COMPANY AUDIT PART 1

• COMPANY AUDIT PART 1
• PRELIMINARY BEFORE COMMENCEMENT OF THE AUDIT OF THE COMPANIES

• COMPANY AUDIT
• COMPANY IS AN ARTIFICIAL PERSON CREATED BY LAW HAVING A SEPARATE LEGAL ENTITY DIFFERENT FROM THE MEMBERS
• MANAGEMENT AND CONTROLS OF THE AFFAIRS IS DONE BY OTHERS KNOWN AS DIRECTORS
• MOREOVER THE SHAREHOLDERS CAN NOT KNOW WHETHER THE INVESTMENTS IN COMPANY ARE SAFE UNLESS THE DIRECTORS DULY INFORM THROUGH THEIR REPORTS
• ESSENTIAL FOR A COMPANY TO APPOINT AN INDEPENDENT AND QUALIFIED AUDITOR TO VERIFY AND CERTIFY THE TRUTH AND FAIRNESS OF THE FINANCIAL STATEMENTS
• PRELIMINARIES BEFORE COMMENCING THE AUDIT OF THE COMPANIES

1. ENSURING THE APPOINTMENT OF THE AUDITOR IS IN ORDER
2. INSPECTION OF THE DOCUMENTS,BOOKS AND REGISTERS
3. INSPECTION OF THE CONTRACT
4. STUDY OF PREVIOUS YEAR’S BALANCE SHEETS AND THE AUDITOR’S REPORT
5. STUDY OF THE INTERNAL CONTROL SYSTEM IN OPERATION
6. ENSURING WHETHER THE APPOINTMENT IS IN ORDER
7. ENSURING COMPLIANCE OF ALL LEGAL PROVISIONS RELATING TO HIS APPOINTMENTS
8. IF THE APPOINTMENT IS MADE IN GENERAL MEETING,HE SHOULD OBTAIN THE RESOLUTION OF HIS APPOINTMENT PASSED IN SUCH MEETING
9. IN CASE HE APPOINTED IN PLACE OF RETIRING AUDITOR,DUE NOTICE HAS BEEN GIVEN TO THE RETIRING AUDITOR
10. SHOULD ALSO SEE THAT A NOTICE OF THE AUDITOR IS GIVEN TO THE SHAREHOLDERS ALONG WITH THE NOTICE OF THE GENERAL MEETING
11. APPOINTED TO FILL THE CASUAL VACANCY,OBTAIN A  COPY OF MINUTES OF THE MEETING OF BOD TO ENSURE THAT HIS APPOINTMENT IS IN ORDER
12. ENSURING WHETHER THE APPOINTMENT IS IN ORDER
13. IN CASE IF THE CAUSAL VACANCY IS DUE TO RESIGNATION OF THE AUDITOR,HE SHOULD OBTAIN A COPY OF RESOLUTION PASSED AT THE GM
14. ALSO COMMUNICATE WITH THE AUDITOR WHO HAS RESIGNED INQUIRING THE CIRCUMSTANCES UNDER WHICH HE HAS RESIGNED
15. ALSO ENSURE THAT INFORMATION OF HIS APPOINTMENT AS THE AUDITOR HAS BEEN SENT TO THE REGISTRAR IN WRITING WITH IN 30 DAYS
16. ALSO GIVE A CERTIFICATE TO THE COMPANY THAT HIS APPOINTMENT OR REAPPOINTMENT AS PER THE PROVISIONS OF THE COMPANIES ACT
17. ENSURING WHETHER THE APPOINTMENT IS IN ORDER
18. ALSO ENSURE THAT HIS REMUNERATION HAS BEEN FIXED AS PER THE PROVISIONS OF THE COMPANY ACT
19. IN CASE OF FIRST AUDITOR,FIXED BY BOARD OF DIRECTORS
20. OTHER CASES IT IS FIXED BY MEMBERS IN GENERAL MEETING
21. IF THE AUDITOR IS CALLED UPON TO DO SOME WORK OTHER THAN AUDITING,HIS FEES FOR SUCH WORK SHALL BE FIXED SEPARATELY

• INSPECTION OF STATUTORY BOOKS AND DOCUMENTS
• MEMORANDUM OF ASSOCIATION: ACCORDING TO SECTION 4 OF THE COMPANIES ACT,MUST CONTAIN THESE CLAUSES :

1. IN CASE OF PUBLIC LIMITED, THE NAME OF COMPANY WITH THE LIMITED,IN CASE OF PRIVATE LIMITED COMPANY
2. THE STATE IN WHICH THE REGISTERED OFFICE OF THE COMPANY IS SITUATED’
3. THE OBJECT OF THE COMPANY : MAIN OBJECTS AND OTHER OBJECTS
4. IN THE CASE OF COMPANIES OTHER THAN TRADING CORPORATIONS WITH OBJECTS NOT CONFINED TO ONE STATE,THE STATE TO WHOSE TERRITORIES THE OBJECTS EXTEND
5. IN CASE OF THE COMPANY LIMITED BY SHARES OR BY GUARANTEE.THAT THE LIABILITY OF ITS MEMBERS IS LIMITED
6. IN CASE OF THE COMPANY HAVING SHARE CAPITAL THE AMOUNT OF SHARE CAPITAL WITH WHICH THE COMPANY IS REGISTERED AND DIVISION THEREOF INTO SHARES OF A FIXED AMOUNT. IN SUCH COMPANY,EACH SUBSCRIBER MUST TAKE AT LEAST ONE SHARE AND MUST WRITE OPPOSITE HIS NAME THE NUMBER OF SHARES HE TAKES
7. INSPECTION OF STATUTORY BOOKS AND DOCUMENTS
8. IN CASE THE COMPANY LIMITED BY THE GUARANTEE,MOA MUST STATE THAT EACH MEMBER UNDERTAKE TO CONTRIBUTE TO THE ASSETS OF COMPANY IN CASE BEING COMPANY BEING WOUND UP
9. UNDER SECTION 13 OF THE INDIAN COMPANIES ACT ,2013 THE SPECIAL RESOLUTION HAS TO BE PASSED FOR ALTERATION OF MOA AND SHALL NOT TAKE PLACE UNLESS IT IS CONFIRMED BY GOVERNMENT AND ALSO TO BE REGISTERED WITHIN THREE MONTHS

• AUDITOR’S DUTY

1. CAREFULLY EXAMINE THE OBJECT CLAUSE TO ENSURE THE COMPANY IS CARRYING THE WORK AS SPECIFIED
2. CHECK THE CAPITAL CLAUSE AND SEE THAT ISSUE OF THE CAPITAL IS WITH IN AUTHORISED CAPITAL
3. ALSO NOTE THE PROVISIONS WHICH ARE LIKELY TO AFFECT THE ACCOUNTS OF THE COMPANY
4. IF THE AUTHORISED CAPITAL HAS INCREASED ACCORDING TO THE LAW,SHOULD BE VERIFIED AND TRACED OUT
5. IN CASE OF THE ALTERATION HAVE BEEN MADE PROVISIONS OF SECTION 13 OF THE COMPANIES ACT HAVE BEEN COMPLIED WITH

• ARTICLES OF ASSOCIATION

1. UNDER SECTION 5.EVERY COMPANY IS REQUIRED TO HAVE THE ARTICLES OF ASSOCIATION
2. A COMPANY LIMITED BY SHARES MAY ADOPT ALL OR ANY OF THE REGULATIONS CONTAINED IN TABLE F,G,H.I.J OF SCHEDULE I TO THE COMPANY ACT 2013
3. THE AOA CONTAINS THE RULES ,REGULATIONS AND BY LAWS  FOR THE INTERNAL MANAGEMENT OF THE COMPANY
4. FRAMED TO CARRY OUT THE OBJECT OF THE MEMORANDUM
5. MUST BE PRINTED,DIVIDED INTO PARAGRAPHS AND DULY SIGNED BY EACH SUBSCRIBERS OF THE MOA
6. THEY MAY BE ALTERED AT ANY TIME SUBJECT TO THE PROVISION OF THE COMPANIES ACT AND CONDITIONS CONTAINED IN MOA

• AUDITOR’S DUTY

1. ISSUE OF SHARE CAPITAL AND ITS DIVISION
2. TO NOTE THE MINIMUM SUBSCRIPTIONS
3. TO NOTE THE RULES RELATING TO ALLOTMENT AND CALLS
4. TO KNOW THE RULES REGARDING TRANSFER AND TRANSMISSION OF SHARES
5. TO KNOW ABOUT PAYMENT OF UNDERWRITING COMMISSION AND BROKERAGE ON SHARES
6. TO KNOW THE DATES ON WHICH A CALL CAN BE MADE AND RATE OF INTEREST TO BE CHARGED ON CALLS OUTSTANDING AND INTEREST TO BE PAID ON CALLS MADE ON ADVANCE
7. AUDITOR’S DUTY
8. TO NOTE NUMBER ,QUALIFICATION,POWERS,DUTIES AND REMUNERATION OF DIRECTORS
9. TO EXAMINE THE BORROWING POWERS OF THE COMPANY
10. TO KNOW THE RULES RELATING TO APPOINTMENT,REMOVAL RIGHTS AND DUTIES AND REMUNERATION OF THE VARIOUS OFFICERS OF THE COMPANY
11. TO NOTE RULES REGARDING RELATING TO THE PREPARATION AND MAINTENANCE OF ACCOUNTS
12. RULES REGARDING DIVIDEND AND RESERVES
13. PAYMENT OF INTEREST OUT OF CAPITAL
14. RULES REGARDING DIVIDEND AND RESERVES