Powers and duties of the company auditors

In order to set up a company be it privately owned or public, The Companies Act of 1956 has laid down certain rules and procedures. After the completion of all due formalities relating to the establishment of a company from registration to approval of company’s name and declarations, the next step is the reporting of annual accounts.

It is mandatory for every registered company to prepare and maintain proper book of accounts. The financial statements issued by the company have to be in conformity with the accounting principles issued by the Institute of Chartered Accountants of India. In order to carry out all of these responsibilities, the company appoints an auditor.

According to section 139- it is a prime requirement that every company shall at the first annual general meeting appoint an auditor who can either be an individual or a firm. Appointment includes reappointment:-

Duties of the company auditor

1. Right to access 
   The auditor of a company shall have right to access at all time to book of accounts and receipt of the company. The auditor can seek information and clarification regarding the following:-

• Books of accounts and records.
• Book entries mentioning transactions made by the company.
• Loans and advances represented as deposits.
• Personal costs carried to profit account.

2. The signing of audit reports

The audit report of the company has to be presented with the signature of the auditor. The signature of the auditor is also important in case of any verification or certification of credentials of the company, transactions or monetary matters.

3. Presence in general meetings

According to Section 146, the auditor shall either personally attend the meeting or through a representative, who shall also be an auditor.

4. Accepting Notices

As per Section 101, a prior notice of the general meeting must be given before 21 days either in writing or through digital means to the auditor. The notice should indicate the timing, date and venue of the meeting and should contain a report of the business to be carried out at the meeting.

5. Right to Remuneration

Any decision regarding fixing of the salary of the auditor shall be done in the general meeting.

Duties of Auditor

It is the duty of the auditor to prepare a detailed official report after attending the general meeting. This official report contains matters related to shares, preliminary expenses, vouchers and payments made by the company.

1. Submission of the report - once the auditing of the company has been completed the auditor has to prepare a report describing his finding and opinions. The report should encompass important aspects such as proper maintenance of book of accounts, financial statements in compliance with the company’s rules, unbiased profit and loss accounts.
2. Duty to attest official report
3. Seek explanation from company staff
4. Duty to visit branches
5. Duty to conduct an inquiry
6. To seek legal and technical aid