{"id":40163,"date":"2022-02-15T11:29:43","date_gmt":"2022-02-15T05:59:43","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=40163"},"modified":"2022-02-15T11:30:05","modified_gmt":"2022-02-15T06:00:05","slug":"supplementary-audit-by-cag-under-companies-act-2013","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/supplementary-audit-by-cag-under-companies-act-2013\/","title":{"rendered":"Supplementary audit by CAG under Companies Act, 2013"},"content":{"rendered":"\n<p class=\"has-drop-cap\">An audit is a necessary term used in accounting that examines and verifies a company&#8217;s financial Information. An audit is to ensure that the company&#8217;s financial Information is represented fairly and accurately following the relevant accounting standards. In this article, we will discuss the supplementary Audit by CAG under the <strong>Companies Act,2013<\/strong><sup><a href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/ebooks.html\"><strong>[1]<\/strong><\/a><\/sup>.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/supplementary-audit-by-cag-under-companies-act-2013\/#Why_is_an_Audit_necessary_for_every_company\" >Why is an\nAudit necessary for every company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/supplementary-audit-by-cag-under-companies-act-2013\/#Who_can_appoint_an_auditor_as_per_the_Companies_Act_2013\" >Who can\nappoint an auditor as per the Companies Act, 2013?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/supplementary-audit-by-cag-under-companies-act-2013\/#Subsequent_Appointment\" >Subsequent\nAppointment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/supplementary-audit-by-cag-under-companies-act-2013\/#Role_and_Power_of_CAG_under_Companies_Act_2013\" >Role and\nPower of CAG under Companies Act, 2013<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/supplementary-audit-by-cag-under-companies-act-2013\/#What_is_Supplementary_Audit_by_CAG\" >What is\nSupplementary Audit by CAG?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/supplementary-audit-by-cag-under-companies-act-2013\/#Scope_of_Supplementary_Audit_by_CAG\" >Scope of\nSupplementary Audit by CAG<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/supplementary-audit-by-cag-under-companies-act-2013\/#Various_Aspects_covered_under_Supplementary_Audit_by_CAG\" >Various\nAspects covered under Supplementary Audit by CAG<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/supplementary-audit-by-cag-under-companies-act-2013\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_is_an_Audit_necessary_for_every_company\"><\/span>Why is an\nAudit necessary for every company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Auditing\nis essential to ensure that companies represent their financial situation\nfairly and accurately and follow accounting standards.<\/p>\n\n\n\n<p>Without\nproper regulations and standards, the company can easily misrepresent their\nfinancial positioning to make it appear more profitable or financially\nattractive than they are.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_appoint_an_auditor_as_per_the_Companies_Act_2013\"><\/span>Who can\nappoint an auditor as per the Companies Act, 2013?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\npurpose of the auditors is to protect the interests of the shareholders, and\nthe appointment of an auditor depends upon the type of company.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">In the case\nof Government Company-Section 137(7) of the Companies Act,2013<\/h3>\n\n\n\n<p><strong>Appointment\nof the first Auditor<\/strong> -In\ncase of Government company or any company governed or owned directly and\nindirectly by the government. The first Auditor in these companies shall be\nappointed by the CAG (Comptroller and Auditor General of India). The\nappointment shall be made within 60 days from the date of registration of the\ncompany. <\/p>\n\n\n\n<p>If\nCAG does not Appoint the first Auditor, the Board of Directors shall appoint\nthe Auditor within the next 30 days. <\/p>\n\n\n\n<p>However,\nin case the board fails to appoint the first Auditor within the said period,\nthe Members can also appoint at an EGM within 60 days of such Information.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">In case of\nany other Company<\/h3>\n\n\n\n<p>The\nBODs shall appoint the first Auditor within 30 days from the date of\nregistration of the company. However, in case of failure of appointment by BOD,\nan Appointment can also be made by shareholders at the Extraordinary General\nMeeting within 90 days of such intimation by the BOD.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Subsequent_Appointment\"><\/span>Subsequent\nAppointment<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>For Government company-<\/strong><\/p>\n\n\n\n<p>The\nComptroller and Auditor General make the Subsequent appointment of Auditor of\nIndia within 180 days from the beginning of the financial year.<\/p>\n\n\n\n<p><strong>Other than Government company-<\/strong><\/p>\n\n\n\n<p>After\nthe first AGM, every company shall appoint an individual\/firm auditor. The\nappointed Auditor shall hold the office from the conclusion of the 1st Annual\ngeneral meeting till the conclusion of 6th AGM.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_and_Power_of_CAG_under_Companies_Act_2013\"><\/span>Role and\nPower of CAG under Companies Act, 2013<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nAudit of the accounts of governement-based companies is administered by the\nComptroller and Auditor General of India. Also, the appointment and <strong>re-appointment\n<\/strong>of the government company are made by the <strong>Comptroller and Auditor\nGeneral of India.<\/strong> It further specifies that the Comptroller and Auditor\nGeneral of India shall have the power to.<\/p>\n\n\n\n<ul><li>Instruct the statutory Auditor to conduct the Audit in a stated manner, <\/li><li>Give directions on any matter relating to the performance of his functions, <\/li><li>Conduct a supplementary audit or test audit himself.<\/li><li>Give observation or supplement the audit report in such manner as he thinks fit.<\/li><\/ul>\n\n\n\n<p>The\ncomments of the Comptroller &amp; Auditor General of India are to be placed\nbefore AGM along with Auditor&#8217;s Report.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Supplementary_Audit_by_CAG\"><\/span>What is\nSupplementary Audit by CAG?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As\nper the provisions of Section 139 &amp;143 of the Companies Act 2013, The\naccounts of the Government Companies (including Companies deemed to be\nGovernment Companies are audited by the Comptroller and Auditor General of\nIndia (CAG). Also, the accounts certified by the Statutory Auditors appointed\nby the CAG are subject to supplementary Audit by CAG or the CAG officers. The\nCAG gives his observation or supplements the reports of the Statutory Auditors.\n<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Availability\nof adopted and audited account at the time of Supplementary Audit by CAG<\/h3>\n\n\n\n<p>It is the company&#8217;s responsibility to make available the <a href=\"https:\/\/corpbiz.io\/learning\/basic-financial-statements\/\"><strong>financial statements<\/strong><\/a>\/any other statements\/documents required under the Companies Act, 2013 to be attached in the annual accounts duly adopted by the board of directors. Also, the same shall be audited by the statutory Auditor to the Accountant General (Audit) by giving sixty days for conducting supplementary Audit.<\/p>\n\n\n\n<p>The\nobservation and comment given by the Comptroller and Auditor General on the\naudit report shall be sent by the company to every officer entitled to copies\nof audited financial statements and also be presented before the AGM of the\ncompany at the same time and in the same manner as the audit report.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Scope_of_Supplementary_Audit_by_CAG\"><\/span>Scope of\nSupplementary Audit by CAG<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is the primary responsibility of the Statutory Auditor to communicate an opinion on the accounts of the company. Supplementary Audit by the CAG is mainly an indicator of cross-checking of Financial Audit of accounts that begins with watchful selection of the Statutory Auditor and continues with the work in progress over sight, including review of the conclusions cited in his audit report. <\/p>\n\n\n\n<p>The\nscope of supplementary Audit by the Comptroller &amp; Auditor General shall\ninclude an examination of selected accounting records and a review of the audit\nreport of the Statutory Auditor, including the observations expressed by him on\nthe accounts of the company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Various_Aspects_covered_under_Supplementary_Audit_by_CAG\"><\/span>Various\nAspects covered under Supplementary Audit by CAG<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nsupplementary Audit by CAG in the audit report of the Statutory Auditors\nbroadly covers the below-mentioned aspects:<\/p>\n\n\n\n<p>Authentication\nof the accuracy of the accounting records, books of account and financial\nstatements prepared concerning the Accounting Standards;<\/p>\n\n\n\n<p>Uncovering\nor prevention of misstatements in and falsification of the financial statements.\n<\/p>\n\n\n\n<p>Uncovering\nthe essential defects or irregularities that have been omitted, and<\/p>\n\n\n\n<p>That\nthe documents presented by the company do not reveal any vital information that\nwould need to be investigated further.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Comments\nmade in the Supplementary Audit by CAG<\/h3>\n\n\n\n<p>The\nnotable and material observations made in the supplementary Audit shall be\nissued as feedbacks of the CAG after due examination of the views if any.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Supplementary audit by CAG is the apex responsibility for external and internal audits of the expenses of the companies. CAG can inspect any office of the company which are subject to his office and can audit the accounts and transactions related to debt, remittance, financial statements the government companies as per the Companies Act,2013.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/is-it-mandatory-to-file-adt-1-for-auditors-appointment\/\">Is it Mandatory to File ADT 1 for Auditor\u2019s Appointment?\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>An audit is a necessary term used in accounting that examines and verifies a company&#8217;s financial Information. An audit is to ensure that the company&#8217;s financial Information is represented fairly and accurately following the relevant accounting standards. In this article, we will discuss the supplementary Audit by CAG under the Companies Act,2013[1]. Why is an [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":40166,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120],"tags":[2124],"acf":{"service_id":"321"},"authorName":"Priyanka Bajpayee","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/03\/IMG-20220303-WA0005.jpg","authorDescription":"A Company Secretary together with PG in international Business, she has gained significant experience as legal content writer. She has keen interest in doing research and writing on legal and financial subject matters. She also holds work experience in legal compliances.","postViews":15321,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40163"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=40163"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40163\/revisions"}],"predecessor-version":[{"id":40175,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40163\/revisions\/40175"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/40166"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=40163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=40163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=40163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}