Rights and duties of an auditor

Introduction to audit
The term audit means examination of books of accounts
and vouchers so as to establish their accuracy

It is the systematic examination of financial statements,

records and related operations to determine adherence to
GAAP, management policies or stated requirements.

IFAC defines audit as the “independent examination of

financial information of any entity whether profit oriented
or non-profit oriented and irrespective of its size or legal
form, with a view to expressing an opinion thereof.”
Features of audit
Making a critical review of the system and procedures
in an organisation;

Making such tests and enquiries into the results as well

as the operation of such systems and procedures, as the
auditor may consider necessary to form an opinion;

Expressing that opinion in the accepted phraseology

that has been developed
Who is an auditor?
An official whose job is carefully check the accuracy
of business records. An auditor can either be an
independent auditor unaffiliated with the company
being audited or a captive auditor, and some are
elected public officials. The term is sometimes
synonymous with “controller.”

Auditors are used to ensure that organisations are

maintaining accurate and honest financial records and
statements.
Auditor’s powers
Right to receive prepared financial accounts

Right to access books and vouchers (statutory right)

Right to obtain necessary information and explanations as he thinks necessary for the performance of
his duties

Sign audit report

Right to remuneration

Right to receive notice and other communications relating to general meetings and attend them
(Companies Act)

Right to correct any wrong statement-auditor can advise the Directors to amend their system of
maintaining accounts if it is faulty

Right to have legal and technical advice-to seek expert opinion as necessary to give opinion
Duties of an auditor
To enquire:
Loans and advances made on the basis of security are properly
secured and terms not prejudicial to the interests of the company
or its members
Whether transactions of the company in the financial statements
are not prejudicial to the interests of the company
Whether loans and advances made by the company have been
shown as deposits
Whether personal expenses have been charged to the revenue
account
Whether any shares have been allotted for cash and if cash has
been received and if not whether the position in the financial
statements is correct
Thank you !!