Presented ToShuvabrata SahaAssistant ProfessorDept. of Accounting & Information Systems,Comilla University.

Company AuditA company is said to be an artificial person created by law having a separate legal entity distinct from its shareholders. The management and control of the affairs of the company is done by other persons generally known as directors. Hence, it becomes essential for a company to appoint an independent auditor, to verify and certify the truth and fairness of the financial statements.

Company Auditor

According to section 212(2) and 212(3) of the Companies Act, noneof the following persons shall be qualified for appointment asauditor of a company namely- According to section 212(2): (a) an officer or employee of the company ; (b) a person who is partner, or who is in the employment of an officer or employee of the company ; (c) a person who is indebted to the company for an amount exceeding one thousand taka, or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand taka. ; (d) a person who is a director or member of a private company, or a partner of a firm, which is the managing agent of the company ; (e) a person who is a director, or the holder of shares exceeding five percent in nominal value of the subscribed capital , of any body corporate which is the managing agent of the company.

According to section 212(3): A person shall not be qualified for appointment as an auditor of a company, if- he, according to sub-section (2), is disqualified for appointment as auditor of any other body corporate which is that companys subsidiary or holding company or a subsidiary of that companys holding company ; he would be disqualified for such appointment, had the said body corporate been a company. According to section 212(4):If an auditor becomes subject, after his appointment to any of the disqualifications specified in sub sections (2) and (3), he shall be deemed to have vacated his office as such.

Appointment of Company Auditor is compulsory under the Companies Act 1994 section 210.The provisions regarding appointment of the auditors according to Section 210 are:1. Appointment of Auditor by the Board of Directors of the Company:First Auditor[Section 210 (6)]:According to the Companies Act 1994 Section 210 (6) provides that the appointment of first auditors by the Board of Directors within one month of theIf the first Auditor is not appointed by the Board of Directors, within one month of registration, the company in general meeting appoint the first auditor.Casual vacancy[Section210 (7)]:According to the Companies Act 1994 Section 210 (7) about casual vacancy If due to death, insanity or insolvency etc ,a casual vacancy of the auditor arises, the board of directors can fill this vacancy.

Cont.2. Appointment of Auditor in the Annual general meeting of the company:The shareholder of the company appoints the accounts Auditor in the annual general meeting in different situations such as;If the Board of Directors fails to appoint the first Accounts auditor within one month in this case the accounts auditor must be appointed in the annual general meeting.According to Section [210 (1)] every company appoints the Accounts Auditors in each of the annual general meeting. And they are existed in their position until the next annual general meeting. And Within 7 days the shareholder must inform the information of the appointment to the new accounts auditor. 3 . Appointment by central Government:Where at an general meeting ,no auditors are appointed or re-appointed, the central government may appoint a person to fill the vacancy.

Cont. 4. Appointment by special resolution: Companies Act 1994 Section 210 provides that in the case of a company in which 25% or more of the subscribed share capital is held, whether individually or collectively by A public financial institution or a government company or a state government or Any financial or other institution established by any state Act in which a state government holds not less than 51% of the subscribed share capitaA nationalized bank or an insurance company carrying on general insurance business the appointment of auditor shall be made by a special resolution.5. Appointment of Auditors of Government or certain other companies: Companies Act provides that the auditor of a government company shall be appointed or re-appointed by the central government on the advice of the comptroller and auditor general.

According to the provisions of section 224(2),retiring auditor, whatsoever authority appointed, shall be atomically re-appointed by passing an ordinary resolution except in the following circumstances;Where he is not qualified for re-appointment.Where he has given to the company a notice in writing of his willingness to be re-appointed.Where a resolution has been passed at the meeting, appointing somebody else instead of him or providing expressly that he shall not be re-appointed.Where a notice has been given of an intended resolution to appoint some person in the place of retiring auditor, and by reason of death incapability or disqualification of that person, the resolution can not be proceeded with.

The company act 1994 under section 210(10) remains, the details of remuneration of company auditor which are present below:In case of an auditor appointed by the board of directors, his remuneration may be fixed by the board of directors.In case of an auditor appointed by the central govt. , his remuneration may be set by the central govt.Under section- 210(10) In all other respects, it must be fixed by the companys shareholder in general meeting or in such manner as the company in general meeting may determine.If an auditor renders services other than the audit work, he will be entitled to get additional remuneration for such work.

Removal before the Expiry of the term:Under section 210(6), it is provided that the shareholder can remove in a general meeting the first auditor appointed by the board of directors.Under section 210(9), it is provided except the first auditor, auditors appointed u/s 210 could be removed before the expiry of the term in a general meeting.

Removal after the Expiry of the term:(section 211(1))The notice must be given by a member on the behalf of companys shareholders, for intended to removal the present auditor before at least 14 days of annual general meeting.On receipt of such a notice, the company shall forward a copy thereof to the retiring auditor.After getting the copy of notification, the auditor may make written representation to the company and he can request for knowing the shareholder.Under sub-section 212(2) and 212(3), after appointed, if any auditor will be unable behind any causes so that he will be entitled as removed from his position.

1.Representative of the shareholders: Generally an auditor is appointed by the shareholders in the annual general meeting. In some cases, an auditor is appointed by the board of directors and government. Though an auditor is appointed by the board of directors and government, actually he is an agent of the shareholders. 2.An officer of the company: Alike company manager, secretary etc. an auditor is not considered officer of the company. But an auditor has been described as an officer of the company under the company act section 331,332,333.3.A servant of the company: Like any other employee or director of a company, an auditor also renders his services to the company. The employee get remuneration from the company for their services the auditor is receiving remuneration from the company, (not termed as audit fees) for the services rendered by him for the company. Hence like employees of the company, the auditor may also be considered as a servant of the company.

Before commencing the actual audit work of a company, the auditor should go through the following preparatory work:1.Ensuring whether his appointment is in order2.Examination of Certificate of incorporation and commencement of business3.Inspection of statutory books and documents4.Inspection of contracts5.Study of Last balance sheet, Accounts and the last audit report6.Collection of list of the officers of the company and the books written by them7.Enquiry of written statement about internal check.8.Examination of the books of the company.

If an auditor takes responsibility of doing any particular job on the basis of contract with his client, then he will be held responsible or liable for any kind of fault or breach of contract and this type of liabilities are called contractual liabilities.