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Unit 11: Appointment, Right, Duties and Liabilities of an Auditor

by the company in the general meeting. Additionally, a prior approval from the Central Notes
Government is also necessary for such removal of the auditors.

Self Assessment

Fill in the blanks:

1. If the auditor already holds the appointment as auditor in the specified number of companies
as per....................., he will be disqualified for further appointment as auditor in any other
company.
2. Practicing chartered accountants, a person holding a certificate under the ..................... is
also qualified to be appointed as auditor of a company.
3. Disqualification of an auditor is given under section.....................

4. The auditors are to be appointed by the ..................... of the company in an ................ by
passing an ordinary resolution shareholders

11.5 Rights, Duties and Liabilities of Auditor

11.5.1 Powers/Rights of an Auditor (Section-255)

1. Right of access to books of account and vouchers [Section 255(1)].
2. Right to receive information and explanations.
3. Right of access to books and papers of branch [Section 255(2)].
4. Right to receive notices of general meetings and to attend those meetings [Section 255(6)].

5. Right to make representation where another person is being appointed as auditor [Section
253(3)].

11.5.2 Duties and Responsibilities of Auditor

The duties and responsibilities of the auditor are laid down in Section 227 of the Companies Act,
1956. While examining the duties of the auditor, it is important to keep in mind the position of
the auditor’s within the framework of company law. The role and responsibilities of the auditor’s
cannot be isolated from the position that the auditor has been assigned by the law and judiciary.
Over the years, the position ascribed to the auditor’s has changed with the judiciary playing an
important role in expanding their role and responsibilities.

Duties of auditor under section [Section 255(3)] are:
1. To give a report to the members on the accounts, books of account, balance sheet and
profit and loss account examined by him. [Section 255(3)].

2. Where any matter reported upon is answered in the negative or with a qualification the
report shall include reasons for such qualification with factual position.
3. To include in the report of the company such matters as directed by the Federal
Government.
4. To attend those general meetings of a listed company, either himself or through authorized
person, in which the balance sheet, profit and loss account and the auditors’ report are to
be considered.

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