C. P. Mansoor S. Ahmed., M. Com PGDBA

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Presentation transcript:

C. P. Mansoor S. Ahmed., M. Com PGDBA Company Auditor C. P. Mansoor S. Ahmed., M. Com PGDBA

Qualification of An Auditor! Sec 226 of ICA – 1956 Chartered Accountant (CAA – 1949) Practicing in India Individual or Partner (Firm Name) Sec 226(2) of ICA – 1956 Restricted Auditors Certificates (Part B States) Rules 1956. Sec 226(2)b of ICA – 1956 CG may by notification in the official gazette make rules providing for grant renewal suspension or cancellation of such certificates and my prescribes conditions and restriction for such purposes. C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Disqualification of an Auditor Sec 226(3) of ICA – 1956 A Corporate Body An officer or an employee of the company A person who is a partner, or who is in the employment of the office or the employee of the company A person who is indebted to the company for an amount exceeding Rs. 1000/- or who has guaranteed or provided the security in connection with the indebtedness of the third party to the company for an amount exceeding Rs. 1000/- C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Appointment of An Auditor Every company must audit its books of accounts Sec 224(5) of ICA - Appointment of First Auditor BOD within 1 month of incorporation till first AGM is concluded AGM new auditor can be appointed provided 14 days prior notice is served to members before the meet. If BOD Fails then the members in the AGM appoint the I Auditor C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Appointment of An Auditor Sec 224(1) of ICA - Subsequent Appointment of Auditors Every AGM members decide the appointment and notice is given within 7 days. An auditor appointed shall within 30 days duly intimate his acceptance or rejection to the registrar If members at AGM fail the CG will appoint to fill the vacancy SS 3 – Company in 7 days shall intimate the failure to appoint to the CG – a fine of Rs. 500/- for every officer of the company Ab initio – invalid appointment at AGM then fresh appointment in GM Under Following Circumstances NO reappointment Not Qualified Unwilling to Continue Resolution Death, Incapacity etc., Every company must audit its books of accounts C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Appointment of An Auditor Government Companies Sec 619 of ICA Appointed by CG on the advice of CAGI C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Appointment of An Auditor Appointment by Special Resolution Sec 224(A) of ICA 25% of Subscribed Capital Single FI / CG / SG / others Provincial Institute under SG where 51% stake is with SG Nationalized Bank or Insurance Co., Then, a special resolution is to be passed to appoint or re-appoint else CG will appoint the Auditor. C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Appointment of An Auditor Casual Vacancy Sec 224(6) of ICA Resignation – BOD Resignation – AGM Appointment / Reappointment Casual Fillers till next AGM C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Appointment of An Auditor Branch Auditor Sec 228 of ICA Branch Accounts – Statutory Auditor Appointment of Branch Auditor – Members at AGM Appointment of Branch Auditor – BOD (authorized) at AGM in consultation with the Statutory Auditor C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Ceiling on Number of Audits To meet the demand for the rotation of auditors by the companies IC(Amendment)A – 1974 U/s 224(1B)(1C) No Individual or Partner in a firm can hold office of an auditor of more than 20 companies of which not more than 10 shall be companies with paid-up share capital of Rs. 25,00,000/- C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Removal of An Auditor C. P. Mansoor S. Ahmed [Master M Ahmed] No new auditor can be appointed unless due notice is served to the old auditor If members wish to nominate an auditor they must intimate with a special notice 14 days in advance to the company and old auditor Representation sent to the members or read at the AGM This is to avoid the Directors from taking advantage First Auditor C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Powers & Rights of an Auditor Right to Access the Books of Accounts Sec 227(1) Right to Call information and explanations Sec 227 (1) Right to receive notice and attend general meetings Sec 231 Right to make statement at the general meeting Right to be indemnified Sec 633 Right to Visit the Branches Sec 228 Right to take legal and technical advice Right to remuneration Right to Sign the Audit Report Right of Lien C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Duties of an Auditor Duty to make Report Matters to be stated in the report Duty to assist investigators Duty to call on Information on Various issues Duty to certify the Statutory Report Duty to Certify the Profit & Loss Account in a Prospectus. C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Liabilities of an Auditors Nature of Liabilities Civil Liability for Negligence Specific Statutory Liabilities Criminal Liabilities Professional Mis-conduct. C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Liability for Negligence under the Law of Agency. LIABILITIES of an AUDITOR Liability for Negligence under the Law of Agency. Liability under the statute (Misfeasance) Companies Act – Either Civil or Criminal The Indian Penal Code C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Liability for Negligence under the Law of Agency – Civil Liability Civil Court – Dividend not Paid Loss arising from Negligence to the company Previous Losses Consequential Losses Unexplained Delay in Audit Guilty of Misfeasance Sec 229 – Person who is appointed should should sign the report Sec 633 – Relief for the auditor. Sec 543 – Winding up (officer’s fined) Damages on account of Negligence only company has a right to sue and not individual share holder. C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

An Act constituting a crime. Liability for Negligence under the Company Law – Civil or Criminal Liability An Act constituting a crime. Sec 628 – Negligence – Liable to pay damages Jury would decide based on damages that would have occurred Articles of Association – Indemnify – Liability Void Company May pay the legal charges that he incurs Summary: He is negligent Client Suffers a Loss Contract=Void, Liable to client as statute decides his duties. (Sec 201) C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Misfeasance means Breach of Duty Liability for Negligence under the Company Law – Civil or Criminal Liability Misfeasance means Breach of Duty Whether he has obtained all information & Explanation Whether in his opinion the financial reports or any annexure thereto Which is false or which omits Liable to imprisonment upto 2 years and fine Sec 227(3) C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Destroys mutilates alters falsifies or an act amounting to Liability for Negligence under the Company Law – Civil or Criminal Liability Sec 539: If with intent to defraud or deceive any person, any contributory or any officer. Destroys mutilates alters falsifies or an act amounting to Makes a fraud or false entry in books registers or records of company Shall be punishable with imprisonment for upto 7 years with fine Can be prosecuted if found guilty C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Sec 63 – Auditor liable if authorized to issue Liability for Negligence under the Company Law – Civil or Criminal Liability Persons who issue prospectus liable for mis statements Imprisonment 2 years and fine upto 5 thousand. Sec 63 – Auditor liable if authorized to issue C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Auditor can be prosecuted for delinquency Liability for Negligence under the Company Law – Civil or Criminal Liability Auditor can be prosecuted for delinquency That statement made was false in material fact That the auditor made such statement – willfully That the statement complained is a part of documents required under the companies act. Sec 545: prosecution made by liquidator Registrar has rights to object. Reasons to be claimed before conclusion Court has power to exercise Sec 633. C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Liability for Negligence under the Indian Penal Code – Civil or Criminal Liability Person signs certificate permissible by law as an evidence Knowing that such certificate is false in any material fact Shall be punishable – in the same lines of providing or creating false evidence Sec 197 of IPC C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018

Liability for Negligence – Civil or Criminal Liability Liabilities of an Auditor towards Third Party Liability of an Honorary Auditor Liability of a Joint Auditor Liability of Auditor of Holding Company and Subsidiary Company Liability of an Auditor for Branch Audit Liability of an Auditor for Libel Liability of an Auditor for Unaudited Accounts C. P. Mansoor S. Ahmed [Master M Ahmed] Monday, September 17, 2018