Powers and Duties of Auditors in Companies Act 2013

Powers

1. Right to access :Every auditor of a company shall have right to access at all time to book of accounts and vouchers of the company. The Auditor shall be entitled to require from officers of the company such information and explanation as he may consider necessary for performance of his duties.There is an inclusive list of matter for which auditor shall seek information and explanation. The list includes issues related to: (a)   Proper security for Loan and advances,(b)  Transaction by book entries,(c)   Sale of assets in securities in loss,(d)  Loan and advances made shown as deposits,(e)  Personal expenses charged to revenue account,(f)    Case received for share allotted for cash.The auditor of holding company also has same rights.
2. Auditor to sign audit reports :The auditor of the company shall sign the auditor’s report or sign or certify any other document of the company and financial transactions or matters, which have any adverse effect on the functioning of the company mentioned in the auditor’s report shall be read before the company in general meeting and shall be open to inspection by any member of the company.
3. Auditor in general meeting:It is a prime requirement under section 146, that the company must send all notices and communication to the auditor, relating to any general meeting, and he shall attend the meeting either through himself or through his representative, who shall also be an auditor. Such auditor must be given reasonable opportunity to speak at the meeting on any part of the business which concerns him as the auditor.
4. Right to remuneration:The remuneration of the auditor of a company shall be fixed in its general meeting or in such manner as may be determined therein. It must include the expenses, if any, incurred by the auditor in connection with the audit of the company and any facility extended to him but does not include any remuneration paid to him for any other service rendered by him at the request of the company.
5. Consent of auditor:As per section 26, the company must mention in their prospectus the name, address and consent of the auditors of the company.

Duties

1. Make report:The auditor shall make a report to the members of the company on accounts examined by him on every financial statement and shall state:(a)   Whether he has sought and obtained all the necessary information and explanations,(b)  Whether proper books of account have been kept,(c)  Whether company’s balance sheet and profit and loss account are in agreement with books of accounts and returns.
2. Audit report of Government Company :The auditor of the government company will be appointed by the Comptroller and Auditor-General of India and such auditor shall act according to the directions given by them. He must submit a report to them which should include the action taken by him and impact on accounts and financial statement of the company.The Comptroller and Audit – General of India shall within 60 days of receipt of the report have right to (a) conduct a supplementary audit and (b) comment upon or supplement such audit report.The Comptroller and Audit – General of India may cause test audit to be conducted of the accounts of such company.
3. Liable to pay damages:As per section 245, the depository and members of the company have right to file an application before the tribunal if they are of the opinion that the management or conduct of the affairs of the company are being conducted in a manner prejudicial to the interests of the company.They also have right to claim damages or compensation from the auditor for any improper or misleading statement made in his audit report or for any fraudulent or unlawful conduct.
4. Branch Audit :Where a company has a branch office, the accounts of that office shall be audited either by the auditor appointed for the company, or by any other person qualified for appointment as an auditor of the company. The branch auditor shall prepare a report on the accounts of the branch examined by him and send it to the auditor of the company who shall deal with it in his report in such manner as he considers necessary.
5. Auditing Standards :Every auditor shall comply with the auditing standards. The Central Government shall notify these standards in consultation with National Financial reporting Authority. The government may also notify that auditors’ report shall include a statement on such matters as notified.
6. Fraud Reporting :If an auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Central Government within such time and in such manner as may be prescribed.
7. Winding up:As per section 305, at the time of voluntary winding up of a company it is a mandatory requirement that auditor should attach the copy of the audits of the company prepared by him.

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