The audit is an independent examination of account books, records pertaining to any entity whether profit-oriented or not and irrespective of its legal form or origin when such examination is conducted thereof to express an opinion on the financials of the entity. In this article, we will discuss the rights and duties of an Auditor in relation to such an audit.
The auditor is an Individual or a firm appointed by the management to examine the books of accounts, financial statements, etc., in order to ascertain the financial position of the entity and such person should be qualified as a chartered accountant.
Rights of an Auditor
Following are the rights of an Auditor
- Right of access to books of accounts etc..,
- Right to obtain information and explanations from the officers
- Right to receive notices and right to attend general meeting
- Right to report to the company members on the accounts examined by him.
Right of access to books of accounts etc..,
Auditor has a right to access the books of accounts, vouchers of the company and its branches which is kept at the registered office or at any other places at all time.
In case of a holding company, the auditor has a right to access the books of accounts, records of all its subsidiaries and associate companies in so far as it relates to the consolidation of its financial statements with that of its subsidiaries and associate companies.
Right to obtain information and explanations from the officers
In order to perform the duties of an auditor, he has the right to obtain information and explanation from the officers as he may deem to think reasonable and necessary to perform the audit.
Right to receive notices and right to attend general meeting
The auditor has a right to receive notices and any other communication in relation to the general meeting. Unless the company specifically exempted, the auditor has a right to attend the general meeting either by himself or by his representative and be heard.
Right to report to the company members on the accounts examined by him
The auditor has a right to report the members which were prepared by him by examining the books of accounts, records, etc., of the company.
Duties of an Auditor
As per section 143(1) of the companies act, 2013, Besides the rights or powers of an auditor, the auditor has certain major duties to inquire which shall be described as follows
- whether the loans and advances which was made by the company on the basis of security have been properly secured and whether the terms and conditions on which they had been made are prejudicial to the interests of the company or to the members of the company.
- whether the transactions of the company which are represented merely by book entries are prejudicial to the interests of the company;
- where the entity not being an investment entity or a banking entity, whether so much of the assets of the entity as consist of shares, debentures and other securities have been sold at a price lesser than that at which they were purchased by the entity;
- whether the loans and advances which was made by the company have been shown as deposits;
- whether the personal expenses have been charged to the revenue account or not;
- where it is stated in the books and documents of the company that any shares which has been allotted for cash, whether such cash has actually been received in respect of such allotment, and if cash has not been actually received, whether the position as stated in the accounts books of the company and the balance sheet is correct, regular and not misleading.