Auditor’s Duties

Auditor’s Duties in Respect of Statutory Report

1. Statutory Report
The report, which is submitted by the directors in the first general meeting of the shareholders is called statutory report. The auditors should duly verify it. The auditor will take following important steps before certifying the statutory report.

2. Study of Legal Documents
The company Memorandum and Articles as also the prospectus should be carefully studied and notes should be made of items affecting terms of share capital issue, minimum subscription, brokerage on shares or underwriting commission, acquisition of assets and liabilities from vendors, mode of satisfaction of purchase consideration etc.

3. Checking of Shares
A complete and exhaustive audit should be made of share capital and debentures issue, including checking of entries in the Register of members and he Register of Debenture holders.

4. Checking of Cash in Hand and Cash at Bank
In order to ascertain the correct balance of cash in hand and in bank, it would be necessary to include in the checking the revenue receipts and payments also.

5. Verify the Capital Receipts and Payments
A through vouching and checking of the cash book transactions for the purpose of verifying the capital receipts and payments will be necessary.

6. Checking of Commission
Auditor should check all types of commission paid or unpaid with the issue or sale of debentures to any one.

7. Verify the Borrowing Power
It should be seen that the limit, if any placed on the borrowing powers of the company is not exceeded.

8. Verify the Minimum Subscription
The auditor should ascertain that the requirements of the law as to minimum subscription have been duly complied with.

9. Checking of Bio Data
Auditor should also verify the names, addresses and descriptions of the directors manages agents and auditors.

10. Verify the Arrears
Auditor should verify the arrears due on calls from directors, managers and agents etc.

11. Scrutiny
Auditor should examine very carefully all the items, which are included in the preliminary expenses account.

12. Checking of Minutes
Director’s minutes will have to be referred to in order to see that the allotment of shares and debentures is properly done and that all capital expenditure and loans borrowed are duly sanctioned.

13. Examine the Passbook
Auditor should examine the bank passbook and verify the receipts and payment with it.

14. Specimen of Auditor’s Certificate
If the undersigned being the auditor of the company, hereby certify that so much of the report are relates to the shares allotted by the company and the cash received in respect of such shares and receipts and the payments of the company is correct.