Remuneration of Auditors Section 142 Companies Act 2013
Remuneration of auditors has been defined in companies act 2013.
What is remuneration of Auditors as per Companies act 2013?
Remuneration of Auditors (apart from the first auditor) of the company will be determined by stakeholders in general meeting as per section 142 of Companies Act 2013.
The process of determination Remuneration of auditors
- The remuneration of the auditor of the company will be fixed in a general meeting or in such a manner as may be prescribed therein. Provided the Board of directors may fix the remuneration of the first auditor appointed by them.
- The remuneration will be the fees payable to the auditor, accompanied by the expenses that are incurred by the auditor with regard to the audit of the company & any facility extended to him by the Companies Act.
- The Remuneration of the Auditor might be fixed in a general meeting or in such a manner as may be determined. Even though the Board of directors can fix the remuneration of the First Auditor.
- The Expenses which are paid to the auditors are in addition to the audit that he carries out in the Company.
(Power and duties of auditors and auditing standards)
- Each auditor of the company will have a right to access at all times to the books of accounts & vouchers of the company, whether kept at the registered office of the Company or such other place & also he shall be authorized to require from the officer such information as may be required.
- The Auditor will make a report to the members of the company on the accounts scrutinized & inspected by him & on every financial statements which are required by this act & it is to be laid before the company in general meeting & the report shall after taking into account auditing standard & matters that are required shall be comprised of the audit report.
- The auditor’s report shall mention in it the following:
- Whether he has acquired all the required information & explanations which to the best of his knowledge & belief are necessary for the purpose of an audit. In the event, if the proper info isn’t received then such details & effect of such information on financial statement should be stated in auditor’s report.
- if the proper books of accounts as per requirement by law is maintained or not &also whether proper returns sufficient for purpose of audit has been received from the branches not visited by him or not.
- if the report in respect of such a branch which is audited by the auditor except the company auditor has been sent to him.
- Whether the company’s balance sheet & profit and loss account are in since with the books of accounts & returns.
- in case the financial statement fulfill the accounting standards
- The observations & comments of the auditor on financial transactions or matters that are having a contrary effect on the company
- Where any of the directors is disqualified to be appointed as the director
- Any of the qualifications, reservations or adverse remarks in respect of maintenance of the books of accounts or other matters connected therewith
- Whether the company has sufficient internal financial control system in place & operative effectiveness of such control.
- Whether the company has disclosed the impact of any pending litigation in the financial statements.
- Whether the company have made provision in regards to any of the material predictable losses as required by law or accounting standards comprising the derivative contracts.
- Whether the company has made a deferral in transferring amount required to be transferred to Investor Education and Protection Fund by the company.
In case of the Government company
The C&AG shall appoint an auditor in order to conduct the audit of the company. The C&AG shall also give directions & the manner in which such accounts of the government company is necessary to be audited by the auditor.
The auditors after completing the audit shall issue the audit report to the C&AG that will be included in all the matters which are mentioned above. The auditor of the government company will mention in his audit report the direction issued by C&AG, the actions taken thereupon & its impact on accounts & financial statement of the company.
On receipt of the audit report of the government company, the C&AG can perform supplementary audit within the period of 60 days from the date of receipt of such audit report. He might also comment on the audit report as he thinks proper.
In the Government Company, the C&AG also requires that the test audit of the company shall be conducted
The Auditor shall Comply with the Accounting Standards. Sec 144 (Auditor not to render certain services)
Any of the auditor appointed by Company should also offer only those services that will be approved by Board of Directors or Audit Committee, as the case may be, but it might not include the below-mentioned services:
- Accounting and bookkeeping services.
- Internal audit Design and implementation of any financial information system.
- Actuarial services.
- Investment advisory services.
- Investment banking services.
- Rendering of outsourced financial services.
- Management services.
- Any other kind of services as may be prescribed.
Sec 145 (Auditor to sign audit reports)
A person who is appointed as the auditor of Company can sign Auditor’s report or also can sign or can certify any other documents of the Company & present same before the general meeting & shall be open for member’s scrutiny as well as inspection.
Sec 146 (Auditors to attend the general meeting)
All such notices & other communications relating to the general meeting will be forwarded to the auditor & he can attend either by himself or through his authorized representative & has right to be heard at such a meeting.
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