CA Anjana Ahuja Goyal

Section 143 Powers and Duties of auditors and auditing standards (Relevant Rule 11, 12, 13 of The Companies (Audit and Auditors) Rules, 2014)

1. Auditor have right to access – books of accounts and vouchers of the co. and all its subsidiaries, if any, in relation to Consolidation of Financial Statement – wherever situated

  1. Auditor may require officers of the co. to provide information and explanation necessary for the performance of his duties
  2. Other Matters he may inquire-

a.       Secured loans and advance made by the co. are properly secured and terms are not prejudicial to the interest of the co. or members

b.      Transactions represented by book entries are not prejudicial to the interest of the co.

c.       Assets of the Co. except investment & banking co. (Shares, Debentures & other securities) are not sold at a price which is below the purchase price

d.      Loans & advances have been shown as deposits

e.      Personal expenses are charged to revenue expenses

f.        Where it is stated that shares have been allotted for cash, the same has been received or not, if not the position shown in account books is correct and not misleading

  1. Auditor shall provide a report on accounts examined and on financial statements which are required to be laid down in General meeting under this act after taking into account all the provisions of this act & auditing standards along with other matters required to be included in report under this act
  2. To the best of auditor’s information and knowledge f.st give true & fair view of the state of the cos. Affairs as at end of the FY

  3. Audit report shall also state following:

  • Information and explanations sought and obtained were necessary for his audit, if not , details and impact of such information
  • Books of accounts have been maintained as per law from his examination & proper returns have been received from the branches not visited by him
  • Branch audit report have been received by him and manner in which he has incorporated the same in his report
  • Bal sheet & P&L A/c are in agreement with books of accounts and returns
  • st complies with Accounting standards
  • transactions having adverse impact , comment on the same
  • director is not disqualified u/s 164 (2) i.e. director who has not filed annual return or f.st for 3 years continuous or failed to repay deposits or interest or redeem debentures on due date or dividend not paid and such failure continues for 1 yr or more then such directors can’t be reappointed for a period of 5 yrs
  • Qualification, reservation or adverse remark relating to maintenance of accounts & other matters
  • Adequacy of internal financial controls & their operating effectiveness
  • Other matters such as impact of pending litigations on f.st, provision for material foreseeable losses on long term contracts including derivatives, delay in transfer of amount to the Investor education and protection fund.
  1. Reason for qualification in the report to be mentioned

8. Govt. Co.– First auditor to be appointed by CAG within 60 days of registration, if it fails to do so, then BOD shall do the same within next 30 days, if they also fails- then inform members. Members will conduct EGM within 60 days & appoint the auditor. (Sec 139 (7))

Govt Co.- Auditor to be appointed by CAG within 180 days of commencement of FY who shall hold the office till the conclusion of AGM.

  • CAG- direct the auditor about the manner of audit
  • Auditor —– submit the report to CAG along with actions taken and impact of directions issued by CAG on the f.st.
  • CAG— can within 60 days from receipt of AR
  • Conduct supplementary audit by the person authorised by him to get some additional information on such matter and in form as directed & comment upon or supplement such audit report and such comments to be sent to every member, trustees of debenture and other entitled persons with f.st and laid down in AGM also.
  • CAG can also by an order cause an test audit to be conducted in case of Govt. Co.
  1. Branch Audit to be conducted by-

Branch office in India

  • Auditor appointed for the co. (Company’s Auditor)
  • Other qualified person under this act or Govt. Cos. Auditor

O/s India

  • Auditor appointed for the co. (Company’s Auditor)
  • Person eligible for auditing under such country laws
  • Branch Auditor— submit report to Company’s Auditor
  1. Mandatory to comply with standards on auditing
  2. CG prescribes Standards on auditing recommended by ICAI& NFRA. ICAI SA’s deemed to be auditing standards.

  3. CG+ NFRA —- may direct by order that auditor’s report shall include matters as may be specified.

13. Fraud- if auditors have reasons to believe that an offence or fraud has been committed by the officers or employees of the co. against the co. He shall report the same to CG within 60 days of his knowledge.

Procedure: Report to be forwarded to BOD or Audit Committee for their observations within 45 days

  • On receipt of such replies forward the report along with comments and such replies to CG within 15 days
  • If no replies received from BOD , shall forward his report to CG along with notes of earlier report
  • Report to be sent to Secretary, MCA in a sealed cover vide registered post followed by an email
  • Report shall be on the letter head of the auditor
  • Report shall be in form ADT- 4
  • No duty shall be regarded as contravened if it’s in good faith while reporting of fraud
  1. CG+ NFRA —- may direct by order that auditor’s report shall include matters as may be specified.
  2. Provisions of this section shall apply to CS & ICWA

16.  Contravention in reporting of fraud: 1 lac to 25 lacs

More Under Company Law

Posted Under

Category : Company Law (3880)
Type : Articles (16964)
Tags : Companies Act (2344) Companies Act 2013 (2117)

Leave a Reply

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