Shital Patel (Student) (33 Points)
12 May 2010Hi,
Somebody plzzz give me a standard formate for statutory audit of a private limited co.applying allllll applicable accounting standards .The co.has Foreing investments also,is there any reporting requirement in the statutory audit report for that??.
AUDITOR'S REPORT
Auditor has to compulsorily inquire and comment in his Report
Section 227(1A) requires auditor to inquire and report on the following matters:
Contents of auditor's report are discussed below:—
(a) whether loans and advances made by the company on the basis of security have
been properly secured and whether the terms on which they have been made are not
prejudicial to the interests of the company or its members;
(b) whether transactions of the company which are represented merely by book entries
are not prejudicial to the interests of the company;
(c) where the company is not an investment company within the meaning of section 372
or a banking company, whether so much of the assets of the company as consist of
shares, debentures, and other securities have been sold at a price less than that at
which they were purchased by the company;
(d) whether the loans and advances made by the company have been shown as
deposits;
(e) whether personal expenses have been charged to revenue account;
(f) where it is stated in the books and papers of the company that any securities have
been allotted for cash, whether cash has actually been received in respect of such
allotment, and if no cash has actually been so received, whether the position as stated
in the account books and the balance sheet is correct, regular and not misleading.
2. Auditor shall report whether the accounts give a true and fair view
The auditor has an obligation towards the members of the company to make a report to
them on theaccounts examined by him, and on every balance sheet and profit and loss
account, which are placed before the company in annual general meeting during his
tenure of office. The auditor has to state whether in his opinion and to the best of his
information and according to the explanations given to him, the said accounts give the
information required by this Act in the manner so required and give a true and fair
view:—
(i) in the case of the balance sheet, of the state of the company's affairs as at the end of
its financial year; and
(ii) in the case of the profit and loss account, of the profit or loss for its financial year.
The auditor's report shall also state:—
(a) whether he has obtained all the information and explanations which to the best of
his knowledge and belief were necessary for the purposes of his audit;
(b) whether, in his opinion, proper books of account as required by law have been kept
by the company so far as appears from his examination of those books, and proper
returns adequate for the purposes of his audit have been received from branches not
visited by him;
(c) whether the report on the accounts of any branch office audited under section 228
by a person other than the company's auditor has been forwarded to him as required by
section 228(3)(c) and how he has dealt with the same in preparing the auditor's report;
(d) whether the company's balance sheet and profit and loss account dealt with by the
report are in agreement with the books of account and returns;
(e) whether, in his opinion, the profit and loss account and balance sheet comply with
the accounting standards referred to in section 211(3C);
(f) in thick type or in italics the observations or comments of the auditors which have
any adverse effect on the functioning of the company;
(g) whether any director is disqualified from being appointed or re-appointed as director
under clause
(g) of sub-section (1) of section 274;
(h) whether the cess payable under section 441A has been paid and if not, the details of
amount of cess not so paid;
Moreover, where matters as stated in (a)(b) and further in (a) to (e) are answered in
negative or with qualification, the auditor's report shall state the reasons for the
answer.
Requirement to give comments in the Auditors Report as per the Companies
(Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956)
Rules, 2003
As per the Companies (Disqualification of Directors under section 274(1)(g) of the
Companies Act, 1956) Rules, 2003 it is provided in rule 4 that:—
(a) it shall be the duty of the statutory auditor of the appointing company as well as the
disqualifying company, as required under section 227(3)(f), to report to the members of
the company whether any director is disqualified from being appointed or re-appointed
as director under section 274(1)(g) and to furnish each year as to whether on the basis
of his examination of the books and records of the company, any director of the
company is disqualified for appointment or reappointment as a director or not.
(b) it shall be the duty of the statutory auditors of the disqualifying company as required
in section 227(3)(f) to report to the members of the company whether any director in
the company has been disqualified during the year from being appointed or reappointed
as director in another company under section 274(1)(g) of the Act.
Auditors are required to make independent investigations as to disqualification of
director u/s 274(1)(g)
It was held in the case of Pawan Jain v Hindustan Club Ltd. (2005) that from a
careful perusal of section 227, which provides for the power and duties of the auditors,
it appears that the auditor cannot submit a report on the basis of the statement
supplied by the company alone. He has to examine and even he has to make an
independent enquiry about the collected materials from other sources to submit a
report regarding clause (f) of sub-section (3) about the disqualification of the directors
under section 274(1)(g).
Before reporting a particular person as being disqualified, an auditor must seek for the
views and/or representations of the director concerned or any person as to whether he
was a director of the defaulting company as mentioned in section 274. Auditor's report
really affects a particular persons right as his civil rights or status is necessarily declared
in a negative way by the auditor by his fact finding. The rules of natural justice demand
that before a person's right is affected, he/she should be given opportunity to explain
his or her position.
Obligation on the Auditors to comment on the compliance of the Accounting
Standards, in the caseof failure, the Auditor has to face the consequences
The Department has issued a Press Note No. 7/99, dated 23-7-1999 which states that
the provisions of section 227 of the Companies Act, 1956 have been amended with
effect from 31-10-1998, with an obligation on the part of the auditors of the companies
to include a para in their report under section 227 of the Act to the members of the
company, stating whether in their opinion the Profit and Loss Account and the balance
sheet comply with accounting standards referred to in sub-section (3C) of section 211. It
has, however, been observed from the published balance sheet of a number of
companies as at 31-3-1999 that such a certification by the auditors is missing in their
reports. It further states that auditors of the companies are, therefore, advised to
ensure that such a clause is added to their reports to the members failing which this
Department will be constrained to take penal action against the auditors as well as refer
the matter to the ICAI for initiating disciplinary proceedings against them.
Signature on the Auditor's Report, etc.
Only the person appointed as auditor of the company, or where a firm is so appointed in
pursuance of the proviso to sub-section (1) of section 226, only a partner in the firm
practising in India, may sign the Auditor's Report, or sign or authenticate any other
document of the company required by law to be signed or authenticated by the auditor.
[Section 229]
COMPANIES (AUDITOR'S REPORT) ORDER, 2003
The Auditor's Report shall include a statement on the matters specified in Companies
(Auditor's Report) Order, 2003 (CARO).
The Central Government has issued on 12th June, 2003, Companies (Auditor's Report)
Order, 2003 effective from 1st July, 2003 which has superceded the earlier
Manufacturing and Other Companies (Auditor's Report) Order, 1988. The Central
Government vide Notification dated 25th November, 2004 has also made certain
amendments in the CARO.
Applicability
Earlier, companies were categorised as (a) Manufacturing, mining, processing, (b)
Supplying & rendering of service, (c) Trading, and (d) Financing, Investment, Chit Fund
Nidhi, Mutual Benefit Societies. Now, this classification/categorisation is done away
with, implying that the order is applicable to all types of companies irrespective of the
nature of business unless otherwise specifically continued to be exempted such as (1)
Banking Company, (2) Insurance Company, (3) section 25 Company. In addition to the
three types of companies, the Central Government has also liberalized the norms for
exemptions for small private limited companies vide Notification, dated 25th November,
2004.
Now a small private limited company shall be exempted from the provisions of CARO, if
it fulfills all the following conditions:—
1. Paid-up capital and reserves shall not exceed Rs.50 Lakh,
2. Outstanding loans from Bank/Financial Institution shall not exceed Rs.25 Lakhs, and
3. Turnover shall not exceed Rs.5.00 Crore.
Obligation to report the breach of law
The Companies Act lays down detailed provisions regarding various matters and casts an
obligation upon officers and directors of the company to carry out the requirements of
the law. Generally speaking, it is the duty of the directors and the management to
ensure that the provisions of the Companies Act have been complied with. However,
where there is contravention of legal requirement by a company, which has a bearing
on the accounts and transactions of the company, the auditor would in the normal
course of his inquiry become aware of them and it would need to be brought to the
notice of the shareholders.
The auditor should, however, not merely state the facts, leaving it to be inferred that a
contravention of legal requirements has taken place, but he should clearly point out
that in his opinion a contravention of the law has occurred. For example if any loans are
given in contravention of section 295 of the Act, the auditor should report the matter
irrespective of the fact that the concerned loans have been repaid after the balancesheet
date.
AUDIT REPORT VS. POLITICAL CONTRIBUTION
Where a company contributes any amount directly or indirectly to any political party
and the auditor is satisfied that political contribution has been made in excess of the
limit prescribed in section 293A, he should qualify his audit report, mentioning the
excess amount involved, if ascertainable. Also where such contributions made by the
company are within the limit but the facts regarding such contributions are not properly
disclosed, the auditor should qualify his report and state the relevant facts. Where he is
in doubt about the applicability of section 293A, he should disclose this fact in his
report. An auditor's duty as such is to examine and report on the accounts of the
company in accordance with the requirements of section 227. The auditor therefore has
no specific duty to make any special enquiry to unearth cases of unauthorised political
contributions if they are not readily apparent from the examination of the accounts
made in the normal course of the audit. If any unauthorised political contribution (or
such contribution in excess of the permissible limit, as the case may be) has been
skillfully concealed by a company or it has not come to the notice of the auditor in the
normal course of his audit, an auditor wouldbe responsible only to the extent it can be
established that in the conduct of the audit he acted without reasonable care and skill.
Views of the Department
(1) According to a Press release, dated 18th June 1962, the Department has impressed
upon the Chartered Accountants, acting as statutory auditors of companies, through the
ICAI, that it was their duty to comment on all such material violations of the law or
sound accounting practice as might reasonably be expected to affect directly or
indirectly the fortunes of the company's accounts.
(2) "The requirements of the Act are that the auditors should specifically certify whether
the published accounts give a 'true and fair' view of the company's state of affairs and of
the profit and loss for the financial year (as compared with the requirements of
certification as true and correct under the 1913 Act).
Shital Patel
(Student)
(33 Points)
Replied 15 May 2010
Can you pls givs me the format of any audit report which i can modify as per myu requiremns.?
SARDAR RASHEED
(ASST.GENERAL MANAGER)
(44 Points)
Replied 02 February 2011
CAN ANY ONE SEND ME THE EXCEL FORMAT BALANCE SHEET WITH ALL SCHEDULES OF ANY MINING COMPANY ESP IRON ORE
SARDAR RASHEED
(ASST.GENERAL MANAGER)
(44 Points)
Replied 02 February 2011
CAN ANY ONE ADVISE IN GETTING THE DIFF FORMATS OF VENDORS BALANCE CONFIRMATION
sonal
(in Final)
(70 Points)
Replied 15 June 2012
Question:- Why in every audit report at the end of audited balance sheet & P/L account it is written that " as per Report of Even date". In which manner and what it actually mean at that place ?? please reply...
waiting.....
sonal
(in Final)
(70 Points)
Replied 15 June 2012
Question:- Why in every audit report at the end of audited balance sheet & P/L account it is written that " as per Report of Even date". In which manner and what it actually mean at that place ?? please reply...
waiting.....
sonal
(in Final)
(70 Points)
Replied 15 June 2012
Question:- Why in every audit report at the end of audited balance sheet & P/L account it is written that " as per Report of Even date". In which manner and what it actually mean at that place ?? please reply...
waiting.....
v.lakshmi narayanen
(auditar)
(21 Points)
Replied 30 October 2012
dear sir,
i am a peacticising chartered accountant. i request you to forward a formet of audit report with companies auditors report order for the year ended 31-3 2012 for a company engaged in the business of running testing lab
regards
v lakshmi narayanen
vlnca @ yahoo.co.in
CAclubindia
