POWER OR RIGHTS OF THE COMPANY AUDITOR:– Following are the rights of company auditor:-
- Right to access at all the times to the books and accounts and vouchers of the company whether kept in head office of the company or elsewhere and shall be entitled to require from the office of the company such information and explanation as the auditor may think necessary for the performance of his duties as auditor.
- The auditor shall make a report to the members of the company on the accounts audited by him and on every balance sheet or profit and loss account which are laid before the company in general meeting. The said accounts give the information required by the act in the manner so required by and gives a true and fair view.
- Right to receive notice of and to attend every general meeting of the company.
- Right to speak to such general meeting when the accounts are being discussed.
- He has right to be indemnified for any liability incurred by him in defending himself against civil and criminal proceedings by the company.
- Right to visit branches of the company to audit the accounts if no other auditor has been appointed to audit branch accounts.
- Right to take legal and technical advice wherever necessary.
- Right to receive remuneration for the work done by him.
- Right to sign the report.
- Right to keep the working notes with him.
LIABILITIES OF AN AUDITOR:- Following are the liabilities of an auditor:-
- If an auditor is guilty of negligence in the execution of his duty, he may be held liable to make good any damage resulting from that negligence.
- An auditor is appointed to detect frauds, errors etc. He is responsible on account of negligence in performance of his duties.
- Any clause in the agreement between the company and the auditor whereby the auditor is freed from liability has been declared void.
- If in the course of the winding up of a company it appears that the auditor has been guilty of any misfeasance or breach of trust in relation to the company, he may be held liable as an officer of the company. The court may examine into his conduct and compel him to contribute such sum to the assets of the company by way of compensation in respect of the breach of the trust as the court thinks fit.
- If the dividends have been improperly declared and paid of the accounts audited by him and which did not show a true and fair picture and were incorrect and misleading, he will be liable to refund such an amount.
- Where a prospectus is issued inviting persons to subscribe for shares or debentures of a company, an auditor is liable in respect of an untrue statements which is made by him as an expert, to pay compensation t every person who subscribes for any shares or debentures on the faith of the prospectus for any loss or damages, he may have sustained by reason of untrue statements included therein.
- If an auditor makes a false statements, particularly knowing it to be false or omits any material fact, knowing it to be material, he may be punishable with imprisonment or a fine.
- If an auditor is a party to a untrue statements in prospectus, he shall be punishable with imprisonment or fine or both.
- Under Indian Penal Code – whosoever issues or signs any certificate required by law to be given or signed or relating to any fact which such certificate by law, admissible by evidence. Knowing or believing that such certificate is false in any material point, shall be punishable in the same manner as if he gives a false evidence.
DUTIES OF COMPANY AUDITOR:- Duties of an auditor are as under:-
- To make the report to the members of the company on the accounts examined by him which should contain all the matters as the companies act.
- Auditor should perform his duties as per articles of association of the company.
- He should certify the statements included in prospectus whenever the same is issued.
- He should certify the contents of the statutory report.
- To comment on all such material violations of the law or sound accounting practices which can reasonably effect directly or indirectly the fortune of the accounts of the company.
- An auditor must know the provisions of memorandum and articles of association of the company.
- He not only should verify the arithmetic accuracy of the accounts but should check the fairness of accounts as well.
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