You are appointed as an auditor of M/s Shine & Co., a partnership firm. During your review, you observed that: The audit appointment was…

While auditing the accounts of M/s Shine & Co., a partnership firm, it is important to ensure that they have formal appointment. Further, deviation from the partnership deed, and absence of documentation for key decisions raise concerns about the validity, transparency, and legal compliance of the firm's operations. Thus, the auditor should specially consider the following matters in the audit of accounts of a partnership: (i) Letter of Appointment: Confirming that the letter of appointment, signed by a partner, duly authorised, clearly states the nature and scope of audit contemplated by the partners, specially the limitation, if any, under which the auditor shall have to function. (ii) Partnership Documents: Studying the minute book, if any, maintained to record the policy decision taken by partners specially the minutes relating to authorisation of extraordinary and capital expenditure, raising of loans; purchase of assets, extraordinary contracts entered into and other such matters as are not of a routine nature. (iii) Objects of Partnership: Verifying that the business in which the partnership is engaged is authorised by the partnership agreement; or by any extension or modification thereof agreed to subsequently. (iv) Books of Account: Examining whether books of account appear to be reasonable and are considered adequate in relation to the nature of the business of the partnership. (v) Mutual Interest: Verifying generally that the interest of no partner has suffered prejudicially by an activity engaged in by the partnership which, it was not authorised to do under the partnership deed or by any violation of a provision in the partnership agreements. (vi) Provision for Taxes: Confirming that a provision for the firm's tax payable by the partnership has been made in the accounts before arriving at the amount of profit divisible among the partners. (vii) Division of Profits: Verifying that the profits and losses have been divided among the partners in their agreed profit-sharing ratio.