Originally posted by : Ankur Garg
	Phir wahi baat mera bhai... Why should i consider F.Y. as 1 April to 31 march for this discussion when nothing is mentioned by Suvarna Ji.

Ankur Ji,

As we know that most of companies follow accounting year of 1st April to 31st march, So we must clear this point to the person who raised this question. If we don't clearify that the answer is not related to the accounting year starting from 1st april 2009 to 31st march 2010, then that person may commit default.
(Think for a second ki agar Suvarna Ji ko pataa hi nahi ho ki company koi aur accounting period kar sakti hai, then it will be a problem)

So, I think we must clear this point to the person who asked this question.

anyways !! leave it...

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please tell us the whole procedure step by step right from preparatiion of accounts so that i can try to make picture to follow the same in all the companies this year practically...

First anf foremost, for the clear understanding of the case, the financial year is ending on 30th Sept for the company and this is the firt AGM of the company.  The company has not yet commenced commercial operations and the transactions are minimal.

Also, the Articles stipulate a 7 days notice period of a General Meeting. So taking into considerations Sec 171 and Sec 53, my understanding  is that a gap of 11 days or even a longer gap of 25 days can be kept between the BM anf AGM.

As advised by Ankur Ji all the above mentioned matters can be transacted in the same meeting. Or should we say that the meeting was adjourned in the morning after approval of accounts and then held again in the evening for approval of Directors' Report and Auditors' Report? Request your advice, Ankur Ji.

In my mind there was no doubt from the very beginning that your FY is Oct 01 to Sept 30.

There is no need to adjourned your BM but maintain the sequence of agenda items mentioned earlier in my previous reply.

Reason---i'll tell you leter with appropriate and detailed reply.

Thank You, Mr. Ankur. Will await your detailed reply.

Authentication of accounts and signing by auditors

[DCA Circular No. 7 of 1974, dated 26-4-1974].

Where there is no time gap or very little time gap between the date of approval of accounts under section 215 by the Board of directors of a company and the date of the audit report thereon, the Department is of the view that responsibility for the preparation of the accounts of a company belongs to the directors who have to approve them before the auditors make their report thereon.

The Act is apparently silent on when the auditors may commence their work of audit. In other words, it does not clarify whether they have simply to await the directors' report on the accounts or proceed with the audit work in the meantime immediately after their appointment at the last annual general meeting.

The auditor's report comes at the end of the audit process and section 215 mentions nothing of the process preceding the preparation of the audit report by the auditors. Further that section 227 of the Act, gives the powers to auditor to access at all times to the books and accounts and vouchers of the company, which amply suggests that they do not have to remain idle at any time after their appointment as auditors.

Subject to the convenience of the company, auditor may actually commence the checking up of vouchers, etc., and the company may prepare trial balance sheets, etc., which will save time for the auditors in the preparation of their report in due course.

Thus, if the auditor signs the balance sheet on the same date on which the directors have approved it, it may not be inferred from this solitary circumstance that the auditor has not performed the audit efficiently.

Hope everything is clear now.

Best Regards

Section 227

 
POWERS AND DUTIES OF AUDITORS.

(2) The auditor shall make a report to the members of the company on the accounts examined by him, and on every balance sheet and profit and loss account and on every other document declared by this Act to be part of or annexed to the balance sheet or profit and loss account, which are laid before the company in general meeting during his tenure of office, and the report shall state whether, in his opinion and to the best of his information and according to the explanations given to him, the said accounts give the information required by this Act in the manner so required and give a true and fair view -
(i) in the case of the balance sheet, of the state of the company's affairs as at the end of its
financial year; and
(ii) in the case of the profit and loss account, of the profit or loss for its financial year.

Auditor's main duty is to form opinion on the financal statements i.e. B/s & P&L & annnexures. & these documents is available to Auditors only after approval of the same. (however the auditor can perform other audit procedures like CARO checks etc. but cannot start audit procedure for opinion on final accounts.)

So, it is not possible for auditor to make Audit Report in that Board Meeting itself.

If a CA accepts an unapproved Final Accounts for his audit procedure, then risk of changes in financial statements always exists.

So, the auditor should accept only approved accounts in case of large organsations.

A complete surrender from my side...