What are the salient features of an auditor’s report (India)?

(1) 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 years.”

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Explanation:

This reveals a set of two duties to be performed by the auditor. On the one hand, he has to certify that the accounts give the information required by the Companies Act, 1956 in the manner so required, and on the other hand, he has to declare that the accounts give a true and fair view of the company’s affairs and its profit or loss for its financial year.

These are two important duties of an auditor. He must ascertain that the information as required by Schedule VI has been disclosed in the Balance Sheet and the Profit and Loss Account.

So far as his second duty relates, he has to certify that the accounts reveal a true and fair view of the company’s affairs. The Auditor’s Report shall also state:

(2) “Whether he has obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit.”

Explanation:

The Act has empowered the auditor to inspect all the books, accounts and vouchers of the company at all times whether they are kept at the Head Office of the company or elsewhere and the auditor shall be entitled to require from the officers of the company such information and explanations as he may think necessary for the performance of his duties as an auditor.

What type of information and explanations the auditor thinks necessary to obtain from the officers of the company will depend upon the circumstances of a particular case. He may rely on them if he gets them from the responsible officers of the company.

(The concept, ‘true and fair’ has already been explained in the preceding Chapter).

(3) “Whether in his opinion, proper books of accounts as required by law have been kept by the company so far as appears from the examination of those books and proper returns adequate for the purpose of his audit have been received from branches not visited by him.”

Explanation:

Here, again, a company is required to keep proper books of accounts as prescribed by the Act and the auditor should, therefore, report specifically whether it has been done so. In case of non-compliance, he should qualify his report.

Secondly, he should confirm and report that proper returns are being submitted by the branches and these returns are adequate for the purpose of his audit. This provision is applicable for those branches which have not been visited by him.

(4) “Whether the report on the accounts of any Branch Officer audited under section 228 by a person other than the company’s auditor has been forwarded to him as required by Clause (c) of sub-section (3) of that section and he has dealt with the same in preparing the Auditor’s Report.”

Explanation:

Further, the auditor should confirm that the accounts of any Branch office have been audited under section 228 by a person other than the company’s auditor and the report of such an auditor has been forwarded to him.

He has to state clearly that he has taken full note of the said report in preparing his own report.

(5) “Whether the company’s Balance Sheet and Profit and Loss Account dealt with by the report are in agreement with the books of accounts and returns.”

Explanation:

Lastly, he has to confirm in his report whether the Balance Sheet and Profit and Loss Account of the company are in full agreement with its books, accounts and returns.

This needs no comment. In every business, the final accounts are prepared in accordance with the books of accounts, returns, etc. The auditor of every company is required specifically to mention this fact in his report that it has been actually done.

x

Hi!
I'm Eddie!

Would you like to get a custom essay? How about receiving a customized one?

Check it out