(12.12.5) Powers and Duties or Obligations of Auditors

Section 227 enumerates some of the powers of auditors:

            (i)  Every auditor of a company has right of free and complete access at all times to the books, accounts and vouchers of the company whether kept at the head office or elsewhere.

            (ii)  He has also the right to require from the officers of the company such information and explanation as may be necessary for the performance of his duties as auditor.

            (iii)  He is entitled to receive notice of and to attend general meetings of the company and be heard on any part of the business which concerns him as auditor.

Section 227 also imposes some obligations on the auditor. He is to make a report to the members of the company on the accounts examined by him and on every Balance Sheet and every Profit and Loss Account laid before the company in general meeting during his tenure of office. The report, besides other things necessary in any particular case, must expressly state:
 

            (i)  Whether, in his opinion and to the best of his information and according to

explanations given to him, the accounts give the information required by the Act

and in the manner so required.

            (ii)  Whether the Balance Sheet gives a true and fair view of the company's affairs as at the end of the financial year and the Profit and Loss Account gives a true and fair view of the profit and loss for its financial year;

            (iii)  Whether he has obtained all the information and explanations required by him for the purposes of his audit;

            (iv) Whether in his opinion, proper books of accounts as required by law have been kept by the company and proper returns for the purpose of his audit have been received from the branches not visited by him.

            (v)  Whether the company's Balance Sheet and Profit and Loss Account dealt with by the report are in agreement with the books of account and returns.

            (vi)  Whether, in his opinion, the profit and loss account and balance sheet comply with the accounting standards referred to under s. 211 (3c).

            (vii)  In thick type or in italics the observations or comments of the auditors which have any adverse effect on the functioning of the company.

            (viii) Whether any director is disqualified from being appointment as director under s.274(1) (g).

Where any of these matters enumerated from (i) to (v) is answered in the negative or with a qualification, the Auditor's Report must state the reason for the answer. Such a report is called the 'qualified report'.