Analyze the Rights and Duties of the Company’s Auditor.

The rights of the Company’s auditor are:

Right to access the books, accounts and vouchers: The auditor of the company has the right to access at all times to the books and accounts and vouchers of the company whether kept at the head office of the company or elsewhere. The right to access the books of accounts is an absolute right and it is not subject to any restriction, exception or qualification.

Right to obtain information and explanation: He has a tight to obtain from the directors and officers of the company any information and explanation as he thinks necessary for the performance of his duties as an auditor. If any information is refused on the ground that it is not necessary for the performance of his duties, the auditor is entitled to report accordingly to the members.

Right to receive notice and other communication relating to General Meeting and attend them: Under Section 231, an auditor of a company has a right to receive notices and other communications relating to General Meeting in the same way as a member of the company. He is also entitled to attend ally general meeting which he attends or any part of the business which concerns him as an auditor.

Right to report to the members: The auditor has a right to report to the members on the accounts examined by him, and to state whether in his opinion and to the best of his information and according to the explanations given to him the said accounts give information as required by the Companies Act and the financial statements give a true and fair view of the state of affairs of the company.

Right to sign Audit Report: Under Section 229, only the person appointed as the auditor of the company or where a firm is so appointed can sign the auditors report or sign and authenticate any other document of the company which the law requires to be signed or authenticated by the auditor.

Right to visit branches: According to Section 228, if a company has a branch office, the company’s auditor shall be entitled to visit the branch office, if he deems it necessary to do so for the performance of his duties as an auditor and shall have a right to access at all times to the books of account and the vouchers of the company as maintained at the branch office.

Right to receive remuneration: He has a right to receive remuneration provided for completed the work which he undertook to do so.

Duties of the Company’s auditor are:

To give report regarding his work: It is the first and the foremost duty of a company auditor to give a report on Profit and Loss and the Balance Sheet when the work of the audit is over. He should furnish a fair report.

To give information of the correctness of the Profit and Loss Account and the Balance Sheet: An auditor should give a clarification that the books of account of the cornpany have been prepared according to the provisions of the act and that the Balance Sheet of the company reveals an economic position of the company and that the Profit and Loss Account gives a true picture of profit or loss or not.

To use the audit report of the branches: The auditor should mention in his report that the reports of the branches provided by other auditors have been obtained by him or not and if he has received, then these have been used by him or not and to what extent.

To report the matters ordered by the Central Government: Where the Central Government requires auditors report on certain matters of specific industries, the auditor should make the statement of this fact in his report.

To inquire certain matters: The auditor shall inquire:

Whether loans and advances made by the company on the basis of security have been properly secured and whether the terms on which they have been made are not prejudicial to the interests of the company or its members.

Whether the transactions of the company which are represented merely by book entries are not prejudicial to the interests of the company.

Whether loans and advances made by the company have been shown as deposits.

If any shares have been allotted for cash, whether cash has actually been received in respect of such allotment.

Sign the audit report: The auditor must sign the audit report himself. In case of partnership firm of auditors, any of the practicing partner is authorized to sign the audit report provided the firm has been appointed as the auditor as per Section 226(1) of the Companies Act.

To help during the investigation of the company: Where the company’s affairs are to be investigated by an investigator appointed under Section 233 to 237, it becomes the duty of the auditor to assist such investigator since the auditor is supposed to be an agent of the company.

Duty to acquaint himself with his duties and care: In the performance of his duties a company auditor is not expected to ignore, any law, particularly the provisions of the Companies Act. Further, an auditor must be honest and should not be negligent. He must exercise due skill and care in the performance of his duties otherwise he may be sued for the damages.

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