Audit report qualification

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Anil (Querist)
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30 May 2014 A private ltd company is supposed to register itself under Shop & Establishment Act. It has not done so. Instead it has shown the registration fees and penalty for non registration as payable to concerned department. In this connection my questions are:

1) Should auditor qualify his report. If yes, what should be the wordings?

2) If audit report is not be qualified, should anything appear in notes to accounts? If yes, what should be the wordings in notes to accounts

Thanks

Nikhil Kaushik

Nikhil Kaushik (Expert)
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31 May 2014 well I dont think this is as big as an issue to attract qualification.

just put a mark in notes stating that the said registration is pending and the charges and interest/penalty has been provided for.

Anil

Anil (Querist)
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31 May 2014 Thank you for your reply Sir.

I have a hypothetical questions:

Let us say - the private company does not register itself under any acts other than companies Act and keeps on providing for fees / charges / penalty / interest payable under other acts in books of accounts.

My questions:

Is there any section in companies Act which prohibits this practice or prescribe the way to deal with this kind of situations?

Even in this case, can one just put a remark in notes to accounts and not qualify?

When is one supposed to qualify in these kind of situations? What is the criteria to qualify , if at all one wants to qualify?

Regards,

Anil.

Amol S Joglekar

Amol S Joglekar (Expert)
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31 May 2014 it is the matter of judgement In the first meeting itself auditor can get to know the MINDSET of the company owners. If the mindset is like what you described in your query ab initio, it is better to QUALIFY the report from the first year itself. When auditor is sure of mens rea......qualify the same, No need to have any clause under companies act.

Anil

Anil (Querist)
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31 May 2014 Thanks for your response Sir.

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