1. Reporting by Auditors under the Companies Act, 2013
Presentation By
CA. Anil Sharma

2. Section -143-Duties of an auditor
Subsection (1) – Enquiries to be made.
Sub section (2) – to make a report to the members.
Sub section (3) – Auditors Report to state other matters ( including as may be prescribed)

3. Section -143(2)-Duties of an auditor
The auditor shall make a report
On the accounts examined by him and
On every financial statements which are required to be laid before the company in general meeting.
The report shall after
taking into account the provision of the Act,
the accounting and auditing standards and
matters which are required to be included in the audit report
To the best of his knowledge, the said ,financial statements give a true and fair view of the state of affairs as at the end of its financial year and profit and loss and cash flow for the year.

4. Section -143-Duties of an auditor
Draft Rule 10.8
Auditor should include their views and comments on:
Effect (if any) of pending litigation on financial statement.
Provision for foreseeable losses (if any) on long term contracts including derivative contracts.
Delay in depositing money into investor Education and Protection Fund.

5. Sec 143(12)- Reporting of Frauds by Auditors
Act requires auditors to report on any fraud etc., to Central Government in such manner as may be prescribed.
Draft Rules provide:
Fraud which is likely to materially affect the company ( happening frequently or amount to be involved is not less than 5% of net profit or 2% of turnover of the preceding year) are to be reported immediately but not later than 30 days . There is no notice to the directors / officers / employees when such reporting is done.
Other frauds to inform Audit committee/BOD and ask for explanation, if not satisfied to inform the Central government.
Sunday, November 18, 2018

6. Section 147- Punishment for contravention
Fine not less than Rs. 25,000/- but may extend to Rs. 5,00,000/-

7. Auditor’s Report SA 700 - The Auditor’s Report on financial Statement.
SA 700 (Revised) – Forming an Opinion and Reporting on Financial Statements.

8. Purpose/Scope SA700 SA700 (Revised)
to establish standard on the form and content of the auditor report.
Auditor’s responsibility to form an opinion and Form and content of report.

9. Scope
SA700
SA700 (Revised)
Modified reports are also dealt with by the same Standard.
Modified opinions are dealt with by SA 705 & SA 706

10. Scope
SA700
SA700 (Revised)
Much of the standard can be adopted to auditor’s reports on financial information other than financial statements.
Form & Content of auditor’s report only for general purpose financial statements complete set.
SA 805 deals with single financial statements and specific elements, accounts or items of a financial statement.
SA 800 deals with special purpose financial statement.

11. Nature of opinion SA700 SA700 (Revised)
Whether financial statements prepared in accordance with an acceptable reporting framework applicable to the entity and whether the financial statements comply with the relevant statutory requirements?
Whether the financial statements are prepared in all material respect, in accordance with the applicable financial reporting framework. It shall include consideration of qualitative aspects of the entity’s accounting practices including indicators of possible bias in management judgment?

12. Process of framing an opinion
SA700
SA700 (Revised)
Carried out in accordance with established standards.
Auditor to conclude as to whether he has obtained reasonable assurance about whether the financial statements, as a whole are free from material misstatement whether due to fraud or error.

13. Form of opinion SA700 SA700 (Revised)
Auditor to give unmodified opinion when he concluded that financial statements are prepared, in all material respect, in accordance with the acceptable financial reporting framework (Para 7(c)).

14. Form of opinion SA700 SA700 (Revised)
The Standard covers all the situations.
Auditor shall not give an unmodified opinion if he concludes that :-
(i) - based on audit evidence obtained,
- the financial statements, as a whole, are not free from material misstatement or
(ii) He is unable to obtain sufficient audit to conclude that the financial statement as a whole, are free from material misstatement (Para 17).
Of financial statements prepared in accordance with the required of a fair presentation framework, do not achieve fair presentation, shall discuss with management and subsequently conclude that matters not resolved (Para 18).
In these situation the auditor shall give a modified opinion in terms 0f SA 705.

15. Difference in report (unmodified opinion) Title
SA700
SA700 (Revised)
Auditor’s Report
Independent Auditor’s report.

16. Introductory Para SA700 SA700 (Revised) No such requirement.
To refer to the summary of significant accounting policy and other explanation in presentation also.

17. Para on Management’s responsibility for the financial statements
SA700
SA700 (Revised)
No such requirement.
Heading to the given ‘Management’s responsibility’ for the financial statements.
The description shall include an explanation that management is responsible for ……. fraud or error.

18. Para on Auditor’s responsibility
SA700
SA700 (Revised)
No such requirement.
Heading to be given
‘Auditor’s Responsibility’.
The report shall state that the audit material misstatement.
‘Ethical requirements’

19. Auditor’s opinion SA700 SA700 (Revised) No such requirement
Heading to the given ‘opinion’.
‘in all material respect ’

20. Other report responsibility
SA700
SA700 (Revised)
No such requirement
Heading to be given ‘Report on other legal & regulatory requirements’

21. THANK YOU Contact me at: 9811320203 anil54@gmail.com
Sunday, November 18, 2018