Title deeds of a factory building owned by Yatin Polymers Ltd. are lodged with a bank as security for a term loan. To verify title, the auditor should:

Correct answer: A) Obtain a certificate directly from the bank confirming that it holds the title deeds on behalf of the company

Explanation

When title deeds are held by a lender as security, the auditor should obtain a confirmation directly from the bank that it holds the deeds, and examine the deeds where possible. The auditor should also check whether the property stands in the company's name and whether the charge is disclosed. Internal copies or registers are less reliable.