10 June 2009
As per section 215(3) of Companies Act, 1956 The balance sheet and the profit and loss account shall be approved by the Board of directors before they are signed on behalf of the Board in accordance with the provisions of this section and before they are submitted to the auditors for their report thereon.
Again it is mentioned by clarification 2 of serial No. 244 page 254 dated 1992 issued by DCA ) There is no contraversion of this section (section 215) in case the audit of final account is completed before approval of the balance sheet by the board of director of company.
Aren’t these two contrary to each other. Explain this
Yes there is a certain contradiction. In fact the language of section 215 is a bit contradictory in itself. It says first approval of accounts by board and then audit of accounts which is very impracticable. So if in a BM first you adopt accounts and immediately after that adopt Audit report then it is like that you have made a contravention of section 215. (but actually there is no violation at all)
To clarify such situation DCA has come up with a clarification mentioned by you which says that there is no contraversion of section 215 in case the audit of final account is completed before approval of the balance sheet by the board of director of company as audit of accounts is a ongoing process.
Hope this discussion would be of some help to you.
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