Statutory Auditor
Elevate your company’s audit accuracy with Legal Delight’s Statutory Auditor service, revealing your financial integrity and market position effortlessly.
Meaning
- Here are several significant aspects concerning India’s Statutory Auditor: Appointment: The appointment of a Statutory Auditor (other than first auditor) for a specified duration is determined by a vote of the company’s shareholders during the Annual General Meeting (AGM).
- Independence: In their employment, statutory auditors are required to preserve their independence and impartiality at all times. They must not possess any personal or financial interests in the company they are auditing, as such interests could compromise their objectivity..
- Scope of the Audit: The job of the Statutory Auditor is to evaluate the company’s financial statements, which includes balance sheet, profit and loss statement, cash flow statement, and notes to accounts. They analyse the company’s financial statements to determine whether it provides an accurate and unbiased representation of the company’s financial situation and performance.
- Audit of Compliance: In addition to examining the company’s financial reporting, statutory auditors also investigate whether the business complies with a variety of legal and regulatory obligations. They make certain that the organisation conforms with all laws, rules, and accounting standards that are in effect.
- Reporting: Once the audit has been completed, the statutory auditor will provide a report that will contain their opinion on the financial accounts. During the course of the audit, serious inaccuracies, breaches of compliance and other important findings if uncovered, will be detailed in the report.
- Corporate Governance: Statutory auditors have an essential part to play in improving corporate governance and ensuring that corporations are transparent and accountable to their stakeholders. They offer an impartial analysis of the state of the company’s finances and contribute to the maintenance of investor trust.
- Statutory Requirement: It is crucial to note that the Companies Act, 2013 in India requires the appointment of a statutory auditor for all businesses, including public and private corporations. This is a requirement that must be complied with by all companies. The pertinent parts of the Companies Act as well as other regulatory requirements regulate the nomination of statutory auditors as well as their day-to-day operations inside an organisation.
What is included in this
FAQs
The shareholders of a business attend an annual meeting called the Annual General Meeting (AGM), where they vote on who will serve as the company’s Statutory Auditor based on the recommendations of the Board of Directors.
In general, an appointment as Statutory Auditor spans the entire financial year. Shareholders must approve this appointment annually at their meeting before the fiscal year concludes.
Yes, as long as the conditions of the Companies Act 2013 and any other regulatory criteria are met, a statutory auditor can be reappointed forconsecutive terms. However, in order to maintain rotation and independence among auditors, there may be caps placed on the maximum number of consecutive terms that a single auditor can serve.
There is a possibility that a statutory auditor might lose their assignment before the end of their term. However, this should be done in accordance with the terms of the Companies Act, and the auditor should be provided with a fair chance to voice their opinion before the removal is finalized.
Yes, in order to be appointed as a Statutory Auditor, one must fulfil a number of predetermined credentials and eligibility requirements. In most cases, the auditor has to be a working member of the Chartered Accountants (CA) profession or a firm of CAs that is qualified to carry out audits in accordance with the applicable rules and regulations.
Yes, the same Statutory Auditor or audit firm can be appointed for several companies; however, this appointment is subject to compliance with the applicable provisions of the Companies Act, the Code of Ethics established by the Institute of Chartered Accountants of India (ICAI), and any other regulatory requirements that may be applicable.
Responsibilities of a Statutory Auditor includes:
- Examination of the company’s financial statements,
- Assessment of compliance with accounting standards and legal requirements,
- Verification of the accuracy of financial records,
- Identification of any material misstatements or non-compliance,
- Issuance of an audit report containing their opinion, etc.
The Companies Act does, in fact, include provisions for the obligatory rotation of statutory auditors, thus the answer is yes. In order to maintain their auditors’ independence and improve the overall quality of their audits, some categories of businesses are required to rotate their auditors after certain intervals.
If it does not compromise their independence, a Statutory Auditor is permitted to offer extra services to a corporation, such as tax consulting, advice services, and internal auditing. However, this is contingent on the Statutory Auditor’s compliance with the relevant laws, rules, and ethical norms. If these conditions are met, the Statutory Auditor can offer these additional services.
The Auditing and Accounting Standards produced by the Institute of Chartered Accountants of India (ICAI) are adhered to by Statutory Auditors in India. These standards give rules and methods for performing audits. In addition to this, they are obligated to abide by the ethical norms and professional standards that have been established by the ICAI.
