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A public company has a separate legal entity that permits its shares to be traded on the market for the public to take a position in it according to section 2(71) of the Companies Act, 2013. It is compulsory for a Public Limited Company to show its financial position, i.e., balance sheet and estimation, to the public to maintain transparency and neutrality. Therefore, according to the Companies Act, a public limited company must get its accounts audited by the Chartered Accountant (CA) or persons eligible to act as auditors. Auditing the public limited’s primary objective is determining whether a Company is providing the correct representation of its financial state of affairs and complying with the Companies Act. It can be determined by examining the information provided to the auditor, such as books of account, statements of bank account, and financial statements.
A public limited company must go through an audit process for each financial year. It does not matter what nature of business public limited conducts or irrespective of turnover; the public companies must get their Books audited for each financial year.
The companies must get their annual accounts audited annually by independent auditors according to Section 143 of the Companies Act 2013[1]. In the audit of a Public Limited, the auditors examine the company’s books of accounts, company transactions during the year, and every other relevant document.
During the audit of a public limited, verify that the financial statements are free from material misstatements and are fairly presented.
The opinions prepared by the auditors on the financial statements are available to the investors and other interested parties.
The main objective of the limited public audit is to provide reasonable assurance to investors, capital market participants, and policymakers so they can invest in the company and take appropriate investment decisions based on Auditor’s Report.
The persons who can be appointed as an auditor of a public company:
The procedure to conduct an audit of Public Limited is as follows:
A Public Limited Company is a separate legal business entity offering shares to be traded on the stock exchange for the general public as per the companies act. To maintain transparency, a company must present its financial position and status to the general public. The auditor inspects the books of account to ensure that they are accurate. Auditing a private limited company is an annual compliance requirement under the Act and Company Law Rules, 2013.
Also Read:Characteristics of Public Limited CompanyDifference Between Private and Public Limited CompanyHow to Convert a Private Limited Company to Public Limited Company?
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