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Chartered Accountants
Section 143 of the Companies Act, 2013 deals with the powers and duties of the auditors and auditing standards. Sub section (3) to section 143 says that the auditor’s report shall state on the questions on the matters referred to in clauses (a) to (j).
The clause (f) and (h) are reproduced hereunder:
the auditor’s report shall state-
|
Clause (f) |
the observations or comments of the auditors on financial transactions or matters which have any adverse effect on the functioning of the company |
|
Clause (h) |
Any qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected therewith. |
There were many questions that were need to be answered. the phrase 'adverse effect on the functioning of the company' has nowhere been defined in the Companies Act, 2013. Auditor’s may find it difficult to comprehend if their observations/comments have an adverse effect on the functioning of the company or not?
Further what is the exact nature of the words “qualification”, “reservation” or “adverse remark” as appear in clause (h). Should they be considered as akin to “qualified opinion”, “adverse opinion” and disclaimer of opinion”
The Guidance Note of ICAI answers many such questions in detail in conjunction with Standards on Auditing (SAs) and other relevant pronouncements. The Guidance Note has been developed by the Auditing and Assurance Standards Board (AASB) of ICAI.
Download Guidance Note Click Here >>
ICAI AASB-Guidance Note on Auditor’s Reporting under Section 143 (3)(f) and (h) of the Companies Act, 2013 |20-04-2015|
