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Company is the artificial being which separate entity from the
owner or management. At the end of the period company's
financial statement must be submitted to the user after proper
examination by the auditor. when an auditor apply auditing
activities to examine the statement in order to give expert
opinion their on such types of Auditing activities are called
company audit. Under the section 183(3) of the company Act
1994:Company Audit means “The balance sheet and profit
and loss account or income or expenditure account, cash
flow statement of a company shall be caused to be audited
by the auditor of the company as in the companies act
provided. and the auditors report shall be attached there to
and the report shall be read before the company in General
meeting”.
2. He must conduct compliance procedure to ensure the reliance
he can place on the efficiency of the internal control system. To
check various assertions of financial data reflected in P & L account
for balance sheet, he must perform substantive procedure to check
the correctness, completeness & validity of the data.
In addition to the above, the auditor ensure that the transaction of
the company do not violate the provision of companies act in as
much as they get reflected in financial statements which he
certifies. For this purpose, important provisions of companies Act
affecting the financial transactions of the company are presented
in the chapter.
The auditor has to see that the items of revenue, expenditure &
item’s of assets & liabilities do get reflected in P & L account &
balance sheet as per the information requirements specified in
schedule VI of the act . He must ensure that the financial
statements reflect true & fair view of the trading results & financial
status of the company pertaining to the period under audit.
3. Section 210 and 211of the company act 1994 deal with issue of appointment of
the company auditor. Section 233 the company act 1994 deal with issue of
appointment of auditor in a special situation. Appointment of auditor are guided by
the securities and exchange rules 1987.Provision regarding appointment of a
company auditor are as follows:
Appointment of first auditor
Appointment of subsequent auditor
Appointment of auditor by a public limited company
Reappointment of the retiring auditor
Appointment of auditor by government
Appointment of auditor by govt In a Listed Public Limited
Company
Appointment of auditor in case of casual vacancy
4. Appointment of first auditor: According to Section 210 (6) of the company act
1994 Important provision in this regard are followings:
The first auditor of a company shall be appointed by the board of directors of the
company.
The appointment of the first auditor shall be made within one month of the date
of registration of the company.
The auditor so appointed shall hold office until the conclusion of first annual
general meeting.
If the board of directors fails to appoint the first auditor within one month of the
date of registration.
Appointment of subsequent auditor: According to Section 210 (1) of the
company act 1994 important provision are followings:
Every company at each AGM appointing the subsequent auditor.
The auditor are appointed to hold office of the from the conclusion of the AGM
unit the next AGM.
The company shall within 7 days of the appointment give intimation thereof to
every auditor so appointed.
No person can be appointed auditor of the company unless his of her written
consent.
Every auditor appointed at annual AGM under within thirty days
5. Appointment of auditor by a public limited company: The public limited
company enlisted with any stock exchange shall appoint a partnership firm of
chartered accountants consisting of not less than two partners in practice for a
minimum of seven years none of whom are associates in a any way of the public
limited company during the auditing period.
Reappointment of the retiring auditor: Under section 210(3)
at any annual general meeting a retiring auditor by whatsoever authority
appointed shall be reappointment, unless:
The retiring auditor is not qualified for reappointment.
The retiring auditor has given a company notice in writing of his or her
unwillingness to be reappointment.
A resolution has been passed at the meeting appointed somebody else instead of
the retiring auditor.
Appointment of auditor by government: According to section 210(4) and
210(5) important provision in this regard are:
if an appointment of an auditor is not made at the annual general meeting, the
govt may appoint a person to fill the vacancy.
6. The company shall within 7 days of the govt power becoming exercisable give
notice of the fact of the govt that is no auditor was appointed or reappointed.
If a company fails to give such notice the company & the every officer of the
company who is in default shall be punishable with fine which may extent to
one thousand taka.
Appointment of auditor by government In a Listed Public Limited
Company:
Whenever the SEC deems it necessary to an audit in a listed public limited
company in the public interest the SEC may appoint auditor to do the audit
within the specific time & to furnish the audit report to the SEC.
If the listed public limited company fails to get its financial statements audited
in prescribed manner & fail to submit the audited financial statement within
the prescribed time the SEC may appoint the required auditor.
Appointment of auditor in case of casual vacancy : Important provision in
this regard is:
The board of directors may feel any casual vacancy in the office of any
auditor,
Where such vacancy is caused by the registration of an auditor; the vacant
shall not be filled by the company in general meeting.
Any auditor appointed in a casual vacancy shall hold office until the
conclusion of the next AGM.
7. Disqualifications :
A body corporate;
An officer or employee of the company.
A person who is partner, or who is in the employment of an
officer or employee.
A person who is obliged to the company for an amount one
thousand taka, or who has given any guarantee or provided any
security in connection with the indebtedness of any third
person.
A person who is a director or member of a private company or
partner which is the managing agent or treasurers of the comp.
A person who is a director, or the holder of shares exceeding
five percent in nominal value of the subscribed capital.
8. under section Under section Requirements as
rofit and Loss
210(10) 210(11) Account
• auditor appointed as • For the purpose of • The profit and loss
first auditor by the section 210(10). Any Account shall contain
Board of Directors, sums paid by the or give by way of a
the remuneration is company in respect of note detailed
fixed by the Board of the auditor’s information in regard
directors. expenses shall be to amounts paid to the
• auditor is appointed deemed to be auditor, whether as
by the Government, included in the fees, expenses or
the remuneration is expression otherwise for services
fixed by the “remuneration” rendered:
Government. • 1. as auditor;
• If the auditor is • 2. as advisor, or in
appointed by any other capacity in
company in the respect to-
general meeting, the • taxation matters.
remuneration of • company law matters
auditors shall be fixed
by the company
9. 1. To certify statutory report
2. To report to the members of the company
3. To inquire into particular issues
4. To certify director’s declaration of solvency.
5. To report for prospectus.
6. To assist inspects
7. To assist public prosecutor
10. Access to the book, account and vouchers
Obtaining information and explanations
Inquiring into particular issues
Receiving notice and attending the general meeting
Reporting to the members.
Visiting branches and access to the branch account.
Signing the audit report.
Receiving remuneration.
11. Removal of Auditor before the expire of Tenure: There is
no provision regarding the removal of Auditor before the expire of his or
her tenure. However from various provisions can be identified in this
regards:
For natural reasons of death or incapacity.
Self removed through resignation from the assignment of duties.
For dishonesty or disqualification.
Removal of Auditor after the expire of Tenure: According to
section 210(6), 210(9) and 211,
The first auditors of a company is appointed by the board of directors
prior to the first annual general meeting. That’s why, remove to first
auditors and appoint in his place any other person who have been
nominated for appointment. The nomination notice has been given to
the member not less than fourteen days before the date of the meeting.
12. Any auditor other than first auditor may be removed from
office before the expire of his term only by a special resolution
of the company in the general meeting.
The retiring auditor has the right to make a representation
which may be circulated to the members unless it is too late to
do so, without prejudice to his or her right to be heard orally,
require that the representation shall be read out the meeting.
