in case of joint stock companies auditor serves as an of sharholders
Answers
JOINT STOCK COMPANY
AUDITOR
A person having the required qualification as per the Companies act and who undertakes the inspection of such books of accounts and financial transactions of the company according to the rules and provisions of the Companies act and to submit the report thereof to the shareholder is an auditor.
Rights of a Company Auditor
According to the companies act the auditor has the following rights:
1) Right to Access Books of Accounts
Every auditor of a company has the right to inspect all books, documents, vouchers, agreements etc. These must be made available to him whenever he requests for them.
2) Right to Obtain Information & Explanation
An auditor is authorized to call for explanation & ask for information from any officer of the company required to perform his professional duties.
3) Right to Inspect Branch Accounts
If branch accounts are audited by a different person he has a right to visit the branch office if necessary & inspect its books of accounts. In case of branches of a bank overseas, the auditor may be given the extracts of accounts.
4) Right to Receive Notice
The act describes that the auditor has the right to receive all notices & communications which an ordinary member of a company is entitled to receive relating to any general meeting. He also has the right to attend meeting& to make any statement regarding the accounts audited by him. But he has no obligation to answer any questions raised at the meeting.
5) Right to Sign Audit Reports
The audit report can be signed only by such person who has been appointed as an auditor.
If a firm is appointed to audit any partner may sign in the report. The auditor has the right to recommend to the board necessary changes in the accounting system. If the changes are not implemented he has the right to mention the same in his report.
6) Right to Seek Advice
Whenever necessary to perform his professional duties, the auditor has the right to seek experts’ opinion on technical & legal matters.
7) Right to be Indemnified
The Companies Act considers the auditor as one of the officers of the company, hence he has the right to be indemnified out of the assets of the company against any liability incurred by him while defending a case whenever a case is file against him & he is not found guilty.
8) Right to Remuneration
The auditor has the right to receive remuneration as prescribed by the law. This right cannot be taken away either by changing the Articles of Association or by Passing a Resolution by Members.
9) Auditor’s Lien
It refers to the right of the auditor to withhold certain documents & papers unless certain documents due to him are cleared.
Auditor has no lien on the books of accounts audited by him but if he has worked as accountant also for which he is not paid he can exercise his right of lien.
The auditor has lien over audit working papers as they belong to him regarding the correspondence between the auditor & his clients, he can exercise the right of lien.
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