{"id":5774,"date":"2020-03-31T10:41:29","date_gmt":"2020-03-31T05:11:29","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=5774"},"modified":"2022-11-16T15:04:26","modified_gmt":"2022-11-16T09:34:26","slug":"powers-and-duties-of-auditors-and-auditing-standards","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/powers-and-duties-of-auditors-and-auditing-standards\/","title":{"rendered":"Power and Duties of Auditors and Auditing Standards"},"content":{"rendered":"\n<p class=\"has-drop-cap\">There are certain statutory rights and duties of auditor which have been provided by the <strong>Companies Act, 2013<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/companies-act\/companies-act-2013.html\"><strong>[1]<\/strong><\/a><\/sup>. These provisions related to rights and duties of an auditor have been defined under Section 143 of the Companies Act, 2013. Although there is no direct mention of auditor&#8217;s powers in order to perform its duties, auditor must have certain powers without which it is not feasible for him to perform its duties. <\/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\/powers-and-duties-of-auditors-and-auditing-standards\/#Who_is_Auditor\" >Who is Auditor?<\/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\/powers-and-duties-of-auditors-and-auditing-standards\/#Powers_of_an_Auditor\" >Powers of an Auditor:<\/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\/powers-and-duties-of-auditors-and-auditing-standards\/#Duties_of_Auditor_of_the_Company\" >Duties of Auditor of the Company<\/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\/powers-and-duties-of-auditors-and-auditing-standards\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_is_Auditor\"><\/span>Who is Auditor?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An independent\nprofessional who is authorized to examine and verify the validity of accounts\nand is certified to perform an audit is called an auditor. In other words, the\nperson who ensures that the company complies with the terms of various\nprovisions such as tax and others as required is called as auditor of the\ncompany. The main intention of auditor is to secure company from any deceit,\nfraud and to spot any disparity or shortcoming in accounting methods of the\ncompany. And give an opinion about the overall health of the financial position\nof the company. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Powers_of_an_Auditor\"><\/span>Powers of an Auditor:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Powers vested under Companies Act, 2013: <\/h3>\n\n\n\n<p>Auditor has some special powers vested with him in respect to access financial records of the company. All these powers have been vested with him by Companies Act, 2013. According to the certain provisions of the Companies Act, 2013 auditor not only has access to the<a href=\"https:\/\/corpbiz.io\/learning\/basic-financial-statements\/\"><strong> financial statements<\/strong><\/a> which are retained at the registered office of the company but to the records also kept in other branches or offices of the company. These financial records include account of book records and other vouchers of the holding company as well as of all subsidiary companies. Auditor has liberty to access the records at any time as per the rights granted to him as per companies act. Certain duties are mentioned as below:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Liberty to Access Company\u2019s information: <\/h3>\n\n\n\n<p>As per\nthe provisions under <strong><em>Section 143(1) of the Companies Act, 2013<\/em><\/strong>,\ncertain powers have been granted to auditor in terms of information access. An\nauditor has leverage to retrieve financial records of the company that includes\naccounts, books and vouchers of the company. Financial books also include\nstatutory, costing and statistical records of the company. He has authority to access\nand also to ask officers of the company about all financial information that is\nkept not only at registered or head office but also at branch offices too. The\nlist includes following:<\/p>\n\n\n\n<ul><li>Enquiry\nin respect of entries made in accounts: An auditor has the responsibility to\ncheck and enquire about the book entries and transactions tool place in company\nduring entire financial year. The main intention behind this to audit\nfinancials of the company and check whether the entries were made on actual or\nnot in order to secure the interest of the company. <\/li><li>To\nexamine loans and advances of the company: An auditor needs to check and\nexamine all loans and advances made on behalf of company that whether they are\nduly secured and comply with the terms of the company. The auditor is required\nto verify the legal enforceability of security made by doing proper valuation\nof the securities so that it is not prejudicial to the interest of the company\nor its shareholders.<\/li><li>To\ncheck and verify the investments and sales made by the company that includes\ncompany\u2019s shares, securities, debentures etc. The main purpose behind is to\nverify whether the acquisition was made at a fair price or not. Further to\ncheck the personal expenses made by officers and directors of the company from\ncompany&#8217;s revenue account. <\/li><\/ul>\n\n\n\n<p>As per <strong><em>Section\n145 of the companies act, 2013<\/em><\/strong> only auditor is authorized to audit and\nsign the financials or audit report of the company that is required by any law\nor authority. Any comment, observation or mentioning about financial\ntransaction in auditor&#8217;s report is to be duly read and discuss in the general\nmeeting of the company and be open to any kind of inspection by its members. <\/p>\n\n\n\n<p>As per <strong><em>Section\n146 of the companies act, 2013<\/em><\/strong>, it is mandated for company to furnish\nevery notice or communication in relation to any general meeting to an auditor.\nAn auditor is required to attend the said general meeting either himself or\nthrough his representative who shall act as an auditor of the company on his\nbehalf. That notice of a general meeting is required to be given at least 21\ndays before the said meeting either in writing or via electronic communication\nas per Section 101 of the companies act. That notice should mention date,\nplace, day and timing of the meeting and shall also contain agenda or business\nstatement need to be discussed in the meeting. In the said meeting auditor\nshall be given reasonable opportunity to speak about any concerns of the\ncompany.<\/p>\n\n\n\n<div class=\"shadow1\">As per <strong><em>Section\n143(8) of the companies Act, 2013<\/em><\/strong> in case accounts of company are to be\naudited by any other person other than company\u2019s auditor, the independent\nauditor shall have all authority to visit office of company in order to perform\nhis duty. He can have access to all financials such as extracts from account\nbooks, vouchers or any other required details at company\u2019s branch office.<\/div>\n\n\n\n<p>The\nauditor is entitled to get a remuneration of his work on performance of his\nduties. Such remuneration of auditor can be fixed at general meeting of the\ncompany or in any such manner as may be determined. He is also entitled to receive\nany other remuneration or expenses as made or incurred by him during\nperformance of his duties w.r.t the company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Duties_of_Auditor_of_the_Company\"><\/span>Duties of Auditor of the Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>An auditor is required to furnish an audit report of the company in every annual general meeting as per Section 143 (2) of the companies act, 2013<\/li><li>In the said audit report, he is required to mention best suitable information about the accounts and financial condition of the company in order to give a true and clear picture of the company&#8217;s financial position. This report helps to predict balance sheet, cash flow and profit &amp; loss of the company.<\/li><li>As per Section 143(9) and (10) of the companies act, 2013 an auditor is required to comply with follow certain audit standards and addendums as prescribed by the central government, Institute of Chartered Accountants of India (ICAI), National Financial Reporting Authority (NFRA) and others.<\/li><li>It is a prime responsibility of an auditor to provide information to central government about any fraud or misdoing of the company or by its officers as per Section 143(12) to 143 (15) &amp; Rule 13 of the companies act, 2013. That report needs to be submitted within a period of 60 days to the central government.<\/li><li>An auditor is required to attach a copy of its audit report with application at the time of filing of Voluntary Winding Up as per the provisions of Section 305 of the companies act, 2013.<\/li><\/ul>\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>Apart from above-mentioned powers and duties auditor has numerous other duties which also includes giving all possible support to officers during the investigation of company affairs which not only help the government to restrain about frauds and wrongdoing of company but also to maintain clarity in system.<\/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\/filing-of-financial-statement-with-registrar\/\">Filing of Financial Statement with Registrar<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There are certain statutory rights and duties of auditor which have been provided by the Companies Act, 2013[1]. These provisions related to rights and duties of an auditor have been defined under Section 143 of the Companies Act, 2013. Although there is no direct mention of auditor&#8217;s powers in order to perform its duties, auditor [&hellip;]<\/p>\n","protected":false},"author":21,"featured_media":5777,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[128],"tags":[443],"acf":{"service_id":"230"},"authorName":"Navdeep Kaur","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG_20190122_114933.jpg","authorDescription":"Navdeep is working as legal counsel in Enterslice group companies having more than 4 years of experience. She has expertise in legal, corporate and regulatory matters.","postViews":22413,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/5774"}],"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\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=5774"}],"version-history":[{"count":28,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/5774\/revisions"}],"predecessor-version":[{"id":50758,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/5774\/revisions\/50758"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/5777"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=5774"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=5774"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=5774"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}