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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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