Company Audit Flashcards
Eligibility & qualification
Sec 141(1) - (2)
Disqualification to a body corporate to be the auditor other than LLP
Section 141(3)(a)
Disqualification to officer and employee of the company
Sec 141(3)(b)
Disqualification to person who is a partner or en employee to the officer or employee of the company
Sec 141(3)(c)
Disqualification due to securities holding or direct or indirect debtness
Sec 141(3)(d)
Disqualification due to business relationship
Sec 141(3)(e)
List of service not to be rendered, whether directly or indirectly, by auditors to company its holding and subsidiary
Section 144 Ac and book keeping Internal audit Design and implementation of FIS Actuarial services Investment advisory services Investment banking Outsourced financial services Management services
A person whose relative is a director or is in employment of the company as director or KMP is disqualified under
Sec 141(3)(f)
Disqualified if limits for number of audits is crossed or full time employment elsewhere
Sec 141(3)(g)
Disqualified due to convicted by the court and ten year has not lapsed yet
Sec 141(3)(h)
Any disqualification attracted after the appointment then he should vacate the office under
Sec 141(4)
First auditor of government company or any statutory corporation owned and controlled by government
Section 139(7)
CAG Within 60 days of incop
If fails BOD within next 30 dAys
If fails member within 60 days in EGM
Subsequent auditor of govt company
Sec 139(5)
CAG within 180 days of commencement of financial year
If fails existing will be reappointed
Existing fails then casual vacancy
First auditor of non govt company
Sec 139(6)
BOD apt within 30 days
If fails inform members
Member will appt within 90 days of receiving info in EGM
Subsequent auditor of non govt company
Section 139 (1)
Situations when retiring auditor cannot be reappointed
Sec 139(9)
Rotation of auditors
Section 139(2)
Listed mandatory
Unlisted public company paid up share capital more than or equal to 10 crore or borrowing from banks and FI or public deposit more than or equal to 50 crore
Private company other than OPC and Small company which paid up share capital is more than or equal to 50 crore or borrowings from bank and FI more than or equal to 50 crores
Casual vacancy
139(8)
Auditor shall file Adt-3 in case of resignation to company, ROC and CAG if it fails then-
Min - 50000 or remuneration of auditor, wel
Maximum - upto 500000
Remuneration of auditors
Section 142
Fixed by members
First auditor - fixed by board of directors
Removal of auditors before the term of expiry
Sec 140(1) Application to CG in ADT 2 (30 days) Then after approval from CG within 60 days approval from members by passing a special resolution in meeting
Appointment of auditor other than retiring auditor
Section 140(4)
Special notice u/s 115 ( 1% voting power or shares with paid up capital at least 5 lacs )
Auditor make written representation to be sent atlest 7 days before meeting
Special resolution to be passed to pass that existing auditor should nit be reappointed
Removal of auditor by NCLT
Section 140(5) Application can be made by CG or any other person can be done suo motto too If NCLT is satisfied them if application made by CG then will appt within 15 days or if application by someone else then it will lead to casual vacancy
Right as well as duty to attend general meeting by auditor
Section 146
Is auditor concerned about the propriety of business conduct ? If yes, then mention the areas of propriety.
Section 143(1)
1 loans And advances given are SIR
2 whether transactions of company which is represented merely by the book entries are prejudicial to the company interest
3 where company is not an investment company or banking company whether any securities has been sold in price lower than the cost of purchasing it
4 whether loans and advances made are shown as deposits
5 whether personal expenses has been charged to revenue account
6 whether any shares allowed for cash and if yes whether cash was received for such allotment
Matters to be compulsory reported by the auditors
Section 143(3)
Whether the auditor has obtained all the info and documents required p
Whether proper books of accounts is BIENG maintained or not
Whether he has received the branch audit report conducted under section 143(8)
Whether company’s b/s and profit loss are in agreement with BOA
Followed accounting standards
Observation or comment on the entity’s financial transaction
Director disqualification under 164(2)
Any qualification, adverse or reservation relating to maintenance of accounts
Adequate IFC-FR
Whether the company has disclosed the impact of pending litigation
Whether provision is being made for the material foreseeable losses
Any delay in transferring amount required to IEPF
Compliance with auditing standards
Section 143(9) &(10)
Duty to sign audit report
Section 145 to be read with clause 12 part 1 first schedule
Duty to report fraud
Section 143(12)
Clause x of Caro, 2016
SA -240
Penalties to company and officers for contravention of section 139-146
Section 147(1) COMPANY MIN - 25000 MAX - 5 lakhs OFFICER FINE MIN - 10000 MAX - 1 lakhs Or imprisonment upto a year Or both
Punishment for contravention of section 139,141,142,143,144 & 145 to the auditor
Section 147(2)
If offense was unintentional
MIN - 25000
Max - 5 lakhs or 4 x audit remuneration WEL
If offense was intentional
MIN - 50000
Max - 25 lakhs or 8x audit remuneration WEL
If convicted under section 147(2)
Under section 147(3)
Refund the remuneration
Pay damages to company, statutory bodies, member and creditors of the company for loss arising out of misleading statements
Branch audit
Section 143(8)
Cost audit
Section 148
Cost audit report
In FORM CRA 3
Cost audit report after comments on negative points by cost auditor to central government
FORM CRA 4 within 30 days of cost audit report received
When to maintain cost records
Company operating under prescribed regulated or non regulated sector making prescribed products and hence total turnover such prescribed product is equal to or more than 35 crores
Except if company is registered under MSME development act
When to get cost records audited
REGULATED SECTOR
Overall turnover 50 crores or more ( only products with turnover of 25 crore or more )
UNREGULATED SECTOR
Overall turnover 100 crore or more (only products with turnover 35 crores or more)
Contents of the certificate to be submitted by the auditor at the time of appointment
That is the individual is eligible and not disqualified for appointment under the CA Act, 1949
The proposed appointment is as per terms provided under the act
The proposed appointment is within the limits laid down by or under the authority of the act
List of proceedings pending with respect to professional matters of conduct as disclosed in the certificate is true and correct
Directors responsibility statement contents
Section 134
Applicable AS has been followed if not explanation for such
Director has selected such accounting policies and applied consistently and made judgements and estimates which a are reasonable and prudent so as to give true and fair view
Proper and sufficient care of maintenance of adequate records
Annual account on going concern basis
Internal financial controls were adequate and operating effectively
Proper system for complying with all the laws and regulations applicable
