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Signing of Balance Sheet by the Auditor before board

Sowmya (Consultant) (24 Points)

21 January 2010

Hi ,

Can you pls clarify as to whether the auditor can sign the balance sheet befor the same is approved from the board.

if not confirm the section which deals about the same. Further what are the consequences of such default

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4 Replies

Dinesh N (Article) (156 Points)
Replied 21 January 2010

A CA cannot certify any accounts which are not placed/approved by the Board in its BOD Meeting.

As per the provisions of Sec-215(3)

"The balance sheet and profit and loss account shall be approved by the Board of Directors before they are signed on behalf of the Board in accordance with the provisions of this section and before they are submitted to the auditors for their report thereon".

Consequences for such default as per section 218 is fine of Rs.500/- for the company.

Auditors may face consequence as per Professional Ethics.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 21 January 2010

Agree with the learned member.

imran (student) (35 Points)
Replied 03 July 2010

PLZ tell me Whether Auditor Sign Balance Sheet Earlier Board Report Or After Board Report?

Amir (Learner) (4016 Points)
Replied 04 July 2010

Dear Mam,

SA-700

Date of the Auditor’s Report

41. The auditor’s report shall be dated no earlier than the date on which the auditor has obtained sufficient appropriate audit evidence on which to base the auditor’s opinion on the financial statements, including evidence that: (Ref: Para. A37-A40)

(a) All the statements that comprise the financial statements, including the related notes, have been prepared; and

(b) Those with the recognised authority have asserted that they have taken responsibility for those financial statements.

A37. The date of the auditor’s report informs the user of the auditor’s report that the auditor has considered the effect of events and transactions of which the auditor became aware and that occurred up to that date. The auditor’s responsibility for events and transactions after the date of the auditor’s report is addressed in SA 56026.

A38. Since the auditor’s opinion is provided on the financial statements and the financial statements are the responsibility of management, the auditor is not in a position to conclude that sufficient appropriate audit evidence has been obtained until evidence is obtained that all the statements that comprise the financial statements, including the related notes, have been prepared and management has accepted responsibility for them.

A39. In case of some entities, the applicable law or regulation identifies theindividuals or bodies (e.g., the directors) that are responsible for concluding that all the statements that comprise the financial statements, including the relatednotes, have been prepared, and specifies the necessary approval process. In such cases, evidence is obtained of that approval before dating the report on the financial statements. In case of some other entities, however, the approval process is not prescribed in law or regulation. In such cases, the procedures the entity follows in preparing and finalising its financial statements in view of its management and governance structures is considered in order to identify the individuals or body with the authority to conclude that all the statements that comprise the financial statements, including the related notes, have been prepared. In some cases, law or regulation identifies the point in the financial statement reporting process at which the audit is expected to be complete.

A40. In some entities, final approval of the financial statements by shareholders is required before the financial statements are issued publicly. In these entities, final approval by shareholders is not necessary for the auditor to conclude that sufficient appropriate audit evidence has been obtained. The date of approval of the financial statements for purposes of SAs is the earlier date on which those with the recognised authority determine that all the statements that comprise the financial statements, including the related notes, have been prepared and that those with the recognised authority have asserted that they have taken responsibility for them.