Rights of statutory auditor

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This query is : Resolved

K Balaji (Querist)

30 December 2011 As a Statutory of a company, whether auditor has a right to see the monthly stock statements submitting to bank by company for working capital loans??

Please tell me... Its urgent...

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)

30 December 2011 Every auditor of a company shall have a right of access at all times to the books and accounts and vouchers of the company, whether kept at the head office of the company or elsewhere, and shall be entitled to require from the officers of the company such information and explanations as the auditor may think necessary for the performance of his duties as auditor. Section 227(1) of ICA, 1956.

The words " such information and explanation as the auditor may think necessary for the performance of his duties" can include the stock statements as well.

No restriction is cast on the auditor in so far as the seeking of information is concerned.

CS Jithesh (ACS,)

CS Jithesh (ACS,) (Expert)

02 January 2012 It is advisable to provide the details, otherwse there is a chance that the same may be mentioned as qualification / reservation in the auditors report and the same may indirectly effect your sanction limits once the same is renewed. It is understood that the stock statment which we are giving to bank will normally appreciated value than the actual stocks. even your statutory auditor also knows this general practice

VN KULKARNI

VN KULKARNI (Expert)

04 January 2012 THE STOCK STATEMENT HAS DIRECT BEARING ON THE STATUS OF THE LOAN A/C-WHETHER IT IS A-PA A/C OR NPA A/C.SO THE VERIFICATION OF IT UTMOST IMP.
IT S/S ARE NOT RCD FOR 3 MONTS THE A/C BECOMES NPA,EVEN IF THE CONDUCT OF THE A/C IS GOOD.

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