Wednesday, 1 June 2016

Audit and Auditors

Every Company shall, at the first Annual General Meeting (AGM), appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its 6th AGM and thereafter till the conclusion of every 6th meeting.

Cost Audit Report
Cost Audit Report

 The Act provides provision for compulsory rotation of individual Auditors in every 5 years and of audit firm in every 10 years in listed Companies. A transition period of 3 years from the commencement of the Act has been prescribed for existing companies to comply with the provision of the rotation of auditors.

An Auditor shall comply with auditing standards. The Central Government will prescribe the standards of auditing or any addendum thereto, as recommended by the ICAI, in consultation with and after examination of the recommendations made by the National Financial Reporting Authority. Auditors, during the course of performance of its duties, are required to immediately report to the Central Government, any offence involving fraud that is being or has been committed against the company by its officers or employees.

 The duties, which have been cast on an Auditor u/s 143, shall apply mutatis mutandis to both Cost Accountants in Practice for Cost Audit Report and Company Secretary in Practice for Secretarial Audit. The Auditor of the Company shall not provide directly or indirectly certain specified services to the company, its holding and subsidiary company.

Central Government directs the Cost Audit to be conducted in such class of companies engaged in the production of such goods of providing such services, which have the prescribed net-worth or turnover and has been directed to include the particulars relating to utilization of material or labor or other items of cost as may be prescribed in their books of account. No approval is required of the Central Government for the appointment of a Cost Auditor to conduct the cost audit.

Visit more Information at NCLT Website

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