Statutory Duties of Company Auditor


Duties of Company Auditor As Per Provision Of Companies Act

Duties of Company Auditor As Per Provision Of Companies Act

The specific duties of a company auditor as per the provisions of the Companies Act may vary by jurisdiction, as each country may have its own legislation governing the role and responsibilities of auditors. In many countries, the Companies Act (or equivalent legislation) provides a legal framework for the duties of company auditors. However, I'll outline some common duties of a company auditor based on typical provisions found in various Companies Acts:

Examine and Report on Financial Statements:

  1. The Companies Act generally requires auditors to examine the financial statements of the company, which include the balance sheet, profit and loss account (income statement), cash flow statement, and notes to the financial statements. Auditors must ensure that these financial statements give a true and fair view of the company's financial position.

Compliance with Applicable Standards:

  1. Auditors are typically required to ensure that the financial statements comply with the applicable accounting and auditing standards, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).


  1. The Companies Act often emphasizes the importance of the auditor's independence. Auditors should not have any financial or personal interests in the company that could compromise their objectivity and impartiality.

Audit Planning and Risk Assessment:

  1. Auditors must plan the audit, assess the risks of material misstatement in the financial statements, and determine the audit scope and objectives. This planning phase is critical to an effective and efficient audit.

Substantive Testing:

  1. Auditors are required to perform substantive testing, which includes examining individual transactions and account balances to validate the accuracy and completeness of the financial statements.

Communication with Management:

  1. The auditor may communicate with the company's management to obtain information and explanations about the financial statements and transactions under audit.

Communication with the Audit Committee:

  1. In many cases, the Companies Act mandates communication between auditors and the company's audit committee, a group of independent directors responsible for overseeing the audit process. This communication ensures that any significant issues or findings are reported to the committee.

Audit Report:

  1. Auditors are responsible for issuing an audit report, which includes their opinion on the financial statements. The audit report should clearly state whether the financial statements present a true and fair view and whether they are free from material misstatements. If there are issues, the report may express a qualified, adverse, or disclaimer of opinion.


  1. Auditors must maintain comprehensive working papers and documentation of their audit procedures, findings, and conclusions. These documents serve as evidence of the audit work performed and help ensure transparency and accountability.

Safeguarding Assets and Detecting Fraud:

  1. Auditors have a duty to assess whether there is any evidence of fraud, including misappropriation of assets or fraudulent financial reporting. While they are not fraud detectors, they should understand fraud risks and indicators.

Compliance Audits:

  1. Some Companies Acts require auditors to conduct compliance audits to ensure that the company is adhering to specific laws and regulations relevant to its operations.

Professional Ethics:

  1. Auditors must adhere to a strict code of professional ethics and conduct that ensures their integrity, objectivity, and confidentiality during the audit process.

Continuing Professional Education:

  1. Many jurisdictions require auditors to engage in ongoing professional development to stay current with changes in auditing and accounting standards.

Follow-up and Recommendations:

  1. Auditors may provide recommendations to the company for improving internal controls, accounting processes, and financial reporting based on their findings during the audit.

It's important to consult the specific provisions of the Companies Act in the relevant jurisdiction to understand the precise legal duties and responsibilities of auditors, as they can vary from one country to another. Companies Acts typically exist to regulate corporate governance and financial reporting standards, including the role of auditors in ensuring the accuracy and transparency of financial statements.

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