1. Provisions.of Companies Act governing audit of Government Companies 1. Introduction & Basic Concepts The word 'Company' is an amalgamation of the Latin word 'Com' meaning "with or together" and ‘Pains’ meaning "bread". Originally, it referred to a group of persons who took their meals together. A company is nothing but a group of persons who have come together or who have contributed money for some common person and who have incorporated themselves into a distinct legal entity in the form of a company for that purpose.

2. Introduction & Basic Concepts A company as an entity has several distinct features which together make it a unique organization. The following are the defining characteristics of a company:

3. Introduction & Basic Concepts Separate legal entity Limited liability Perpetual succession Separate property

4. Introduction & Basic Concepts Transferability of shares Common seal Capacity to sue and being sued Separate Management

5. Acts governing audit of Govt. Companies According to Indian Companies Act, 1956 following provisions are also applicable to Government Companies. Accounts & Audit Books of Account to be kept by a Company Every company must maintain proper books of accounts of its affairs

6. Contd…. Preparation of Balance Sheet and Profit and Loss Account The company has to prepare its balance sheet and profit & loss account from the books of account maintained by it. Every Balance Sheet of a company must give a true and fair view of the state of affairs of the company as at the end of the financial year and must be in the prescribed format.

7. Contd… Form of Balance Sheet Part 1 to Schedule VI of the Companies Act, 1956 gives the format in which the balance sheet is to be prepared. The schedule gives 2 types of formats, the horizontal format and the vertical format. A company can prepare its balance sheet in either of the 2 formats

8. Contd… Authentication of Balance Sheet and Profit & Loss Account The balance sheet and profit & loss account of a company must be signed on behalf of the Board of directors by two directors out of whom one must be the managing director, where there is one and the manager, or secretary, if any. The balance sheet and profit and loss account must be approved by the Board of directors before they are submitted to the auditors for the purpose of audit. The report of the auditors must be attached to the balance sheet and profit & loss account.

9. Contd…. The report of the Board of Directors must be attached to every balance sheet presented at the annual general meeting. The report must contain information regarding the following matters :- The state of affairs of the company The amount, if any, which it proposes to carry to any reserves in such balance sheet The amount of dividend recommended

10. Contd… Auditors of Government Companies The auditor of a Government company is appointed or re-appointed by the Comptroller and Auditor-General of India provided that the audit would be within the number of acceptable audits available to each auditor.

11. Contd…. The Comptroller & Auditor General of India has the power: - To direct the manner in which the company's accounts are to be audited by the auditor so appointed and to give such auditor instructions in regard to any matter relating to the performance of his functions as such To conduct supplementary audit of the companies account.

12. Contd…. The auditor must submit a copy of his audit report to the Comptroller and Auditor- General of India who shall have the right to comment upon or supplement, the audit report in such manner as he may think fit.