Discuss about the position of the Auditor in a company.
The position of the Auditor in a company under the Provisions of the Companies Act:
Representative of the shareholders: An auditor is appointed by the shareholders of the company in the Annual General Meeting (except when he is appointed by the Board of Directors of the company in a newly established company). He is appointed to safeguard the interest of the shareholders. He does so be examining the books of account, documents and other relevant information relating to the working of the company.
As an officer of the company: According to Section 2(30) of the Indian Companies Act, a company’s auditor is supposed to be an officer of the company. He can summon the persons suspected of having the property of the company in the case of winding up of the company (Sec. 477).
Section 478 empowers an auditor to order public examination of the promoters, directors etc who are guilty of fraud. Section 539 gives the power to the auditor to recommend the penalties for the falsification of accounts book. According to Section 633, he has the power of the court to grant relief in certain cases i.e. in proceedings for negligence, default, breach of duty, misfeasance etc.
As a servant of the company: An auditor is the servant of the company as he is paid for the job performed by him for the company. His position is a little different from the employees of the company. He cannot be called as the servant of the directors of the company, rather he is appointed to check the work of the directors.
As a representative or agent of the company: Sometimes an auditor has to act as a representative of the company for which he has been appointed as an auditor. As per the provisions of Section 230(b) if the company asks for investigation, he has to act as an agent of the company.
As an agent of outsiders: An auditor acts as an agent of outsiders. Outsiders invest their money in the company in the form of debentures, advances, public deposits, supplying goods on credit. They do so on the basis of auditors report. The profit earning capacity of the company, the efficiency of the management and such other facts can be judged by the outsiders from the auditors report.