What is Company Audit report | Companies Act 2013
Every company undergoes performance metrics on the basis of the company audit report. This helps us in comprehending the financial position of the company. If you’re perplexed about how to do a company audit under the Companies Act 2013, keep digging in this blog.
We’ll talk about the regulations, key elements, and the process involved in a company audit report. It'll aid you in conducting objective insight into your company!
Introduction to Company Audit Report
The company audit report is a recorded letter processed by the company auditor. It comprises the auditor’s assessment of the financial position of the company. The process is undertaken whether the company’s financial declaration is in accordance with GAAP (Generally accepted accounting principles).
The company auditor scrutinizes the audit report with its annual report. It is external and independent in nature. Now that you know about the meaning of the company audit, it’s crucial to know how to audit a company. Knowing the company audit process is mandatory. It ought to be done as the creditors and banks need legal scrutiny of the company before lending them any credit.
How to do a company audit?
The Company Audit under the Companies Act 2013 is distinct. It's essential you go through the information vigilantly. Below are the salient regulations for conducting company audits in light of the Companies Act 2013.
Guidelines Around Audit Under the Companies Act 2013
As per the Companies Act 2013 for Audit, each and every organization ought to devise a financial declaration ending 31st March of every year. The financial statements must be provided with a fair conviction of the company’s financial status.
It should comply with the accounting norms alerted by the government under Section 133. The company audit report should be well-drafted and devised in the format and form that should be enacted for a certain type of organization.
Mentioned below are the monetary statements needed for company audit under section 2013-
- *Cash Flow Statement *
- Profit & Loss Account
- Income & Expenditure Account Balance Sheet (in the case of Non- Profit Organization)
- An explanatory note linked to, or constituting part of, any file referred, &
- *A declaration for audits in shares, if accessible *
- Appointments of Company Auditors
The next step is the appointment of the company auditor. Under the Companies Act 2013, the audit process is undertaken by the appointment of the auditor by the Board Of Directors (BODs) within 30 days from the incorporation of the company. As per this Act, an auditor signifies-
- A Chartered accountant or
- An organization of chartered accountants, who are proficient to be the company auditor. Also, they’ve stated their agreement to be appointed as the company auditor.
- Eligibility Refrain Criteria For Company Audit Report
Stated below are the individuals who are strictly refrained from appointment as the company auditor under the Companies Act 2013-
- Anybody who is a friend or family member.
- An officer or employee from the organization
*- An individual who is a partner or director of the company or related to the company. *
*- A body corporate beyond an LLP certified under the Limited Liability Partnership Act, 2008. *
Types Of Audits Under the Companies Act, 2013
Under the Companies Act, 2013, the following varied types of audits are conducted to cover each and every facet of corporate functioning-
Internal Audit under the Companies Act, 2013-
Internal Audit is liberated assistance to examine internal controls, processes, methods, and business practices. This type of audit brings conformity with the diverse laws asserted by an organization.
Secretarial Audit under the Companies Act,2013-
Under the Companies Act 2013, a Secretarial Audit is the scrutiny to examine the compliance of the guidelines and laws in accordance with the company. This sort denotes from where the company auditor divulges the opinion as-
To endure significant regulations and conducts in the organization are in likewise the size and processing of the company. Subsequently, the company auditor scrutinizes conformity with desired guidelines, and rules.
Statutory Audit under the Companies Act, 2013-
Section 143 of the Companies ACT, 2013 necessitates guidelines for the duties of the company auditors. This Audit passes on a report to the shareholders on the financial documents and book of accounts scrutinized by the auditor.
Branch Audit under the Companies Act, 2013-
The Branch Audits are conducted in the case of Foreign and Local Branches. Their Auditors ought to examine the data report on the BOA (Board of Auditors) of the branch reviewed by them and deliver the same to the company auditor.
Cost Audit under the Companies Act, 2013
Cost Audit is the arrangement to audit the financial records of the services and product’s costings. This involves labor costs, overheads, and manufacturing costs.
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Now that you’re well acquainted with company audit under the Companies Act 2013, it’s imperative you get it done. Not only it ensure compliance with regulations and policies but also promotes the best codes of conduct.
It is the sole duty of the company auditor to deliver to regulators and shareholders certainty for the company’s financial status. At JR Compliance, we are well-versed in providing you with legal compliance. We’ve served more than 10,000+ leading leaders in the market.
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