In India, the term “statutory auditor” refers to an external auditor whose appointment is mandated by law. A “statutory audit” is a legally required review of the accuracy of a company’s or government’s financial records. The purpose of a statutory audit is the same as the purpose of any other audit – to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions. (Source: Wikipedia)

The purpose of carrying out an audit is to check the ways in which a company spends the shareholders’ money and earns profits for the shareholders. The audits also see to it that the methods used for spending such money is in accordance with the laws and policies actively implemented for such use. It is factors such as these that make statutory audits so important.

ROC compliances during statutory audit

Through this Articles we will be discussing the pointers which needs to be check by the Statutory Auditors at the time of conducting Statutory Audits or finalizing the Books of Accounts of an Unlisted company :-

1. Check whether company have filed the resolution for Disclosure of Interest in form MGT 14 (For Private companies, filing of form MGT 14 is not mandatory).

2. Check whether DIN of all the directors has not been disabled due to non-filing of Form DIR 3 KYC with ROC.

3. Check status of each director in the company, whether they are disqualified or not under section 164 of the Companies Act, 2013.

4. Check whether companies has complied with the provision of Section 230 and Rule 8 (Appointment of Key Managerial Personnel) of the Companies Act, 2013 (Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel).

5. Check whether company has reported Loans, Security deposits and other deposits and non-deposits in form DPT 3 and whether all the necessary steps has been taken by the company as per the provisions of Section 73 and Rules prescribed under Companies Act, 2013.

6. Check whether related party transactions has been made by the company during the year, if yes then whether they have complied with the provisions of section 188 of the Companies Act, 2013.

7. Check whether company has reported details of Invoices whose payment was made after 45 days or Invoices which were outstanding at the end of reporting period in form MSME 1 (half yearly return which company needs to file).

8. Check whether Form BEN-2 has been filed by the company if there was a change in the position of a significant beneficial owner.

9. Check whether Declaration from Directors and their relatives has been obtained, in case of any loan received by the company from them.

10. Check whether company has complied with the applicable provisions of the Companies Act, 2013 while receiving Loans from its shareholders.

11. Check whether company has granted any loans to its directors or any person in whom any of the director of the company is interested, if yes then whether the company have passed the necessary resolutions under section 185 (Check the conditions which were prescribed for getting exemptions under this section for private companies).

12. Check whether company have passed the necessary resolutions under section 180 (1)(C) while borrowings has been made by the company.

13. Check whether company have passed the necessary resolutions under section 186 while granting any loans, investments or Guarantee.

14. Check whether company took any financial assistance from Banks and Financial Institutions if yes then whether charge has been created or modified with respect to the same financial assistance.

15. Check whether company has paid off any Loans to Banks and Financial Institutions if yes then whether charge has been satisfied.

16. Check whether company has complied with the provisions of Cost Audit which includes filing of form CRA-2(if applicable)

17. Check whether company has complied with the provisions Internal Auditor (if applicable)

18. Check whether company has complied with the provisions of Private Placement, Right Issue, Bonus Issue & ESOP if company has issued shares to Investors.

19. Check whether company has accepted any share transfer requests from the shareholders if yes then whether company has complied with provisions of section 56 of the Companies Act, 2013.

20. Check all the details related to the Holding, Subsidiaries & Associate Concerns of the company wherever applicable.

21. Check whether companies has complied with all the provisions for Declaring Interim or Final Dividend.

There are so many areas which needs to be checked by the Audit team while conducting the Statutory Audit of an unlisted company. While companies are complying with the requirements of the Companies Act, 2013 just for the sake of completing the compliances, here auditor of the company needs to check whether the company is fulfilling the requirements as prescribed under the Act and if not then to raise a red flag in accordance with the same.

Author Bio

More Under Company Law

2 Comments

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

November 2020
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
30