AUDITORS’ reports<br /><ul><li>External auditor’s report is prepared on the company’s financial statements and its accompanying notes.
This auditor's report is intended to advise investors, the government, and other users on whether the company’s financial statements have been prepared in accordance with Generally Accepted Accounting Principles (GAAP),
Whether they are free of material misstatement (e.g. free of important and significant errors), and whether they show a true and fair view of the operating results, financial position and cash flows of the company.</li></ul>&<br />AUDITOR DIRECTOR<br />reports<br />
AUDITORS’ reports<br /><ul><li>Section 227 of the Companies Act 1956 deals with the auditor’s report.
CARO 2003<br />Companies Auditors Report Order 2003<br />Requirements:<br /><ul><li>Dubious practices like loan to private companies, sale and purchase transactions by book entries and / or at fictitious prices not open to Normal Audit.
Investing public lost heavily in some listed companies.
CARO 2003<br />Requirements dispensed with under CARO<br /><ul><li>Revaluation of Fixed Assets.
Comment on fair & proper valuation of Inventory.
Determination of any unserviceable stores and provision for the loss.
Records for sale and disposal of byproducts and scraps.
Personal expenses charged to revenue.</li></ul>&<br />AUDITOR DIRECTOR<br />reports<br />
What is done by CARO<br />Physical Verification of Inventory<br />Loan Transactions with parties covered by Section 301<br />Internal Control <br />Transactions (other than Loan) with Parties covered under section 301<br />Fixed Deposit<br />Internal Audit System<br />&<br />AUDITOR DIRECTOR<br />reports<br />
New Requirements CARO<br />Disposal of Substantial part of Fixed Assets <br />“If a substantial part of the Fixed Assets have been disposed off during the year, whether it has affected going concern”.<br />Disputed Statutory Dues <br />“In case dues of sales tax / income tax / custom tax / wealth tax / excise duty / cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending may please be mentioned”.<br />Default in repayment of dues to FI’s / Banks<br />“Whether the Company has defaulted in repayment of dues to a financial institution or bank or debentureholders ? If yes, the period and amount of default to be reported.” <br />&<br />AUDITOR DIRECTOR<br />reports<br />
The Audit and the Firms<br />Auditors’ Reports leads to the following utilities:<br /><ul><li>Effective corporate governance
Impacts the enhancement of shareholders’ and stakeholders’ value.
These reports are supposed to be a bond of trust for the investors both present and potential. </li></ul>Some of the largest Auditing Firms are:<br /><ul><li>Price water house coopers
The Auditing Firms<br />PricewaterhouseCoopers (or PwC) is one of the world's largest professional service firms. It was formed in 1998 from a merger between Price Waterhouse and Coopers & Lybrand, both formed in London.<br />It has grossed worldwide revenues of $28 billion and has its presence in over 150 countries.<br />KPMG has its global headquarters located in Amstelveen, Netherland. It was incepted in 1987 with the merger of Peat Marwick International and Klynveld Main Goerdeler. Today it runs in over 140 countries.<br />&<br />AUDITOR DIRECTOR<br />reports<br />
SIGNIFICANCE and implications<br />The Auditors Report acts as a catalyst towards ensuring a better quality of financial performance of a company.<br />It expresses the auditors view on true and fairness of the company in the: <br /><ul><li>Balance sheet
Cash flow in the case of cash flow statement</li></ul>It covers opinion, views and comments on certain matters, crucial to functioning of the business and financial performance.<br />&<br />AUDITOR DIRECTOR<br />reports<br />
Fallacy at Auditing leads to…<br /><ul><li>Scandals it the region of manifold sums of money. Examples would be:
Worldcom</li></ul>This eventually leads to:<br /><ul><li>Huge loss to the shareholders (when disclosures are made)
Countries image where the scandal occurs also get tarnished in a great deal. The reputation of India Inc. post the Satyam fiasco was a case in point. </li></ul>&<br />AUDITOR DIRECTOR<br />reports<br />
DIRECTORS’ reports<br />A report by the board of directors has to be attached to every balance sheet that covers various areas like:<br /><ul><li>The general state of company’s affairs
Information about the amounts, if any which it proposes to carry to any reserves in the balance sheet
The amount recommended to be paid by the way of dividends
Any material changes that might have occurred between the end of financial period and the date of report
Energy, Technology and foreign exchange earnings </li></ul>As per Section 217, Companies Act<br />&<br />AUDITOR DIRECTOR<br />reports<br />
DIRECTORS’ reports<br />The report furnishes information about the changes in the nature of the business of <br /> The company itself<br /> Or <br /> Any of the subsidiary of the company, whether owned fully or partially. <br /> (Generally in the classes of business in which the company has an interest)<br /><ul><li>It Should also contain a complete explanation on every adverse remark , qualification and reservation, if any, contained in the auditor’s report.
Reasons for the failure, if any to complete the buy back within the time specified.</li></ul>&<br />AUDITOR DIRECTOR<br />reports<br />
Responsibility Statement<br />Directors’ Responsibility Statement:<br /><ul><li>Responsibility of preparation of accounts as per the applicable accounting standards; proper explanation of any material departures.
Responsibility of having made reasonable and prudent judgments and estimates that give a fair view of the state of affairs and the profit and loss in the Financial year.
The accounts have been prepared on a going concern basis</li></ul>&<br />AUDITOR DIRECTOR<br />reports<br />
Considerations in the reports<br />The report should also contain the name of every employee who:<br /><ul><li>If employed for the complete financial year, received remuneration of not less than Rs 24 lacs per annum in aggregate
If employed for a part of the financial year, received remuneration not less than 2 lacs per month in aggregate.
If employed for whole year or a part thereof, received remuneration which in aggregate is more than/is at an aggregate rate more than a managing director or a whole-time director or a manager, and holds either by himself or along with his spouse and dependent children, not less than 2% of the equity shares of the company.
Report should specify if any such employee is related to any director or manager of the company, and if so, the name of the director.</li></ul>&<br />AUDITOR DIRECTOR<br />reports<br />