Published by www.lecturesheet.comCompany is the artificial being which separate entity from theowner or management. At the end of the period companysfinancial statement must be submitted to the user after properexamination by the auditor. when an auditor apply auditingactivities to examine the statement in order to give expertopinion their on such types of Auditing activities are calledcompany audit. Under the section 183(3) of the company Act1994:Company Audit means “The balance sheet and profitand loss account or income or expenditure account, cashflow statement of a company shall be caused to be auditedby the auditor of the company as in the companies actprovided. and the auditors report shall be attached there toand the report shall be read before the company in Generalmeeting”.
He must conduct compliance procedure to ensure the reliance he can place on the efficiency of the internal control system. To check various assertions of financial data reflected in P & L account for balance sheet, he must perform substantive procedure to check the correctness, completeness & validity of the data. In addition to the above, the auditor ensure that the transaction of the company do not violate the provision of companies act in as much as they get reflected in financial statements which he certifies. For this purpose, important provisions of companies Act affecting the financial transactions of the company are presented in the chapter.The auditor has to see that the items of revenue, expenditure & item’s of assets & liabilities do get reflected in P & L account & balance sheet as per the information requirements specified in schedule VI of the act . He must ensure that the financial statements reflect true & fair view of the trading results & financial status of the company pertaining to the period under audit.
Section 210 and 211of the company act 1994 deal with issue of appointment ofthe company auditor. Section 233 the company act 1994 deal with issue ofappointment of auditor in a special situation. Appointment of auditor are guided bythe securities and exchange rules 1987.Provision regarding appointment of acompany auditor are as follows: Appointment of first auditor Appointment of subsequent auditor Appointment of auditor by a public limited company Reappointment of the retiring auditor Appointment of auditor by government Appointment of auditor by govt In a Listed Public Limited Company Appointment of auditor in case of casual vacancy
Appointment of first auditor: According to Section 210 (6) of the company act1994 Important provision in this regard are followings:The first auditor of a company shall be appointed by the board of directors of thecompany.The appointment of the first auditor shall be made within one month of the dateof registration of the company.The auditor so appointed shall hold office until the conclusion of first annualgeneral meeting.If the board of directors fails to appoint the first auditor within one month of thedate of registration.Appointment of subsequent auditor: According to Section 210 (1) of thecompany act 1994 important provision are followings:Every company at each AGM appointing the subsequent auditor.The auditor are appointed to hold office of the from the conclusion of the AGMunit the next AGM.The company shall within 7 days of the appointment give intimation thereof toevery auditor so appointed.No person can be appointed auditor of the company unless his of her writtenconsent.Every auditor appointed at annual AGM under within thirty days
Appointment of auditor by a public limited company: The public limitedcompany enlisted with any stock exchange shall appoint a partnership firm ofchartered accountants consisting of not less than two partners in practice for aminimum of seven years none of whom are associates in a any way of the publiclimited company during the auditing period.Reappointment of the retiring auditor: Under section 210(3)at any annual general meeting a retiring auditor by whatsoever authorityappointed shall be reappointment, unless:The retiring auditor is not qualified for reappointment.The retiring auditor has given a company notice in writing of his or herunwillingness to be reappointment.A resolution has been passed at the meeting appointed somebody else instead ofthe retiring auditor.Appointment of auditor by government: According to section 210(4) and210(5) important provision in this regard are:if an appointment of an auditor is not made at the annual general meeting, thegovt may appoint a person to fill the vacancy.
The company shall within 7 days of the govt power becoming exercisable givenotice of the fact of the govt that is no auditor was appointed or reappointed.If a company fails to give such notice the company & the every officer of thecompany who is in default shall be punishable with fine which may extent toone thousand taka.Appointment of auditor by government In a Listed Public LimitedCompany:Whenever the SEC deems it necessary to an audit in a listed public limitedcompany in the public interest the SEC may appoint auditor to do the auditwithin the specific time & to furnish the audit report to the SEC.If the listed public limited company fails to get its financial statements auditedin prescribed manner & fail to submit the audited financial statement withinthe prescribed time the SEC may appoint the required auditor.Appointment of auditor in case of casual vacancy : Important provision inthis regard is:The board of directors may feel any casual vacancy in the office of anyauditor,Where such vacancy is caused by the registration of an auditor; the vacantshall not be filled by the company in general meeting.Any auditor appointed in a casual vacancy shall hold office until the conclusion of the next AGM.
Disqualifications :A body corporate;An officer or employee of the company.A person who is partner, or who is in the employment of anofficer or employee.A person who is obliged to the company for an amount onethousand taka, or who has given any guarantee or provided anysecurity in connection with the indebtedness of any thirdperson.A person who is a director or member of a private company orpartner which is the managing agent or treasurers of the comp.A person who is a director, or the holder of shares exceedingfive percent in nominal value of the subscribed capital.
under section Under section Requirements as rofit and Loss 210(10) 210(11) Account• auditor appointed as • For the purpose of • The profit and loss first auditor by the section 210(10). Any Account shall contain Board of Directors, sums paid by the or give by way of a the remuneration is company in respect of note detailed fixed by the Board of the auditor’s information in regard directors. expenses shall be to amounts paid to the• auditor is appointed deemed to be auditor, whether as by the Government, included in the fees, expenses or the remuneration is expression otherwise for services fixed by the “remuneration” rendered: Government. • 1. as auditor;• If the auditor is • 2. as advisor, or in appointed by any other capacity in company in the respect to- general meeting, the • taxation matters. remuneration of • company law matters auditors shall be fixed by the company
1. To certify statutory report 2. To report to the members of the company 3. To inquire into particular issues4. To certify director’s declaration of solvency. 5. To report for prospectus. 6. To assist inspects 7. To assist public prosecutor
Access to the book, account and vouchers Obtaining information and explanations Inquiring into particular issuesReceiving notice and attending the general meeting Reporting to the members.Visiting branches and access to the branch account. Signing the audit report. Receiving remuneration.
Removal of Auditor before the expire of Tenure: There isno provision regarding the removal of Auditor before the expire of his orher tenure. However from various provisions can be identified in thisregards: For natural reasons of death or incapacity. Self removed through resignation from the assignment of duties. For dishonesty or disqualification.Removal of Auditor after the expire of Tenure: According tosection 210(6), 210(9) and 211,The first auditors of a company is appointed by the board of directorsprior to the first annual general meeting. That’s why, remove to firstauditors and appoint in his place any other person who have beennominated for appointment. The nomination notice has been given tothe member not less than fourteen days before the date of the meeting.
Any auditor other than first auditor may be removed fromoffice before the expire of his term only by a special resolutionof the company in the general meeting.The retiring auditor has the right to make a representationwhich may be circulated to the members unless it is too late todo so, without prejudice to his or her right to be heard orally,require that the representation shall be read out the meeting.