Duties of an auditor
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“An Auditor is a watch dog of a company not a blood hound” is one of famous phrase by justice lopes. There are certain defined duties for an auditor to perform being an auditor of a company but of course auditor also has a certain limitation. As we are well aware that auditor appointment is one of major compliance that every company has to comply within 30 days of its incorporation. Now after meeting this compliance and also cost of an auditor. Let us understand what role an auditor plays in a company.


Here are the following power and duties of an auditor which is also defined under Companies act, 2013.

  1. Have a right to access at all the times to books of account and vouchers of the company.

  2. Shall be entitled to require from the officers of the company such information and explanation as he may consider necessary for the performance of his duties as auditor.

  3. 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

  4. Auditor may inquire about following maters :

    • 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 prejudicial to the interests of the company or its members,

    • whether transactions of the company which are represented merely by book entries are prejudicial to the interests of the company,

    • whether personal expenses have been charged to revenue account

    • where it is stated in the books and documents of the company that any shares 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.

  5. The auditor shall make a report to the members of the company on the accounts examined by him and on every financial statements which are required by or under this Act to be laid before the company in general meeting.

  6. The auditor’s report shall also state :

    • whether he has sought and obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit and if not, the details thereof and the effect of such information on the financial statements,

    • whether, in his opinion, proper books of account as required by law have been kept by the company

    • whether the company’s balance sheet and profit and loss account dealt with in the report are in agreement with the books of account and returns

    • whether, in his opinion, the financial statements comply with the accounting standards

    • the observations or comments of the auditors on financial transactions or matters which have any adverse effect on the functioning of the company,

    • whether any director is disqualified from being appointed as a director,

    • any qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected therewith,

    • whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls


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