An auditor is an official whose job it is to
carefully check the accuracy of business records. An auditor might be either an
internal auditor, external auditor or independent auditor for accounting firms
in the public or private sector.
Who can be appointed as an Auditor?
Only
a qualified Chartered Accountant within the meaning of the Chartered
Accountants Act, 1949 can be appointed as an auditor. However, the following
points should also be considered for the appointment of auditor.
1.
If the Chartered Accountant is holding a Certificate of Practice, and practicing
in his individual capacity, he may be appointed as an auditor only as an
individual.
2.
If the Chartered Accountant is holding a Certificate of Practice and is a
partner of a firm of chartered accountants, the firm may be appointed as
auditor. Any partner of the firm may perform his duties in the name of the
Firm.
3.
If any person is holding a certificate authorizing him to act as an auditor,
even though he is not a chartered accountant, he may be appointed as auditor.
Such Certificates are not being issued since November 1, 1956.
Who cannot become Auditors of a Company?
The
following persons are not qualified to be appointed as auditors of a company:
1.
The auditing service is considered to be personal, therefore a body corporate
cannot be appointed as auditor. This also ensures that the liability of the
auditor does not become limited. A person holding any security of the company,
carrying a voting right cannot be appointed as auditor.
2.
A person who is indebted to the company in excess of Rs. 1000/-.
3.
A person who has given guarantee or security to the company in relation to the
indebtedness of any third person for a sum exceeding Rs.1000/-.
4.
An officer or employee of the company.
5.
If a person is disqualified to be appointed as auditor of any one company, he
shall be disqualified to be appointed as auditor of
i.
its subsidiary company.
ii.
its holding company.
iii.
subsidiary company of its holding
company.
The
above disqualification avoids any financial relationship between the auditor
and the company.
Additional disqualification of an
auditor:
An
auditor who
1.
has any direct financial interest in the company.
2.
receives any loan or guarantee from or on behalf of the company.
3.
has any business relationship (other than as an auditor) in the company.
4.
has been in the employment in the company.
5.
whose relative is in the employment of the company.
Appointment of Auditors:
The company in General Meeting may decide to have the
accounts of a Branch Office audited otherwise than by the company’s auditor in
which case the meeting should appoint any qualified person as auditor of the
Branch or authorize the Board of Directors to appoint a qualified person as
auditor for the Branch in consultation with the company’s auditors.
1.
Section 224 (1B), prescribes limits for the chartered Accountants for holding
company audits. A Chartered Accountant should ensure that his audits are within
the limits prescribed before accepting the appointment as an auditor of the
company.
2.
There is no prohibition in appointing a relative of a director as auditor.
However, under the Chartered Accountants Act 1949, he should disclose his
interests/relationship in his audit report.
3.
If the remuneration fixed for the auditor exceeds the prescribed limit, (as per
Chartered Accountants Act), the auditor may be appointed by passing a special
resolution. In some cases, approval of central Government is also required.
Other Points to be noted regarding appointment of auditors
1.
If an employee of the Chartered Accountant in practice is director of a
company, the chartered Accountant is not disqualified from being appointed as
auditor.
2.
A statutory auditor of a company cannot be appointed as an internal auditor.
3.
An auditor of a company can however accept any other assignment with that
company, as long as he she does not become the employee of the company.
4.
IF a chartered accountant is indebted to a company, the firm( in which he is a
partner) cannot be appointed as auditor. Similarly, if the firm is indebted to
the company, the partner of the firm cannot be appointed as an auditor of the
company.
5.
After his appointment as an auditor to a company, if an auditor becomes disqualified
due to any of the reasons stated above, his office will be deemed to be
vacated.
Appointment & Reappointment of Auditor:
Reappointment
of Auditor:
1. A retiring auditor may be re-appointed at the annual
general body meeting by passing a resolution.
2. Reappointment of a retiring auditor is not automatic. A resolution at the
annual general body meeting is required.
However, a retiring auditor shall not be
reappointed,
- When he does not qualify for reappointment.
- When he is not interested or expressed unwillingness to accept reappointment.
- When a resolution is passed in the AGM appointing some other auditor. Companies (Amendment) Bill, 2003 requires a special resolution.
- When opted not to reappoint him.
- When resolved to appoint some other auditor and such resolution could not be proceeded with, due to death, or disqualification of such person.
Appointment of Auditor against Casual Vacancy:
The Companies Act has not defined casual vacancy.
But one can say that casual vacancy for an auditor arises due to
disqualification, resignation, death, etc.
1. The Board of Directors may appoint an auditor
to fill the casual vacancy caused by any reason other than by resignation.
2. Where there are more than one auditor, the
remaining auditor may act as the auditor during the vacancy period.
3. Where the casual vacancy is due to
resignation, the vacancy can be filled up only at a annual general meeting.
Appointment of Auditor by Special Resolution
In the case of companies mentioned below, appointment
and reappointment of auditors at the annual general meeting shall be made only
after passing a special resolution.
1. A company in which not less than 25% of the
subscribed share capital is held as on the date of annual general meeting,
jointly or singly, by,
- a nationalized bank or a general insurance company or
- any institution, financial or otherwise, established under State or Provincial Act, in which, not less than 51% of the subscribed capital is held by the State Government or
- a central Government or a state government or a government company or a public financial institution.
Here, the following are to be noted:
1. Subscribed share capital includes preference
share capital.
2. Special Resolution for the appointment of
auditor is necessary even if a nationalized bank holds shares of the company in
its name as security for loans advanced by it.
3. If any of the above mentioned companies fails
to appoint the auditor by passing a special resolution in its annual general
body meeting, the Central Government has the power to appoint the auditor of
the company.
The term Public financial institution means
- any institution constituted under any Central Act or
- any institution in which not less than 51% of the paid up share capital is held or controlled by the Central government
- The official gazette of the Central government mentioning the names of the Public Financial Institutions.
(1) Right of Access to Books of Accounts:
Every auditor of a Company has a right of access
at all times to the books of accounts and vouchers of the company whether kept
at the head office of the company or elsewhere. Thus, the auditor may consult
all the books, vouchers and documents whenever he so likes. This is his
statutory right. He may pay a surprise visit without informing the Directors in
advance but in practice, the auditors inform the Directors before they pay
their visits.
(2)
Right to visit branch office:
According to section 228, if a company has a
branch office, the accounts of the office shall be audited by the company’s
auditor appointed under section 224 or by a person qualified for appointment as auditor of the company under section 226. Where
the Branch Accounts are not audited by a duly qualified auditor, the auditor
has a right of access at all time to the books, accounts and vouchers of the
company and thus, may visit the branch, if he deems it necessary.
(3) Right
to receive notice of general meeting:
Under section 231 an auditor of a company has a
right to receive notices and other communications relating to General Meeting
in the same way as a member of the company.
(4) Right
to attain general meeting:
He is also entitled to attend any General Meeting
which he attends or any part of the business which concerns him as an auditor. According
to the power of the auditor, he may make any statement or explanation with
regard to the accounts as he may desire. He need not, however, answer any
questions. Ordinarily, it is not necessary for the auditor to attend every
General Meeting, but it will be good for him to attend meetings in the
following circumstances:
(a) When
his report contains important qualifications directly affecting the management,
so that his remarks may not be
misunderstood or misinterpreted.
(b) When
he has received a notice from the company that someone else is going to be
proposed for appointment as auditor of the company at the Annual General
Meeting.
(c) When
he has been specially asked by the management to be present.
(5) Right
to send the audit report :
Under section 229, only the person appointed as
auditor of the company, or where a firm is so appointed, only a partner in the
firm practicing in India, may sign the auditor’s report, or sign or
authenticate any other document of the company required by law to be signed or
authenticated by the auditor.
(6) Right
to call for information and explation:
He has a right to obtain from the Directors and
officers of the company any information and explanation as he thinks necessary
for the performance of his duties as an auditor. This is another important
power in the hands of the auditor. He will, however, decide as to which information
or explanations he thinks necessary to obtain. It the Directors or officers of
the company refuse to supply some information on the ground that in their
opinion it is not necessary to furnish it, he has a right to mention the fact
in his report.
(7) Right
to claim Remuneration:
Company auditor has right to claim remuneration.
His remuneration will be fixed by appointing authority and it will be paid by
company.
(8) Right to Correct any Wrong Statement:
The auditor is required to make a report to the
members of the company on the accounts examined by him and on every Balance
Sheet and Profit and Loss Account and on every other document declared by this
Act to be part of or annexed to the Balance Sheet or Profit and Loss Account
which are laid before the company in General Meeting during his tenure of
office. The Directors have a duty to prepare them and present them to the
auditor. The auditor cannot require but advise the Directors to amend their
system of maintaining accounts if it is faulty. If his suggestions are not
carried out, he has a right to refer the matter to the members. If the method
of accounting is inadequate, he must state the fact in his report that proper
books of accounts have not been kept by the company.
Duties of an
Auditor :
(1) Duty to make a report to the member :
The auditor shall report to the
shareholders on the accounts examined by him. The report so submitted shall
contain the following:
(a)
Whether, in his opinion, the Profit and Loss Account referred to in his report
exhibits a true and fair view of the profit or loss.
(b) Whether,
in his opinion, the Balance Sheet referred to in his report is properly drawn
up so as to exhibit a true and fair view of the state of affairs of the
business according to the best of the information and explanations given to him
as shown by the books of accounts.
(c) Whether
he has obtained all the information and explanations which to the best of his
knowledge and belief were necessary for the purpose of his audit.
(d) Whether,
in his opinion, proper books of accounts as required by law have been kept by
the company so far as appears from his examination of those books, and proper
returns adequate for the purpose of his audit have been received from branches
not visited by him.
(e) Whether
the report on the accounts of any branch office audited under section 228 by a
person other than the company’s auditor has been forwarded to him as required
by (c) of sub-section (3) of that Section and how he had dealt with the same in
preparing the auditor’s report.
(f) Whether
the company’s Balance Sheet and Profit and Loss Account dealt with by the
report are in agreement with the books of accounts and returns.
Where any of the matters
referred to above is answered in the negative or with a qualification, the
auditor’s report shall state the reason for the answer.
Under section 227 (4A), the
Central Government may, by general or special order, direct that, in the case
of such class or description of companies as may by specified in the order, the
Auditor’s Report shall also include a statement on such matters as may be
specified therein.
The Central Government before
making any such order may consult the Institute of Chartered Accountants of
India constituted under the Chartered Accountants Act, 1949, in regard to the
class or description of companies, if the Government thinks it necessary.
In exercise of the powers
conferred by sub-section (4A) of section 227 of the Companies Act, 1956, the
Central Government has issued the Manufacturing and other Companies (Auditor’s
Report) Order, 1975 which applies to every company which is engaged in one or
more of the following activities:
(i) Manufacturing, mining or
processing,
(ii)
Supplying and rendering services,
(iii)
Trading, and
(iv) The
business of financing investment, Chit Fund, Nidhi or mutual benefit societies.
The order will not apply to
banks. The order requires that the Auditor’s Report on the accounts of every
company examined by him to whom this order applies, for any financial year
ending on a day on or after January 1, 1976, should contain matters specified
in paragraphs 4 and 5 of the order.
(2) Duty to make enquiries:
The auditor shall enquire:
(a) Whether loans and advances
made by a company on the basis of security have been properly secured and
whether the terms on which they have been made are not prejudicial to the
interests of the company or its members.
(b) Whether transactions of the
company which are represented merely by book entries are not prejudicial to the
interests of the company.
(c) Where the company is not an
investment company within the meaning of section 372 or a banking company,
whether so much of the assets of the company, as consists of shares, debentures
and other securities have been sold at a price less than at within they were
purchased by the company.
(d) Whether
loans and advances made by the company have been shown as deposits.
(e) Whether
personal expenses have been charged to revenue account.
(f) Whether it is stated in the
books and papers of the company that any shares have been allotted for cash,
whether cash has actually been received in respect of such allotment, and if no
cash has actually been so received, whether the position as stated in account
books and the Balance sheet is correct, regular and not misleading.
(3) Duty to assist inspectors:Under section 240, it is the duty of an auditor “to preserve and to produce to an inspector or any person authorized by him in this behalf with the previous approval of the Central Government, all books and papers of, or relating to the other body corporate which are in their custody or poser and otherwise to give to the Inspector all assistance in connection with the investigation which they are reasonably able to give.
(4) Duty to certify statutory Report :
According to section 165 (4), the auditors of the
company shall, in so far as the statutory report relates to the shares allotted
by the company, the cash received in respect of shares and the receipts and
payments of the company, certify it as correct after the same has been
certified as correct by not less than two Directors of the company, one of whom
shall be a Managing Director. (Every company shall within a period of not less
than one month and not more than six months from the date from which the
company is entitled to commence business, hold a General Meeting of the members
which shall be called the statutory Meeting.)
(5) Duty
in relation to the issue of prospectus :
In case of prospectus issued by an existing
company, there will be previous three or four years financial statements. When
such prospectus is certified by company auditor people can rely on the values
shown.
(6) Duty
in relation to declaration of the solvency :
When a company goes into its voluntary winding up
and a declaration of solvency is made by its Directors under section 488 (I),
such a declaration is to be accompanied by the report of the auditors of the
company under section 488(2). It is the duty of the auditors to make such a
report.
Other
Duties of an Auditor
:
1. An auditor should correspond in
writing with the previous auditor:
He should see that for his appointment, the
Articles of Association brave been complied with or not.”
2. It is the duty of an auditor
that he should not adopt foul means over the shareholders to get himself
appointed as an auditor and maintain his office at two places to defraud
others.
3. The auditor should inform the
shareholders about the violation of the provisions of the Sections of the
Companies Act.
4. It is the duty of an auditor
not to practice as an auditor unless he is a member of the Institute and holds
a Certificate of Practice granted by the Council of the Institute.
6. While auditing the accounts
of a company, it becomes the duty of an auditor to scrutinize debentures in
detail and examine properly the rules in the Debenture Trust Deed.
7. An auditor, who fails to
verify cash in hand and to draw the attention of the shareholders to the
unsatisfactory condition of the bank which he audits and fails to bring to bear
on his work that skill and diligence in the performance of his duties which
were required of him, is guilty of professional misconduct punishable under
section 20(2) and 21(3) of the Chartered Accountants Act, 1949.
8. It is the duty of an auditor
that he should verify investments himself while certifying such investments.
9. An auditor should check
properly the stock and the accounts.
10. That it is the duty of a
company’s auditor in general to satisfy himself that the securities of the
company in fact exist and are in the safe custody, cannot be gainsaid.
Liabilities of an
Auditor:
(A) Civil Liabilities :
Civil liabilities arise when there are dispute between two parties for a loss caused to one due to the act of another. In this case, the auditor is called upon to pay damages as decided by the court. These may be of the following types
1. Liability of Negligence
Negligence means acting carelessly or failing to perform a duty enjoyed upon a person. An auditor is expected to perform his duties as an agent of the shareholders by exercising care and diligence in the implementation of statutory requirements for the maintenance and presentation of the financial statement. Auditor must be kept himself up to date with the information if he commits some negligence the purpose of audit is failed.
2. Liability of Liable
In the report the auditor may criticize any person. If it is based on the fact there is no liability of the auditor. On the other hand the auditor is liable in order to avoid this liability the auditor should take care that the report is based on facts and is prepare with good intention.
3. Liability of the Third Party
The auditor is expert in finding out the errors and frauds and is aware how to check the books of accounts. Many third parties as the shareholders, investors, tax authorities, creditors and government rely upon his reports. So if he makes any type of error or fraud, he is liable to pay the damages.
4. Misstatement in Prospectus
According to section 59 The civil liability of an auditor arises due to misstatement in prospectus. Where a prospectus invites person to subscribe for shares or debentures of a company, the auditor shall be liable to pay compensation to every person who subscribe for a purchase any shares or debentures on the faith of the prospectus for any loss or damage be may reason of any untrue statements.
5. Breach of Contract
If the auditor fails to fulfill the term of the contract the civil liability arises of an audited. In case if he omits the all or some conditions of contract, if he cannot make the secrecy, if fails to provide the true and fair view to the owner, he is liable to pay to the owner if sustain any finacial loss.
(B) Criminal Liabilities :
Since for certain purpose of the companies Act, and auditor is deemed to be an officer of the company, he is a liable for such. Act of omission or commission constituting offence under the Act.
1. Misstatement in Prospectus (Sec-63)
Here a prospectus containing any untrue or misstatement is issued with the consent of auditor who shall be punished the with imprisonment which may extend up to two years or with fine which may extend up to Rs. 5,000/- or both.
2. Requirements of Reports (Sec-225)
Here the auditor does not confirm to the requirement of reports as per sec-229 he shall be punished with fine, which may extend up to Rs. 1,000.
3. Assistant to Investigate (Sec-240)
Auditor has statutory duty to assist any investigator appointed by the central Government in collecting any information of the company otherwise he shall be punished with imprisonment which may extend up to six month or with a fine up to Rs. 2,000/- or both for continuous default Rs. 200/- per day may also be charged.
4. Assistance to Prospectus (Sec-242)
On the basis of report of an inspector control Government may prosecute any officer. Auditor is to assist in such prosecution otherwise he is to be punished for contempt of court.
5. Return Books, Papers Property etc. (Sec-477)
At the time of winding up of a company, court may ask the auditor to return any property books or papers of the company otherwise he can be arrested.
6. Public Examination (Sec-478)
On the report of official liquidation, the audition of the companies to the publicly examined. Notes of such examination shall be used as evidence in any civil or criminal proceeding against the auditor.
7. Falsification of Books of Accounts (Sec-539)
Where the auditor is guilty of destruction, multilation, alteration, falsification of any books papers securities, he shall be imprisoned which may extend up to 7 years and shall also be liable to fine.
8. Prosecution of Auditor (Sec-545)
Where auditor is found be guilty of any criminal offence by the liquidator of the company, he shall be prosecuted.
9. False Statement In Any Return
Where the auditor makes any false statements in any material respect in any return report, certification, balance sheet etc, he shall be imprisoned which may extend up to 2 year and shall also be liable to fine.
10. Disqualified Auditor (Sec-254(6))
The company ordinance has clearly stated the persons who are not qualified as auditor, but if an unqualified auditor may act as auditor of the company. He is liable to fine up to Rs. 5,000/- rupees.
11. Non-Compliance (Sec-260)
In case when the auditor makes any report or signed against the legal requirement and the report may be not true the auditor is liable to fine for Rupees 2,000/- if it is willful fault.
12. Auditor Report
If the auditor make the report with the extent to profit himself and the third party for any loss for a material consideration it is a criminal liablity. He may be punished for six months and fine upto 2,000/- rupees.
13. Assist Inspector (Sec-268)
The auditor has to give all the necessary assistance in connection with investigation to the inspector. Some times the auditor may fail to give it. In this case he shall be punishable up to one year and fixed up to ten thousand rupees.
14. Auditor Account (Sec-384(4))
The auditor is liable to submit his report after or within he two months at the end of the period to which account relates. If he fails there is a fine up to rupees 5,000/-
15. False Evidence (Sec-419)
If any person provides false evidence he is punishable up to two years and liable for fine also. The evidence may be affidavit oath or some affirmation etc.
16. Winding (Sec-420)
The criminal liability of company officers including auditor may be composed may year before or during liquidation of company of criminal offences like concealing or removing property, concealing or falsifying document and papers. The liquidation can go to the court of law for proving the breach of duty.
17. False Statement (Sec-492)
Whoever makes a statement false or incorrect or omits any material fact shall be punishable with imprisonment for a term, which may extend to three year and shall be liable to a fine not exceeding twenty thousand rupees.
18. Professional Misconduct
If the auditor fails to follow the rules of their own profession he is liable for the criminal liability. For this default the council can with draw the certificate of practice. The council can also go to the court of law for prosecuting the concerned auditor. The auditor can suffer the jail or fine or both.
(A) Civil Liabilities :
Civil liabilities arise when there are dispute between two parties for a loss caused to one due to the act of another. In this case, the auditor is called upon to pay damages as decided by the court. These may be of the following types
1. Liability of Negligence
Negligence means acting carelessly or failing to perform a duty enjoyed upon a person. An auditor is expected to perform his duties as an agent of the shareholders by exercising care and diligence in the implementation of statutory requirements for the maintenance and presentation of the financial statement. Auditor must be kept himself up to date with the information if he commits some negligence the purpose of audit is failed.
2. Liability of Liable
In the report the auditor may criticize any person. If it is based on the fact there is no liability of the auditor. On the other hand the auditor is liable in order to avoid this liability the auditor should take care that the report is based on facts and is prepare with good intention.
3. Liability of the Third Party
The auditor is expert in finding out the errors and frauds and is aware how to check the books of accounts. Many third parties as the shareholders, investors, tax authorities, creditors and government rely upon his reports. So if he makes any type of error or fraud, he is liable to pay the damages.
4. Misstatement in Prospectus
According to section 59 The civil liability of an auditor arises due to misstatement in prospectus. Where a prospectus invites person to subscribe for shares or debentures of a company, the auditor shall be liable to pay compensation to every person who subscribe for a purchase any shares or debentures on the faith of the prospectus for any loss or damage be may reason of any untrue statements.
5. Breach of Contract
If the auditor fails to fulfill the term of the contract the civil liability arises of an audited. In case if he omits the all or some conditions of contract, if he cannot make the secrecy, if fails to provide the true and fair view to the owner, he is liable to pay to the owner if sustain any finacial loss.
(B) Criminal Liabilities :
Since for certain purpose of the companies Act, and auditor is deemed to be an officer of the company, he is a liable for such. Act of omission or commission constituting offence under the Act.
1. Misstatement in Prospectus (Sec-63)
Here a prospectus containing any untrue or misstatement is issued with the consent of auditor who shall be punished the with imprisonment which may extend up to two years or with fine which may extend up to Rs. 5,000/- or both.
2. Requirements of Reports (Sec-225)
Here the auditor does not confirm to the requirement of reports as per sec-229 he shall be punished with fine, which may extend up to Rs. 1,000.
3. Assistant to Investigate (Sec-240)
Auditor has statutory duty to assist any investigator appointed by the central Government in collecting any information of the company otherwise he shall be punished with imprisonment which may extend up to six month or with a fine up to Rs. 2,000/- or both for continuous default Rs. 200/- per day may also be charged.
4. Assistance to Prospectus (Sec-242)
On the basis of report of an inspector control Government may prosecute any officer. Auditor is to assist in such prosecution otherwise he is to be punished for contempt of court.
5. Return Books, Papers Property etc. (Sec-477)
At the time of winding up of a company, court may ask the auditor to return any property books or papers of the company otherwise he can be arrested.
6. Public Examination (Sec-478)
On the report of official liquidation, the audition of the companies to the publicly examined. Notes of such examination shall be used as evidence in any civil or criminal proceeding against the auditor.
7. Falsification of Books of Accounts (Sec-539)
Where the auditor is guilty of destruction, multilation, alteration, falsification of any books papers securities, he shall be imprisoned which may extend up to 7 years and shall also be liable to fine.
8. Prosecution of Auditor (Sec-545)
Where auditor is found be guilty of any criminal offence by the liquidator of the company, he shall be prosecuted.
9. False Statement In Any Return
Where the auditor makes any false statements in any material respect in any return report, certification, balance sheet etc, he shall be imprisoned which may extend up to 2 year and shall also be liable to fine.
10. Disqualified Auditor (Sec-254(6))
The company ordinance has clearly stated the persons who are not qualified as auditor, but if an unqualified auditor may act as auditor of the company. He is liable to fine up to Rs. 5,000/- rupees.
11. Non-Compliance (Sec-260)
In case when the auditor makes any report or signed against the legal requirement and the report may be not true the auditor is liable to fine for Rupees 2,000/- if it is willful fault.
12. Auditor Report
If the auditor make the report with the extent to profit himself and the third party for any loss for a material consideration it is a criminal liablity. He may be punished for six months and fine upto 2,000/- rupees.
13. Assist Inspector (Sec-268)
The auditor has to give all the necessary assistance in connection with investigation to the inspector. Some times the auditor may fail to give it. In this case he shall be punishable up to one year and fixed up to ten thousand rupees.
14. Auditor Account (Sec-384(4))
The auditor is liable to submit his report after or within he two months at the end of the period to which account relates. If he fails there is a fine up to rupees 5,000/-
15. False Evidence (Sec-419)
If any person provides false evidence he is punishable up to two years and liable for fine also. The evidence may be affidavit oath or some affirmation etc.
16. Winding (Sec-420)
The criminal liability of company officers including auditor may be composed may year before or during liquidation of company of criminal offences like concealing or removing property, concealing or falsifying document and papers. The liquidation can go to the court of law for proving the breach of duty.
17. False Statement (Sec-492)
Whoever makes a statement false or incorrect or omits any material fact shall be punishable with imprisonment for a term, which may extend to three year and shall be liable to a fine not exceeding twenty thousand rupees.
18. Professional Misconduct
If the auditor fails to follow the rules of their own profession he is liable for the criminal liability. For this default the council can with draw the certificate of practice. The council can also go to the court of law for prosecuting the concerned auditor. The auditor can suffer the jail or fine or both.
(C) Other Liabilities
1. Honorary Audit
The auditor on the honorary basis may also accept an audit work. After the completion of the audit work he is bound to submit his report.
2. Joint Audit
When the two auditors carried out the work of audit it is called as the joint audit. It is possible by the two independent auditors under the agreement. Sometimes, a business concern may have two or more than two business places in different cities or countries conduct the audit by one auditor. So this audit is conduct the responsibilities lies on the head of every auditor who had done the work of audit. It is also stated in the audit report.
1. Honorary Audit
The auditor on the honorary basis may also accept an audit work. After the completion of the audit work he is bound to submit his report.
2. Joint Audit
When the two auditors carried out the work of audit it is called as the joint audit. It is possible by the two independent auditors under the agreement. Sometimes, a business concern may have two or more than two business places in different cities or countries conduct the audit by one auditor. So this audit is conduct the responsibilities lies on the head of every auditor who had done the work of audit. It is also stated in the audit report.
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