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Wednesday, 2 November 2011

What are auditor duties in respect of statutory report and give an imaginary specimen of such report

STATUTORY REPORT :-
The report which is submitted by the directors in the first general meeting of the shareholders is called statutory report. It should be duly verified by the auditors.

Following important steps will be taken by the auditor before certifying the statutory report.

1. Study Of Legal Documents :-
Auditor should study the documents of the company like Articles, Memorandum and Prospectus very carefully.

2. Checking Of Shares :-
Auditor should check the total number of shares allotted to different classes of shares. He should also check the fully and partly paid share.

3. Checking Of Cash :-
Auditor should check the total amount of cash received by the company in respect of all the allotted shares.

4. Verify The Capital Receipts & Payment :-
Auditor should be very careful in verifying the capital receipts and payments.

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

6. Verify The Borrowing Power :-
Auditor should examine that the limit is imposed on the borrowing power of the company. If it is imposed then company has used his powers within limits.

7. Verify The Minimum Subscription :-
Auditor should also check the minimum subscription is according the requirements of act or not.

8. Checking Of Bio Data :-
Auditor should verify the names, addresses and descriptions of the directors, managers, agents and auditors.

9. Verify The Arrears :-
Auditor should verify the arrears due on calls from directors, managers and agents etc.

10. Securitiny :-
Auditor should examine very carefully all the items which are included in the preliminary expenses account.

11. Checking Of Minutes :-
In order to see the allotments of shares and debentures auditor should examine the minutes of the directors meetings. He should also check the capital expenditure and borrowed loans which are duly sanctioned.

12. Examine The Pass Book :-
Auditor should examine the pass bank pass book and verify the receipts and payment with it.

13. Verify Documents :-
It is the duty of the auditor that he should verify all the legal documents of the company. Prospectus, Articles and Memorandum of Association are the most important documents.

14. Payment To Brokers :-
Brokerage is paid to the brokers on shares. It is the duty of the auditor that he should vouch the payment on shares carefully to verify that such payments are made to the bonafide brokers.

15. Authorized Capital :-
Auditor should check that issued capital is with in the limit of the authorized capital. He should indicate if it is beyond the limit.

16. Checking Of Balances :-
Auditor is required to check the balance from the register of the members to the schedule of share capital and also verify that it agrees with the control account or not.


SPECIMEN OF AUDITOR'S CERTIFICATE :-
"If the undersigned being the auditor of the company, hereby certify that so much of this report as 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."

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