Sheridan Audio Visual Ltd's application for an audit has been approved. The letter outlines legal requirements for private limited companies in the audit process, including appointing an auditor, filing annual returns and financial statements, holding annual general meetings, and preparing director's reports. It also details statutory duties of auditors and directors for financial reporting, and advantages of undergoing an audit such as meeting regulatory requirements, improving accounting systems, and enhancing credibility.

1. LETTER OF APPROVAL
To: Mr Sheridan
Managing Director
Sheridan Audio Visual Ltd
Dear Mr Sheridan,
I would like to inform you that your application for audit has been approved.
The following are stated as the reason to audit.
The auditing process is an annual procedure which comes under compliance requirements of
companies. We provide you a list of legal requirements in addition to the auditing process to
ensure you are compliant with laws:
 Auditor Appointment – An auditor will be appointed within one month of company
incorporation. Tenure of Auditor will be 5 years.
 Statutory Accounts Audit – Sheridan AV shall prepare their financial accounts for an
annual compulsory audit by a practicing Chartered Accountant.
 Annual Return Filing – Private Limited Companies shall file their Annual return for the
Financial Year according to the given form within 60 days of conducting their Annual
General Meeting.
 Financial Statements Filing – All Private Limited Companies are to file their Balance
Sheet, Profit and Loss account Statement along with Director’s report included in the
form to be done 30 days within conducting their Annual General meeting.
 Conducting Annual General Meeting – Sheridan AV will hold an Annual General
Meeting at least once per calendar year. It is required to hold an annual general meeting
six (6) months prior to a conclusion of the financial year.
 Preparing Director’s Report – A Director’s report has to be prepared with all relevant
information in accordance with Section 134.
There are some specific requirements for a PLC which must be met:
• The minimum number of shareholders must be two (a private limited company only needs one
shareholder)
• Accounts must be filed within 6 months of the year end (the limit is 9 months for a private
company)
• The Company Secretary must be a qualified person (in a private company the secretary does
not need to be qualified)
• The minimum number of Directors is two (just one needed for a private company)

2. A company which desires to list its shares in a stock exchange has to comply with the following
requirements:
 Permission for listing should have been provided for in the Memorandum of Association
and Articles of Association.
 The company should have issued for public subscription at least the minimum prescribed
percentage of its share capital (49 percent).
 The prospectus should contain necessary information with regard to the opening of
subscription list, receipt of share application etc.
 Allotment of shares should be done in a fair and reasonable manner. In case of over
subscription, the basis of allotment should be decided by the company in consultation
with the recognized stock exchange where the shares are proposed to be listed.
 The company must enter into a listing agreement with the stock exchange. The listing
agreement contains the terms and conditions of listing. It also contains the disclosures
that have to be made by the company on a continuous basis.
Statutory duties of an auditor:
 Gives report on the accounts which are audited by him.
 Gives audit report of balance sheet and profit and loss account.
 Audit the documents which are attached with balance sheet and profit and loss account of
company.
 Express his true opinion in his report.
 Ensure that balance sheet and profit and loss account have been made on the basis of
accounting books and evidences.
 Should give all information in the prescribed manner.
 Should make his audit report on the basis of available information.
 Should see whether company fulfills all legal compliance.
 All statutory duties are fixed by Law but company can increase his duties by passing the
resolution in annual general meeting.
The statutory duties of the directors for reporting the financial results of the business are as
follows:
 Know the nature of the organization and how it operates.
 Maintain independence and fair presentation for the success of the company.
 Consider the consequences or weigh the advantages and disadvantages of the decisions in
the long-run.
 Never accept benefits from third parties, exercise full-disclosure and consistency in
adherence to the presentation of the financial statement.
 Follow the periodicity of the financial statement reporting and apply accounting policies
and procedures and use them effectively and consistently.
 Responsible for ensuring that judgements and estimates are accurately applied and the
financial statements are free from error and material misstatement.

3.  Internal control in the organization must be properly regulated. Policies and procedures
must be followed and fraud and error must be eliminated.
 Practice of diligence and due professional care in the preparation of financial statement
and must indicate whether it’s in accordance with the financial reporting standards.
 Responsible for presenting information that is understandable, comparable and know
every audit activity that is and will be conducted inside the organization.
 Responsible for choosing the leaders or head of the management. They should ensure that
the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have enough
knowledge and professionalism in part taking their roles.
The advantages of having an audit are as follows:
 The main reasons on having an audit is to meet the statutory requirements and regulations
in the industry
 It helps identify weaknesses in the accounting systems and suggest useful improvements
that can make your business more efficient.
 It is an effective tool that is designed to reduce the scope for risk of fraud and error within
the business.
 It provides an independent verification that the financial statements are a true and fair
representation of the entity’s current situation.
 An audit will enhance the credibility and reliability of the figures being submitted to
lenders, prospective buyers and any stakeholders to your business.
 It is also used by business owners for better financial planning, budgeting and financial
decision-making for the future.
 Through an audit engagement, management and those charged with governance benefit
from advisory services that we provide to the business. This is provided to you from our
knowledge that we would have accumulated on your operations, and covers a broad range
of areas. We review and advise on the more technical aspects that may be difficult for
you to interpret.
Alex Gold Financial Services
Acknowledged and agreed on behalf of Sheridan Audio Visual Ltd by
(signed)
......................
Graeme Moore, Senior Auditor
September 16,2020