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    Company Law - Auditors

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    Satish Kumar Nadar
    This document discusses auditors and their role in companies. It explains that auditors are needed to ensure money provided by shareholders is being used as intended and the company's accounts accurately reflect its financial position. The document outlines the appointment process for auditors in companies, their qualifications, who cannot be appointed, their remuneration, rights and duties. It provides details on appointing the first auditor, their term, notifying their appointment, and reappointing auditors at AGMs.

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    Company Law - Auditors

    Uploaded by

    Satish Kumar Nadar
    22 views10 pages
    This document discusses auditors and their role in companies. It explains that auditors are needed to ensure money provided by shareholders is being used as intended and the company's accounts accurately reflect its financial position. The document outlines the appointment process for auditors in companies, their qualifications, who cannot be appointed, their remuneration, rights and duties. It provides details on appointing the first auditor, their term, notifying their appointment, and reappointing auditors at AGMs.

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    This document discusses auditors and their role in companies. It explains that auditors are needed to ensure money provided by shareholders is being used as intended and the company's accounts accurately reflect its financial position. The document outlines the appointment process for auditors in companies, their qualifications, who cannot be appointed, their remuneration, rights and duties. It provides details on appointing the first auditor, their term, notifying their appointment, and reappointing auditors at AGMs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    22 views10 pages

    Company Law - Auditors

    Uploaded by

    Satish Kumar Nadar
    This document discusses auditors and their role in companies. It explains that auditors are needed to ensure money provided by shareholders is being used as intended and the company's accounts accurately reflect its financial position. The document outlines the appointment process for auditors in companies, their qualifications, who cannot be appointed, their remuneration, rights and duties. It provides details on appointing the first auditor, their term, notifying their appointment, and reappointing auditors at AGMs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    Sushant

    Ravindra Harawde
    SYLLB – Div A
    Roll No - 22

    Company Law

    AUDITORS
    Why there is need for Audit?
    It is to be remembered that a company carries on business with capital provided by person who
    do not control the use of the money provided by them.

    Such persons would, therefore, like to ensure that this money is used only for the intended
    purposes of the company and that the company’s accounts reflect a true and fair view of the
    financial condition of the company.

    It is for this purpose that the law requires the accounts of the company to be audited, that is
    checked and verified, by an independent person who is neither an employee nor a debtor of the
    company.
    Appointment of Auditors (S 139 to
    148)
    The first auditor of the a company is to be appointed by the Board of Directors within 30 days
    from the date of registration of the company.
    If this is not done then, the Board must inform its members who must call an EGM (Extra-
    ordinary general meeting ) and appoint the first auditor.
    In either case the auditor, holds the office till the conclusion of the first AGM of the company.
    At the first AGM of the company, the company must appoint an individual or firm as its auditor,
    who holds office from the conclusion of that AGM till the conclusion of the sixth AGM of the
    company.
    After the appointment, the company must inform him about his appointment and also intimate
    the ROC within 15 days from the date of the meeting at which he was appointed.
    Qualification of an Auditor
    A person who is eligible to be appointed as auditor of a company only if he is a chartered
    accountant. A firm is qualified to be so appointed if a majority of its partners practicing in India
    are chartered accountants.

    However when a firm is so appointed, only those partners who are chartered accountants can
    act and sign on behalf of such a firm.
    S.141 – List of persons who cannot be
    appointed as an auditor.
    1 – A body corporate – other than a limited liability partnership;
    2 – An officer or employee of the company.
    3 – A person who is a partner, or who is in the employment, of an officer or employee of the company.
    4 – A person who, or his relative or partner –
    Is holding any security of , or interest ( Exceeding Rs 1,000 or such other amount as may be
    prescribed), in the company or its subsidiary, holding or associated company or subsidiary of such
    holding company.
    5 – A person or firm who or which has – directly or indirectly – a business relationship with the
    company or its subsidiary or holding or associate company;
    6 – A person whose relative is a director or is in the employment of the company as a director or key
    managerial personnel;
    S.141 – List of persons who cannot be
    appointed as an auditor.
    7- A person who is in full time employment elsewhere.

    8 – A person or a partner of a firm holding appointment as its auditor if such person or partner is
    (as on the date of the appointment or re-appointment) an auditor of more than twenty
    companies.

    9 – A person who has been convicted by a court of an offence involving fraud and period of ten
    years has not elapsed from the date of his conviction.

    10 – Any person whose subsidiary or associate company or any other form of entity is engaged in
    consulting and specialized services as provided in S.144 of the act.
    Remuneration of Auditors

    The remuneration of the auditors is to be fixed by the members of the company in general
    meeting. The remuneration of the first auditor of the company can, however, be fixed by the
    Boards of Directors.

    Such remuneration shall, in addition to his fees, include the expenses incurred by the auditor in
    connection with the audit of the company and any facility extended to him. It does not,
    however, include any remuneration paid to him for other services rendered by him at the
    request of the company.
    Rights of an Auditor
    1 – Right to attend company meetings (S.146)
    2 – Right of access to books, vouchers, etc (S.143)
    3 – Right to obtain information and explanation.
    4 – Right to inspect branch accounts.
    5 – Right to remuneration.
    6 – Right to lien.
    7 – Right to legal and technical assistance.
    Duties of an Auditor
    1 – Duty to examine the accounts of the company carefully.
    2 – Duty to give a correct financial picture to the members.
    3 – Duty to sign the audit report.
    4 – Duty to state certain matters in the auditor’s report.
    5 – Duty to comply with the accounting standards.
    6 – Duty to report frauds.
    7 – Duty to verify cash-in-hand, etc.
    8 – Duty to make inquiries under S.143 of the Act.
    9 – Duty to act honestly.
    10 – Duty to disclose bad and doubtful debts.
    Thank You!!!

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