Duties of company auditor as given under companies act are as below:

1. Sec.227(1A): Under this Sec. it is the duty of the auditor to enquire:

a. Whether loans and advances given on security have been properly secured and the

terms & conditions on which they have been made are harmful to the interest of the

company.

b. Whether transactions which are represented merely by book entries in fact have

taken place and are harmful/prejudicial to the interest of the company. (E.g. In

books purchases were recorded for. In reality no such transaction has taken place.

The auditor's report should mention this fact).

c. Whether any of the assets of the company consisting of shares, debentures etc. have

been sold at a price less than the cost of such shares etc. (This is not applicable to an

investment company or a banking company). (This doesn't prohibit the sale below

cost. If the sale is bonafide and the price is reasonable having regard to the

circumstances of the case, need not be reported.)

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

e. Whether personal expenses have been charged as business expenses.

f. Where it is stated in the books of accounts that any shares have been allotted for

cash, then the cash has been actually so received. (DCA notification Shares

allotted

against a debt payable by the company shall be taken as 'shares allotted for cash').

Sec.227(2): Under this sec. it is the duty of the auditor to make a report whether, in his

opinion the financial statements give a true & fair view:

a. In the case of the B/s of

the financial position of the company at the end of the

financial year &

b. In the case of the profit and loss account of

the profit or loss for the year.

3. Sec.227(3): Under this sec. it is the duty of the auditor to state the following in his audit

report:

a. Whether he has obtained all the information and explanations which were necessary

for the purposes of his audit.

b. Whether the audit report on the financial statements of any branch office audited by a person other than the company's auditor has been forwarded to him and how he

has dealt with the same in preparing the auditor's report.

c. Whether the company's balance sheet and profit and loss account are in agreement

with the books of accounts and branch returns.

d. Whether any director is disqualified under Sec.274 (1) (g). (Sec.274(1)(g) A

person is

disqualified from being appointed as a director, if the company in which he is a

director has not filed the annual returns for any continuous 3 financial years Or has

failed to repay its deposit or interest thereon on due date Or redeem its debentures

on due date Or pay dividend and such failure continues for ≥ 1 year.)

e. In bold or in italics the observations of the auditors which have any adverse effect on

the functioning of the company.

f. Whether the cess payable under Sec. 441A has been paid and if not, the details of

amount of cess not so paid".

g. Whether, in his opinion, proper books of accounts, as required by law, have been

kept by the company and proper returns adequate for the purposes of his audit have

been received from the branches. Remember that the cost records prescribed under

Sec.209(1)(d) also from part of books of accounts.

h. Whether accounts give the information required by the act in the manner so required.

i. Whether in his opinion, the balance sheet and the profit and loss account comply

with the accounting standards referred to in Sec.211 (3C) of the Companies Act.

4. Sec.227 (4): Where any matters referred in Sec.'s 227(2) and 227(3) are answered in

negative, it is the duty of the auditor to state the reasons for such answers in his audit

report.

5. Sec.227(4A): It is the duty of the auditor to include in his report a statement on such matters

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