Hello friends,
This is sumit duggal, wanna wants to that that expenses incurred by director on his own health can be claimed in company.
as i am doing audit of private ltd company and During going through i see that medical expenses incurred on director has been debited in company accounts.
so i want to know that what should i do in this regard as expense is about amount of rs 15 lacs
the above situation should be dealt with as follows:
You should make an inquiry u/s 227(1A) in respect of following matters:
1. whether such payment has been authorised by the company?
2. whether the terms of appointment of a Director include such payment?
If the answers to the above questions are yes, then it is not required to be commented upon. However since the amount involved is material, adequate disclosure is required to be made in the accounts.
Where such payment is not covered by contractual obligations or accepted business practices but incurred by the company and charged to revenue accounts, it is the duty of an auditor to report thereon
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