Introduction
Auditing is a crucial step in the financial reporting process. To guarantee that a company's financial statements present a true and fair picture of its financial situation, an auditor must give an unbiased, independent evaluation of the financial statements. Maintaining the integrity of financial reporting and ensuring that investors and other stakeholders can rely on the information given in financial statements are the duties of auditors. We'll talk about the duties of an auditor under the Companies Act of 2013 and their eligibility in this article.
Who is an auditor?
An auditor is a professional who is responsible for evaluating financial records, transactions, processes, and controls within an organization to ensure accuracy, compliance, and Auditors are appointed by the company's shareholders and are generally independent of the company being audited.
Eligibility Criteria for an Auditor
Following are the eligibility requirements for an auditor.
A professional accounting or auditing qualification, such as a Certified Public Accountant (CPA), Chartered Accountant (CA), or Certified Internal Auditor (CIA), is typically required for auditors.
Auditors need to have significant experience in accounting or auditing in addition to their educational qualifications. Working in corporate accounting departments or public accounting organizations for several years is required.
Auditors must have a thorough understanding of accounting principles, including Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).
Independent and impartial conduct is required of auditors at all times during the audit process. This means avoiding any conflicts of interest that could compromise their independence or objectivity and being impartial in their assessment of the company's financial statements.
Regulations, such as those pertaining to license and registration, as well as ethical principles, as specified by the International Ethics Standards Board for Accountants (IESBA), must be complied with by auditors.
What are the duties of an auditor?
To ensure accurate financial reporting, auditors have several duties to perform. The following are the key duties of an auditor:
Preparation of the audit report
An audit report is an analysis of a business's financial position. Based on the company's financial statements, the auditor is responsible for creating an audit report. In addition to this, an auditor must ensure that financial statements comply with relevant accounting laws, such as the Companies Act 2013 and accounting standards.
In addition to this, an auditor must ensure that the financial statements present an error-free and fair view of the company's financial position. An accurately written audit report can help businesses make informed decisions based on exact financial information.
Conducting Enquiries
Making inquiries as required is one of an auditor's main duties. This comprises determining whether personal expenses are charged to the Revenue Account, whether loans and advances are correctly shown as deposits, whether financial statements adhere to applicable accounting standards, and whether loans and advances issued based on security are adequately secured.
Assist in the matter of branch audits.
An auditor will help to complete the branch audit if they are a branch auditor for the entire company. Based on the branch's financial records, they will prepare a report and submit it to the company auditor to include in the main audit report.
Comply with audit standards.
To perform audit duties with relevant ease and accuracy, an auditor must comply with auditing standards issued by the central government in consultation with the National Financial Reporting Authority.
Fraud detection and reporting
Suppose an auditor detects any fraud in the financial statement while performing his duties. They must immediately report the matter to the central government, as outlined in the Companies Act 2013.
Adhere to the Code of Ethics and Professional Conduct.
An auditor is required to adhere to a code of ethics as well as a code of professional conduct. The auditor's behavior and activities are governed by guidelines and principles that are encompassed by these regulations. They comprise essential ideas, including professional skepticism, due care, and confidentiality.
Training and development
Audit staff and other employees are trained and guided on audit-related matters, which comprise legal matters, growing risks, and best practices.
Conclusion
In conclusion, the duties of an auditor are to ensure the accuracy and reliability of a company's financial statements. Auditors play a vital role in maintaining the integrity of financial reporting, and their role is essential in helping investors and stakeholder groups make informed decisions about the company's health. The duty of an auditor requires high-level experience, independence, and objectivity, and an auditor needs to sustain these qualities throughout the audit process.
The author is an operations director and co-founder of Ebizfiling India Private Limited. and has 13+ years of rich and profound experience with various corporate sectors. Has led teams of 50+ professionals. In due process, I gained vast knowledge of all the areas of Indian statutory compliance, including laws and taxation.
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