Authentication of annual accounts, dir and auditor report

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2014 Dear Experts

Ours is a private company. We are filing annual accounts for a newly incorporated company which was incorporated on 23.11.2012. Therefore, the due date for holding the AGM is 31.12.2013 for the period 23.11.2012 and ending on 31.3.2013. Our AGM date is 30.12.2013.

We have finalised the annual accounts, auditors report and directors report. However, there seems to be some confusion with regard to the dates.

The annual accounts, directors report and notice for calling AGM has been signed by the directors on 18.12.2013. However, the auditors report has been signed on 20.12.2013.

I am a trainee and when I sent the form 23AC and 23ACA for certification to the PCS, he came back saying that we have not complied with the Companies Act, 1956.

I am really confused as to what is the correct procedure. The companies act clearly says that the annual accounts, directors report and schedules and notes after approval of the Board needs to be sent to the auditors for their report. Doesn't this mean that the annual accounts and director's report has to be signed prior to the auditor's report?

Please clarify.

Anticipating your earliest reply.

Regards

Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2014 Please can I have a reply to the below query?

Thanks

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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15 July 2024 I understand your confusion regarding the signing and submission sequence of the annual accounts, directors' report, and auditors' report under the Companies Act, 1956. Let's clarify the correct procedure based on the requirements:

### Sequence of Signing and Submission

1. **Directors' Report and Annual Accounts**: According to the Companies Act, 1956 (and similarly under the Companies Act, 2013), the directors' report and the annual accounts (including schedules and notes) should be prepared and approved by the Board of Directors of the company.

- **Board Approval**: These documents (directors' report and annual accounts) should be approved by the Board of Directors before they are sent to the auditors for their report.

2. **Auditors' Report**: After the directors' report and annual accounts are approved by the Board, they are then sent to the auditors.

- **Auditor's Examination**: The auditors will examine these documents, conduct necessary audit procedures, and then prepare their report on the financial statements.

3. **Signing of Documents**:
- **Directors' Report and Annual Accounts**: These documents are typically signed by the directors after they have been approved by the Board. The signing date should reflect the date of approval by the Board of Directors.

- **Auditors' Report**: The auditors' report should be signed by the auditor after they have completed their audit procedures and are satisfied with the accuracy and fairness of the financial statements. The signing date of the auditors' report should reflect the date of completion of their audit work.

### Compliance with Companies Act, 1956

Based on the sequence above, it is clear that the directors' report and annual accounts should be finalized and signed by the directors before they are submitted to the auditors. The auditors then review these documents and prepare their report, which is signed afterward.

### Specific Situation

In your case:

- The directors signed the annual accounts, directors' report, and AGM notice on 18.12.2013.
- The auditors signed the auditors' report on 20.12.2013.

This sequence is generally correct. The directors' report and annual accounts were signed first by the directors after Board approval, and then the auditors' report was signed by the auditors after their examination.

### Conclusion

The confusion might arise from a misunderstanding or miscommunication. Ensure that:
- The PCS (Practicing Company Secretary) understands the sequence of signing required under the Companies Act, 1956.
- Confirm that all documents (directors' report, annual accounts, auditors' report) are properly dated and signed in the correct order as per the above sequence.

If there are specific queries or concerns raised by the PCS, discuss them with your seniors or legal advisors to ensure compliance and rectify any procedural issues promptly. It's crucial to maintain proper documentation and adherence to legal requirements during the audit and submission process.

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