AUDITOR
An Auditor is a Person whose job is to examine a company’s financial records. It is
done to ascertain the accuracy of financial statements provided by the
organization.
QUALIFICATION OF AUDITOR
According to the provisions in Section 226 of the company’s act,
According to the provisions of the chartered accountants act, 1949, a
person who is a member of the “Institute of Chartered Accountants of
India” is qualified and can be appointed as an auditor of the company.
Any firm whose all partners are qualified and practicing chartered
accountancy and those who possess the above-mentioned eligibility such
partners can practice in the name of the firm.
A person holding a certificate under “Restricted Auditor’s Certificate” (Part
B State) Rules, 1956 is also qualified to act as Auditor of a company.
APPOINTMENT & RE-APPOINTMENT OF AUDITOR
According to Section 224 of the Companies Act:
First Appointment: - The Board of Directors appoint the first auditor
of the company within 1 month of the registration of the company, which
continues till the end of the first annual general meeting of the company.
Appointment Every Year: - Every Year the company appoints the
auditor in the annual general meeting of the shareholders. The auditor
appointed this way holds office till the completion of the next annual general
meeting. The auditor has to be intimated about his appointment within 7
days after the resolution about the appointment has been passed in the
annual general meeting. After getting this information the auditor has to
inform the Registrar of the Companies in writing in a prescribed form
whether he has accepted or refused the appointment within 30 days.
Re- Appointment: - Only the auditor who has been appointed by the
company should be reappointed in the annual general meeting. Of course,
reappointment is not done under the following circumstances:
1) If auditor is not qualified for reappointment.
2) If a resolution has been passed to appoint another person instead of
him or resolution has been passed that the same auditor should not
be reappointed.
3) If auditor has given a notice in writing to the company about his
unwillingness for his reappointment.
Appointment by Central Government: - When the
appointment or re-appointment of an auditor is not possible at Annual
General Meeting of the company, the central government appoints the
auditor. In this case, the company has to inform the central government
within 7 days of completion of annual general meeting of the company
that the auditor is not appointed or re-appointed.
Appointment of auditor of government company or
corporation: - In the corporation, Government companies which are
established by the laws of state or central government where the
government has more than 50% Right, the appointment of an auditor of
such companies is done by the central government on the advice of the
comptroller and auditor general of India.
DUTIES OF AUDITOR
{A} Duties of an auditor according to company’s act:
1) To Present the Audit Report: -
It is the preliminary duty of an auditor to present the report
before shareholders after verification of accounts of the
company.
The Auditor has to address his report only to the
shareholders and present it to them.
Only in special audit, the auditor has to give his report
addressing the central government.
It is not the auditor’s duty to send the audit report to each
and every shareholder. Once he submits the report to the
company secretary, his duty is fulfilled.
2) Certification to be Given for Statutory Report: -
The Company has to hold Statutory Meeting within 6 months after
the registration of the company in which the statutory report is to
be presented. The auditor has to give certificate for the following
matters in this statutory report: -
Number & types of shares issued by the company.
Total amount of cash received by the company for allocated
shares.
Statement of receipts- payments of cash till that date.
3) Assist the Special Auditor/ Inspector: -
To verify company’s accounts and management, the central
government appoints special auditors. At that time, it is the
auditor’s duty to offer necessary and possible help to such
auditor-inspector.
{B} Duties of auditor according to Judicial
Decision:
The auditor should make himself acquainted with the AoA of
the company.
He should exercise reasonable care & skill while doing his
duty.
He should verify the existence of all assets shown in the
balance sheet.
He should disclose the true economic condition of the
company.
