Learn about the statutory duties of an auditor and how they contribute to financial transparency and integrity in businesses. Understand the importance of independence, due professional care, and compliance with auditing standards in auditing practices.
Statutory Duties of an Auditor.
STATUTORY REPORT
When a company is formed, then it is the duty of auditor to check the statutory report. The statutory report contains the information about shares, receipts and payments of company.
PROSPECTUS REPORT
It is the duty of the auditor to prepare the prospectus report. The prospectus is issued by the company for the sale of shares and debentures.
ANNUAL REPORT
It is the duty of auditor to prepare the annual report. The annual report includes the profit and loss account, balance sheet and cash flow statement. The annual report may be
ASSIST PUBLIC PROSECUTOR
It is the duty of auditor to provide the assistance to prosecutor in connection with the prosecution of directors. The auditor is legally bound to help the public prosecutor.
HELP INSPECTORS
Sometime Government appoints the inspector for obtaining the information about the matters of company. So it is the duty of auditor to provide the ‘true information to inspector.
CERTIFY SOLVENCY
In the case of voluntary winding up, the auditor should present the P/L account and Balance Sheet to show the solvency position of the Company.
SIGN REPORT
The auditor should prepare and sign the audit report. A report without auditor’s signature is not valid. He should prepare the report according to the rules of audit.
COMMON LAW DUTIES of Statutory Duties of an Auditor
AGREEMENT
The auditor is bound to perform all jobs according to terms of employment as per his agreement with the management. The legal duties of auditor remains unchanged but he can perform extra duties.
FOLLOW ETHICS
It is the professional duty of auditor to follow the professional code of ethics as laid down by the professional body.
APPLICATION OF STANDARDS
It is the duty of auditor to apply the international standards of auditing on relevant audit area. The quality of his work depends upon auditing standards.
COURT CASES DUTIES
It is duty of an auditor to examine accounts and to see whether these are correct or not If he does not examin me the documents, he will be liable for negligence.
DUTY TO OUTSIDERS
As the auditor is appointed by the shareholders, so he has no duty to outsiders. But if the auditor commits fraud and third party suffers in loss, then he has duty to third party.
ACCURACY OF ACCOUNTS
The auditor is bound to check and verify the accuracy of the books of accounts. There must not be error in Balance Sheet and Profit & Loss account.
RELY ON CERTIFICATE
It is the duty of the auditor to rely on certificate issued by a responsible officer of the company holding a key post.
SECRECY
It is the duty of auditor to maintain the secrecy about facts and figures of client’s business.
REPORT SUBMISSION
It is the duty of the auditor to submit the report within reasonable time. He should not see that whether annual general meeting held or not.
PAYMENTS BY THE COMPANY
Auditor should see that all the payments made by the company are for the purpose of business and are in accordance with the articles of association of the company.
SKILL AND CARE
It is duty of the auditor to act honestly and with reasonable skill and care before he believes what he certifying is true.
NO ADVICE
It is not the duty of the auditor to give the advice to the directors or members as how the business is carried on. 20. SECRET RESERVES
If secrete reserves created in the past are used for increasing the current profit then the auditor should report about this fact.
BREACH OF DUTY
It is the duty of the auditor to see that there has been no breach of duty on his part and that he has done his job 22. VERIFY SECURITIES
It is the duty of the auditor to verify the securities of the company and to see that these are in safe custody with a responsible person.
NO DOUBT
If the auditor is doubtful about the work which he has to start then he must go through the record to create the doubt.
VERIFY THE ASSETS
It is the duty of auditor to verify the existence of assets which are stated in the balance sheet. If he dose not verify the existence of the assets then he will be held liable.
COMPLETE REPORT
It is the duty of auditor to prepare complete report about the affairs of the company.
QUALIFY REPORT
It is the duty of auditor to present his report free from errors.
Conclusion
In conclusion, understanding the statutory duties of an auditor is essential for professionals in this field to uphold the integrity of their profession and provide reliable assurance to stakeholders
