rights and duties of stockholders or members towards the
corporation and among themselves with the reference to the management of corporate
affairs and to regulate the transaction of the business of the corporation in a particular
way. The corporate by laws usually contains the following;
1. Place of meetings
2. Quorum
3. Proxies
4. Qualifications of directors
5. Election and term of office of directors or trustees
6. Disqualifications for position of director
7. Compensation to stockholders or members
8. Imposition of penalties or sanctions
9. Issuance of certificates of stock
The content of corporate bylaws is needed by the internal auditors to accomplish its
objective which is to help the directors and trustees analyze and appraise the financial
and operational activities. Corporate bylaws are written by the owners of the corporation
at the time of its founding. Bylaws discuss issues like corporate officers, the board of
directors’ responsibilities, how they are elected, terms of office, how and when board
and shareholder meetings will be held, and how the board of directors’ functions. At a
bare minimum, your corporate bylaws should include the corporation's identifying
information such as name, address, principal place of business, designation of the
corporation as public or private, and the fiscal year of the corporation.
The bylaws should also include the number and type of shares and stock classes that
the corporation is authorized to issue, information about shareholder meetings—
including notification of a meeting and voting by proxy—annual meeting procedures,
and requirements for notifying members. Every corporation must have at least an
annual meeting, so this is an important part of the bylaws
The board of directors are an integral part of a corporation, so they should be included
in the bylaws. This should consist of the number of board members, general powers
and duties, terms of service, and the number of directors considered a quorum. Once
board officers are selected, include descriptions of their duties, how they are elected,
and their terms of office.
