Rights of the Auditor
Although auditors are independent professionals, they have some rights. If these rights are not upheld or met, auditors will not be able to perform their duties. Some of those rights include the following.
Access to Records
The primary right that auditors have is the right to access the records. It includes both financial and non-financial information. Depending on the type of engagement and services provided, the information required may differ.
Nonetheless, auditors have the right to request any records or information without any restrictions. It includes any information that the client keeps related to the accounts, such as general ledgers, bills, invoices, etc. Similarly, auditors have the right to obtain information and explanations from employees or the management.
Access to Enquire Management and Personnel
Generally, auditors must be able to interact with the clients’ employees or management. While some clients may not provide unrestricted access, auditors must have the right to contact those involved in financial decisions. It also includes personnel who are not present at the client’s current location. Regardless of the employee’s location or position, auditors must be able to interact with them.
Right to Attend Meetings
Auditors also have the right to attend the client’s annual general meetings. On top of that, they must have the right to receive any notifications about such meetings. Auditors must not have any restrictions imposed by the client that prevents them from participating in these meetings.
Right to Provide Opinion
Auditors also have the right to express their opinion on the financial statements. This right comes from the fundamental reason for conducting audits. This right gives them permission to express their opinion based on their findings during their work. If the client doesn’t meet any of the above rights or restricts the auditor’s impudence, auditors have the right to resign as well.
Duties and Liabilities of a Company Auditor (Section 227):
Duties towards the shareholders:
- Report shareholders about true and fair state of affairs of the company
- State that balance sheet and profit and loss a/c give all information required by law
- State that balance sheet and profit and loss a/c agree with the books of account
- State that balance sheet and profit and loss a/c agree with accounting standards
- State that he has obtained all the necessary information
- State whether the company has maintained all books as required by law;
- State the reasons of qualification in his report
- State that he has received the audit report on the branch accounts audited by other auditor and how he has dealt with the same in preparing his report
- Auditor shall state in his report whether:
- a) The loans taken are properly secured and the terms of loans are not against the interests of the company
- b) Loans given are shown as fixed deposits and the terms of loans are not against the interests of the company
- Transactions recorded as book entry are not against the interests of the company
- Personal expenses of directors have not been charged to revenue a/c of company;
- The company fulfills the requirements of CARO 2003.
Duties towards Company:
- Prospectus:According to Sec 56, the auditor is required to certify profits or losses, assets & Liabilities and dividend paid etc in the prospectus.
- Statutory Report:Section 165 requires that the auditor has to certify the statutory report.
- Public Deposits:Section 58AA requires the auditor to report about whether the company has followed all rules and guideline of RBI in regard to public deposits or not.
- Signature on Audit Report:Section 229: It is duty of auditor to sign on his report.
- Insolvency (Section 488): If the company wants itself to be declared insolvent, it is duty of auditor to prepare profit and loss a/c for the current period.
Duties towards Government:
- CARO-2003: The auditor has to report para-wise that the company has fulfilled all the requirements of CARO-2003.
- Assist the Investigation u/s 237:It is duty of auditor to assist the investigation ordered by the CG u/s 237.
Duties towards General Public:
- His office is of confidence and faith. He must be reliable in all respects.
- He should reveal all material information regarding the state of affairs of the company to the company as well as to the general public.
- While issuing prospectus u/s 56, he should see that the prospectus does not include any misleading information or material.