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Audit.............................?

vikas gupta (c.a final....) (714 Points)

06 April 2011

1. what are powers of auditors in company audit 1?

Rights of auditor OR duties of auditor?

2.First auditor is not be given intimation regarding his appointment and he is not required to inform ROC regarding his refusal or acceptance,....how is it possible....how will auditor come to knw?

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5 Replies

Srinath (Chartered Accountant) (166 Points)
Replied 06 April 2011

Question 1

(1) Every auditor of a company shall report to the members on the accounts required to be laid before the company in general meeting and on the company's accounting and other records relating to those accounts and if it is a holding company for which consolidated accounts are prepared shall also report to the members on the consolidated accounts.

(2) An auditor shall, in a report under this section, state -

(a) whether the accounts and, if the company is a holding company for which consolidated accounts are prepared, the consolidated accounts are in his opinion properly drawn up -

(i) so as to give a true and fair view of the matters required by section 169 to be dealt with in the accounts and, if there are consolidated accounts, in the consolidated accounts; (ii) in accordance with the provisions of this Act so as to give a true and fair view of the company's affairs; and (iii) in accordance with the applicable approved accounting standards;

(aa) if in his opinion the accounts, and where applicable the consolidated accounts, have not been drawn up in accordance with a particular applicable approved accounting standard -

(i) whether in his opinion the accounts or consolidated accounts, as the case may be, would, if drawn up in accordance with the approved accounting standard, have given a true and fair view of the matters required by section 169 to be dealt with in the accounts or consolidated accounts; (ii) if in his opinion the accounts or consolidated accounts, as the case may be, would not, if so drawn up, have given a true and fair view of those matters, his reasons for holding that opinion; (iii) if the directors have given the particulars of the quantified financial effect under section 166A(5), his opinion concerning the particulars; and (iv) in a case to which neither subparagraph (ii) nor (iii) applies, particulars of the quantified financial effect on the accounts or consolidated accounts of the failure to so draw up the accounts or consolidated accounts, as the case may be;

(b) whether the accounting and other records and the registers required by this Act to be kept by the company and, if it is a holding company, by the subsidiaries other than those of which he has not acted as auditor have been, in his opinion, properly kept in accordance with the provisions of this Act; (c) in the case of consolidated accounts -

(i) the names of the subsidiaries, if any, of which he has not acted as auditor; (ii) whether he has considered the accounts and auditor's reports of all subsidiaries of which he has not acted as auditor, being accounts that are included (whether separately or consolidated with other accounts) in the consolidated accounts; (iii) whether he is satisfied that the accounts of the subsidiaries that are consolidated with other accounts are in form and content appropriate and proper for the purposes of the preparation of the consolidated accounts, and whether he has received satisfactory information and explanations as required by him for those purposes; and (iv) whether the auditor's report on the accounts of any subsidiary was made subject to any qualification (other than a qualification that is not material in relation to the consolidated accounts), or included any comment made under subsection (3), and, if so, particulars of the qualification or comment;

(d) any defect or irregularity in the accounts or consolidated accounts and any matter not set out in the accounts or consolidated accounts without regard to which a true and fair view of the matters dealt with by the accounts or consolidated accounts would not be obtained; and (e) if he is not satisfied as to any matter referred to in paragraph (a), (b) or (c), his reasons for not being so satisfied.

(3) It is the duty of an auditor of a company to form an opinion as to each of the following matters:

(a) whether he has obtained all the information and explanations that he required; (b) whether proper accounting and other records (including registers) have been kept by the company as required by this Act; (c) whether the returns received from branch offices of the company are adequate; and (d) whether the procedures and methods used by a holding company or a subsidiary in arriving at the amount taken into any consolidated accounts were appropriate to the circumstances of the consolidation,

and he shall state in his report particulars of any deficiency, failure or shortcoming in respect of any matter referred to in this subsection.

(4) An auditor of a company has a right of access at all reasonable times to the accounting and other records (including registers) of the company, and is entitled to require from any officer of the company and any auditor of a related company such information and explanations as he desires for the purposes of audit.

(5) An auditor of a holding company for which consolidated accounts are required has a right of access at all reasonable times to the accounting and other records (including registers) of any subsidiary, if necessary, and is entitled to require from any officer or auditor of any subsidiary, at the expense of the holding company, such information and explanations in relation to the affairs of the subsidiary as he requires for the purpose of reporting on the consolidated accounts.

(6) The auditor's report shall be attached to or endorsed on the accounts or consolidated accounts and shall, if any member so requires, be read before the company in general meeting and shall be open to inspection by any member at any reasonable time.

(7) An auditor of a company or his agent authorized by him in writing for the purpose is entitled to attend any general meeting of the company and to receive all notices of, and other communications relating to, any general meeting which a member is entitled to receive, and to be heard at any general meeting which he attends on any part of the business of the meeting which concerns the auditor in his capacity as auditor.

(8) If an auditor, in the course of the performance of his duties as auditor of a company, is satisfied that -

(a) there has been a breach or non-observance of any of the provisions of this Act; and (b) the circumstances are such that in his opinion the matter has not been or will not be adequately dealt with by comment in his report on the accounts or consolidated accounts or by bringing the matter to the notice of the directors of the company or, if the company is a subsidiary, of the directors of its holding company,

he shall forthwith report the matter in writing to the Registrar.

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vikas gupta (c.a final....) (714 Points)
Replied 06 April 2011

Not satisified ....i want brief and quick answer asap

Sunshine (Helping All) (10575 Points)
Replied 06 April 2011

Rights-

1. To get remuneration-ab simple si baat hai..koi kaam karega to paise to lega hi...

2. Right to access the books and records of the client at all times- Ab agar aap apne accounts usko nai doge to wo audt kya khaak karega??wo kabhi bhi aapne books and records maang sakta hai...

3.Right to attend the GM- Notice of GM is compulsurily sent to auditor...

4.Right to speak at the GM- Adutor can speak only at those matters which concerns his work..

5.Right to get information-Right to get explaination and info abt whatever concerns his work of Audit..jo wo apne kaam se related pooche., use batana hoga...

6.Right of lien- Agar aap usko kaam poora ho jane ke baad paise nai doge...to wo aapke books of accounts ko apne kabze me rakh sakta hai...if after the completion of work,remuneration is not paid, he has a right of lien on the books which is legally acquired from the client for the puropose of Audit..

7.Right to receive notice of removal and representation at time of removal- use nikaloge to usko notoce dena hoga and ek baar uski baat sunane ka mauka bhi.....

8.Right to inspect branch office- Principal Auditor kisi bhi branch ke office ko visit karke wahan ke rcords and books maanf sakta hai....

2 Like

Hardik Dave (IPCC and CS Professional(FINAL) Student) (15533 Points)
Replied 06 April 2011

Originally posted by : Sunshine...
	Rights- 1. To get remuneration-ab simple si baat hai..koi kaam karega to paise to lega hi... 2. Right to access the books and records of the client at all times- Ab agar aap apne accounts usko nai doge to wo audt kya khaak karega??wo kabhi bhi aapne books and records maang sakta hai... 3.Right to attend the GM- Notice of GM is compulsurily sent to auditor... 4.Right to speak at the GM- Adutor can speak only at those matters which concerns his work.. 5.Right to get information-Right to get explaination and info abt whatever concerns his work of Audit..jo wo apne kaam se related pooche., use batana hoga... 6.Right of lien- Agar aap usko kaam poora ho jane ke baad paise nai doge...to wo aapke books of accounts ko apne kabze me rakh sakta hai...if after the completion of work,remuneration is not paid, he has a right of lien on the books which is legally acquired from the client for the puropose of Audit.. 7.Right to receive notice of removal and representation at time of removal- use nikaloge to usko notoce dena hoga and ek baar uski baat sunane ka mauka bhi..... 8.Right to inspect branch office- Principal Auditor kisi bhi branch ke office ko visit karke wahan ke rcords and books maanf sakta hai....

realy true.smile. Friend sneha.

Manmohan ACA, CS (Chartered Accountant ) (14243 Points)
Replied 06 April 2011

Duties

Duties of an Auditor as to enquiry:

1. Ensure compliance of section 227(1A)

a. Loans & Advances made by the company secured & prejudicial to the interest of the company,

b. Whether transactions of the company which are represented merely by book entries are not prejudicial to the interests of the company.

c. Where the company is not an Investment Company as defined in Sec.372 or Banking Company, which sells its assets & securities at the price less than its purchase price.

d. Loans & Advances have been shown as deposits.

e. Whether personal expenses have been charged to P&L account.

f. If no cash has been received in respect of shares then whether the position stated in balance sheet is correct, regular and not misleading.

(Auditor have to give reason for both negative & positive remarks)

2. Report whether accounts complies with the Companies Act, 1956.

3. If proper returns as required by auditor of the branches not visited by him are not received by him then he must state this fact in his audit report

4. Whether he has obtained all the information and explanations which to the best of his knowledge and belief were necessary for his audit.

5. Whether in his opinion proper books of accounts as required by law are kept by the company and proper returns have been received by him of the branches not visited by him.

6. Whether the reports on accounts of any branch offices audited by a branch auditor u/s 228 have been forwarded to him as required u/s 228(3)(c) & the manner in which he have dealt with it for preparing auditor’s report.

7. Whether the companies Balance Sheet & P/L Account are in agreement with the books of accounts & returns.

8. Whether in his opinion Balance Sheet & P/L A/c complies with the Accounting Standard s u/s 211(3C).

9. Auditor has highlighted adverse effects in companies functioning by thick or italic type.

10. Whether any director has been disqualified from being appointed as director u/s 274(1) (g).

11. Whether cess payable u/s 441A (levy & collection of cess on turnover or gross receipts of the company) has been paid, if not, details of amount not so paid.

12. Compliance with CARO, 2003 as amended by CARO (Amendment) order 2004

13. It will be duty of the branch auditor to prepare the audit report for that branch & forward it to the company’s auditor.

14. Section 229 Signing of the Audit Report

à When a single C.A is practising, there can’t be any question of any firm name.
à When a firm of a C.A is appointed as an auditor, then only a practicing partner may sign the report.