The Auditor of a company shall now be allowed to have access to records of the Subsidiaries, so far as it relates to consolidation of accounts of a subsidiary with the company.
The Company Auditors Report must report on the below mentioned points:
- Any qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected therewith;
- Whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls;
The Companies Act now also provides that Auditor must require to comply with auditing standards prescribed by this act. The Central Government from time to time will prescribe the auditing standard and its related addendum if any thereto and which has been recommended for guidance of auditing by the ICAI in consultation National Financial Reporting Authority after examination of NFRA’s recommendation. Further where no auditing standards are notified by NFRA than auditing standard prescribed ICAI shall be deemed to be the auditing standards.
Company Auditors report must contain auditors views and comments on the following matter:
- Whether the company has disclosed the impact if any existing on the date of financial statement or pending litigation on its financial position in its financial statement;
- Whether the company has made proper provision which has been required under any law or accounting standards applicable for any substantial or material foreseeable losses on long term contracts entered into by the company including derivative contracts.
- Whether there has been any delay transferring amount, required to be transferred into the Investor Education and Protection Found by the company.
- The company auditor must need to provide the reasons for any substantial matters which is required to be included in the Auditor Report whether with negative remark or with a qualification and which was not required under the old law.
- The Auditor’s right has been extended to inquire about the assets of the company except in case of company not being an Investment Company or a Banking Company whether the assets such company consisting of shares or debentures and other securities and such assets has been sold by the company at a price lower than the price purchase by the company.
- In case of auditing government company auditor should consider direction issued by the CAG of India while auditing financial statement whether the impact of such direction has been reported or not. The branch auditor is required to report to the company’s auditor along with his audit report. Reporting of Fraud by auditor in his audit report shall also extend to such branch auditor to the limited it concerned with concerned branch.
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