He may also ask the company to notify such representatives to the shareholders of the company. While auditing the accounts of a company, it becomes the duty of an auditor to scrutinize debentures in detail and examine properly the rules in the Debenture Trust Deed. In recognition of the importance of such compliance, the American Institute of Certified Public Accountants has adopted, as part of its Code of Professional Conduct, rules which support the standards and provide a basis for their enforcement. The auditor has a right to sign the audit report. Right to get representation circulated : The company, on receipt of representations, shall mention the fact of representations being made in the notice of the meeting and send a copy there of to every member of the company to whom the notice of one meeting is sent. Remuneration :- It may be fixed by the management. The liability for such offence is imprisonment upto 6 month or fine or both.
An auditor can be either an independent auditor unaffiliated with the company being audited or a captive auditor, and some are elected public officials. If it is proved that the auditor has been guilty of destroying, mutilating, altering, falsifying or secreting of any books, papers or securities or is privy to the making of any false or fraudulent entry in any register, book of account or document belonging to the company, he shall be punishable with imprisonment extending to seven years and also be liable to fine. If he does not possess either of the qualifications, he is not qualified to act as an auditor of a company. London and General Bank Case, 1895. Section 230: Maintaining Books of Accounts The directors are responsible for compliance with the statutory requirements regarding preparation and maintenance of proper books of account and circulation of financial statements that give a true and fair view. Duties under the Companies Act The auditor has the following duties under the Companies Act: 1. Company auditor has to give his co-operation to govt.
If they refuse to provide then he can report to the members. The Cost Auditor has to be appointed by the Board of Directors under Section 233-B of the Companies Act subject to prior approval of the Company Law Board. Right Of Attending The Meeting :- It is the right of the auditor that he should attend the general meeting of the shareholders. The punishment is imprisonment upto a period of three years. Special Resolution and the appointment of an Auditor The Companies Amendment Act 1974, by its Section 224-A, requires passing of a special resolution for the appointment or re-appointment of an auditor s at the each annual general meeting, in case of companies where less than 25% of the subscribed capital is held whether singly or in any combination by. Right Of Correction :- In case of any mistake the auditor can make correction and issue the revised statement. But where the auditor is a firm, a partner of such firm has a right to sign the audit report, provided he is a practising Chartered Accountant in India.
Paragraphs renumbered by the issuance of Statement on Auditing Standards No. His main stock in trade is the trust and goodwill of his client which ought to protect at all times otherwise he will go out of business. This is his statutory right. But, in his report, he should express his own opinion but not that of experts concern. If the method of accounting is inadequate, he must state the fact in his report that proper books of accounts have not been kept by the company. These developments are also a remainder of the collapse of some financial institutions in Nigeria in the early 1990's, in spite of their public declared accounts showing massive profits.
London and General Bank Case, 1895. Job Seekers: and apply on Monster now. The company should issue a formal letter of appointment to the concerned auditor after receiving the approval of the Central Government so that he can start the work of his assignment. These duties in short are enumerated here. .
Under the Indian Penal Code ; 2. To give information of the correctness of the Profit and Loss Account and the Balance Sheet: An auditor should give a clarification that the books of account of the cornpany have been prepared according to the provisions of the act and that the Balance Sheet of the company reveals an economic position of the company and that the Profit and Loss Account gives a true picture of profit or loss or not. Company or a Private Ltd. In case of certain companies, the auditor is to be appointed only with the approval of the company by a special resolution. State its merits and demerits. Obligations Of An Auditor The external Auditor by law, shares a special fiduciary relationship with the company that it audits its books.
It may be in the form of letter or statement. Appointment of Auditors Under Nigerian Law, Auditors are appointed by a special resolution passed at an Annual General Meeting of a company. Section 227 4A empowers the Central Government to require by order, that the auditor's report will include a statement on such matters as may be specified therein. Comments, criticisms, suggestions, ideas, etc are always welcomed. As amended, effective for audits of financial statements for periods beginning on or after January 1, 1997, by Statement on Auditing Standards No. There is also the related civil liability of misfeasance. Management is responsible for adopting sound accounting policies and for establishing and maintaining internal control that will, among other things, initiate, record, process, and report transactions as well as events and conditions consistent with management's assertions embodied in the financial statements.
Duties and Responsibilities of a Cost Auditor: The duties and responsibilities of a Cost Auditor have not been clearly given in the Companies Act. Under the Life Insurance Corporation Act; 5. Duty to acquaint himself with the provisions of the company law and also enquire from his predecessor about it in writing, 4. The auditor has no responsibility to plan and perform the audit to obtain reasonable assurance that misstatements, whether caused by errors or fraud, that are not material to the financial statements are detected. The following auditing standard is not the current version and does not reflect any amendments effective on or after December 31, 2016. To make report to the shareholders. It is the duty of the auditors to make such a report.
Any auditor appointed in a casual vacancy shall hold office until the conclusion of next annual general meeting. The auditor's knowledge of these matters and internal control is limited to that acquired through the audit. The Act has vested the power to appoint auditors with directors, shareholders, the Central Government and the Comptroller and Auditor General of India. He can attend every meeting of the shareholders. The total amount of cash received by the company in respect of all the shares allotted, distinguishing as aforesaid; c.
Right of being indemnified: Under section 633, an auditor being an officer of a company , has a right to be indemnified out of the assets of the company against any liability incurred by him defending himself against any civil and criminal proceedings by the company if it is proved that the auditor has acted honestly or the judgement delivered is in his favour. See section 230, Due Professional Care in the Performance of Work, paragraphs. Even for re-appointment of a retiring auditor, passing of a resolution is essential. For audits of fiscal years beginning before December 15, 2010,. Duty to enquire about the true and fair state of affairs of the company and submit his proper report. Under section 240 6 , the auditor is treated as an agent of the company for the purpose of this section. Officer here means a director, managing director, manager or secretary ; iii a person who is a partner or who is in the employment or an officer or employee of the company; iv a person who owes the company more that Rs.