Private and Limited sole proprietor and limited Company registered under the Companies Act, whether it is publicly or privately held or if its having a share capital or not are required to maintain proper book of accounts and get the books of accounts audited each year. In this article, we look at all aspects of Company audit.
Appointment of the First Auditor of the Company
All other companies, apart from Government Company are required to appoint an Auditor within 30 days from the day of incorporation of the Company. The Board of Directors of the Company appoints the auditor through a meeting that it holds amongst the board.
In case the company’s Board of Directors does not appoint the first Auditor(s) of the Company within 30 days period of incorporation of the Company, then the first auditor of the company can be appointed by shareholders/members of the Company by conducting a general meeting.
Power and Duties of Auditor of the Company
An Auditor of the Company ought to be an autonomous individual appointed by the Company to express a feeling on whether the money related explanations arranged by the organization are free of financial misstatement, misrepresentation or error and in line with the Accounting Standards. Note that it is the duty of the Company to keep up book of records and get ready money related explanations of the Company. The Auditor of the Company can’t keep the Book of Accounts of the Company or prepare financial statements related to the Company, as it would disable his/her freedom.
Assessment of the audit function
The organization’s auditor has each right to get admission to the books of account and vouchers of the organization, and also has the energy to invite for any facts or documents this is required to permit him performing his/her duties. furthermore, an auditor of the organization is ought to investigate the subsequent topics listed below:
- Whether or not any loans and advances made through the employer on the basis security basis had been secured properly and whether or not the terms on which they had been made are within the interest of the corporation and its participants.
- Whether or not company’s transactions that are recorded within the book of entries are prejudicial to the pastimes of the organization.
- If the corporation isn’t always a funding organization or a banking company, whether or not a lot of the belongings of the organization as encompass stocks, debentures and other securities have been sold at a rate less than that at which they were purchased with the aid of the company.
- Whether or not loans and advances made via the company had been shown as deposits.
- Whether or not non-public prices were charged to sales account.
- In which it is said in the books and documents of the enterprise that any shares were allocated for cash, whether or not cash has without a doubt been obtained in admire of such allotment, and if no cash has truly been so acquired, whether the location as said in the account books and the balance sheet is accurate, everyday and not misleading.
Audit file for agency
Based totally on the audit of the organization, the auditor will make a document to the members of the business enterprise stating whether to the best of his/her records and information, the money owed of the organization an economic statements deliver a true and truthful view of the state of the organization’s affairs. in addition, the audit record should additionally encompass:
- whether or not he/she (auditor) has sought and received all of the data and explanations which to the excellent of his expertise and notion were important for the motive of his audit and if not, the details thereof and the impact of such statistics on the monetary statements;
- whether or not, in his/her (auditor) opinion, proper books of account as required by means of regulation have been kept by the business enterprise to date as seems from his examination of those books and proper returns adequate for the functions of his audit were acquired from branches now not visited by him;
- Whether the file on the accounts of any branch workplace of the agency audited by means of someone apart from the agency’s auditor has been sent to him/her (auditor).
- whether or not the organization’s balance sheet and earnings and loss account dealt with within the record are in agreement with the books of account and returns;
- Whether, in his/her (auditor) opinion, the financial statements comply with the accounting standards;
- The observations or comments of the auditors on economic transactions or subjects which have any detrimental impact at the functioning of the corporation;
- Whether any director is disqualified from being appointed as a director;
- Any qualification, reservation or damaging commentary relating to the protection of bills and different matters connected therewith;
- Whether or not the organization has adequate inner financial controls system in location and the running effectiveness of such controls;
Restrictions on statutory auditors
The auditors of a corporation can best provide offerings which are approved by the board of director or audit committee of the organization. In addition, below any case, the auditor of an enterprise is against the law from imparting the subsequent services “immediately or not directly” to the company or its preserving organization or subsidiary company to maintain independence of the auditor:
- Accounting or e book retaining offerings
- Internal audit
- Layout and implementation of economic facts gadget
- Actuarial services
- Funding advisory services
- Investment banking services
- Rendering of outsourced monetary services
- Management offerings.