Central Women's University

1. WELCOME TO MY
PRESENTATION

2. AUDIT IN LIMITED
COMPANY

3. If you choose to run your business as a limited
company, the business will:
 Be legally distinct from the people who run it;
 Keep finances separate from the owner's personal finances;
 Be able to own assets and keep any profits it makes after tax.

4. Contents of an Audit Report
■ Title
■ Addressee
■ Managements Responsibility for Financial Statements
■ Auditors Responsibility
■ Opinion
■ Basis of the Opinion
■ Other Reporting Responsibility
■ Signature of the Auditor
■ Place of Signature
■ Date of Audit Report

5. Re-appointment of Auditor
■ Where at any AGM, no auditor is appointed or re-appointed, the
existing auditor shall continue to be the auditor of the company ( it shall
be automatic)
■ In case of death of the auditor (if it is an individual), the casual vacancy
shall be filled within 30 days by the board. He will hold office till the next
AGM.

6. Removal of Auditor
(Sce - 140)
■ The Auditor appointed may be removed from his office before the
expiry of his term only by a special resolution of the company, after
obtaining previous approved of the central Government in that behalf in
the prescribed manner.

7. Branch auditors
1. Accounts of branchAudit can be audited by -The company's audit or
any other person, qualified to be & appointed as an auditors as per the
provision of the Act as branch auditor & appointed as such under
section 139.
2. The branch auditor prepare a report on the account of the branch
examined by him & the company's auditor shall deal with such report
in a manner as he considers necessary.

8. Duties of an Auditor
■ Section 227: Duty to give report.
■ Section 165: Duty to certify statutory report.
■ Section 240: Duty to assist government inspector.
■ Section 58 (A) and 58 (B): Duty with regard to public deposits.
■ Section 62 and 63: Duty to certify prospectus.
■ Section 227 (1A): Duty to conduct an inquiry with regard to matters mention in the
section.

9. Audit in Financial
Statements

10.  Audit Companies produce financial statements that
provide information about their financial position and
performance.

11.  Income Statement:
An income statement shows the performance of the company during a fiscal
year.
 Balance Sheet:
The balance sheet reports the financial position of the company at the end of
the fiscal year .
 Cash Flow Statement:
The cash flow statement may also be included in the audited financial
statements.The cash flow statement reveals the cash inflows and outflows
during the fiscal year.

13. Limitations of a Financial Statements Audit
■ Time lapse
■ Audit testing on samples and other selected data
■ Over-reliance on expert systems
■ Forming professional judgments in highly specialized areas
■ Report format limitations

14. Duties of Company Auditors
■ Carry out an audit
■ Report to members their opinion whether the financial statements
give a true and fair view and comply with applicable reporting
framework and regulations
■ Be independent of the company
■ Exercise a reasonable degree of skill and care

15. Audit report in Limited
Company

16. Audit Report
• For any enterprise, the audit report is a key deliverable which shows the
end results of the entire audit process.
• The auditor should be careful in issuing the audit report as there is are a
large number of people placing reliance on such report and taking
decisions accordingly.
• The report should be issued by being unbiased and objective in
discharging the functions.

17. Opinion in an Audit Report
There are primarily two kinds of opinions issued by an auditor in his / her
audit report:
■ Unmodified Opinion (also called Unqualified report)
■ Modified Opinion (also called Qualified report)

18. Cont.
■ There are three kinds of modified opinions which are issued according
to the findings and circumstances:
A. Adverse Opinion
B. Qualified Opinion
C. Disclaimer of Opinion

19. Going concern assumption
■ Under the going concern assumption, a company is viewed as
continuing in business for the foreseeable future.
■ Financial statements are prepared on a going concern basis .
■ When the use of the going concern assumption is appropriate, the
company will be able to realize its assets and discharge its liabilities in
the normal course of business.

20. The annual report
■ A companys annual report is typically made up of the audited financial
statements and a narrative, containing managements description of the
companys performance and activities.
■ The financial statements, annual report and other documents all enable
shareholders to understand how management has performed over the
periods presented.

21. Emphasis of Matter paragraph in an Audit Report
Example of circumstances where the auditor shall include Emphasis of Matter paragraph
in audit report:
■ To inform users of financial statements that the same has been prepared under a
special purpose framework;
■ The auditor discovers some facts after the date of an audit report and the auditor
issues new or amended audit report.
■ Uncertainty about the future outcome of an ongoing litigation.