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Unit 14: Audit of a Partnership Accounts and Government Company

Self Assessment Notes

Fill in the blanks:
10. At present, Section 209 (4A) of the Act requires companies to preserve the................., together
with the vouchers relevant to any entry in such books of account, in good order, relating
to a period of not less than .............immediately preceding the current year.
11. The auditor appointed or reappointed for Government company audit does not hold
appointment as auditor in more than ............companies, of which not more than ten could
be companies, with paid-up share capital of ` ............ or more.
12. At present, the Companies Act contains provisions relating to maintenance of ....................
under section 209 (1) (d) and Cost Audit under section 233B of the Companies Act in
respect of specified industries.

14.4 Summary

Key audit partner focuses on whether a partner is responsible for key decisions or
judgments on significant matters with respect to the audit of the financial statements on
which the firm will express an opinion.
Audit procedure for a partnership account include: Partnership deed or the clauses
containing the working of the firm should be carefully studied; Seek explanations if the
partnership deed is silent about any important matter; Powers and duties of partners;
Division of work; Study the financial clauses; Checking of the books of account and making
report of the audit.

A Government Company is defined in Section 617 as “any company in which not less than
51 per cent of paid-up share capital is held by the Central Government or by any State
Government or Governments or partly by the Central Government and partly by one or
more State Governments and includes a company which is a subsidiary of a Governments
Company as thus defined.”
The auditor of a Government company shall be appointed or reappointed by the Central
Government on the advice of the Comptroller and Auditor-General of India.
The auditor will submit a copy of the audit report to the Comptroller and Auditor-General
of India who may comment upon or supplement the audit report in such manner as he
may think fit.

The preparation of financial information and its audit, therefore, needs to be regulated
through law with stringent penalties for non-observance Accounting Standards serve a
vital function in this respect.
The Audit Committee discussed at length the existing provisions of the Act regarding
approval and authentication of accounts, circulation of accounts and filing of accounts
with the Regulatory body.

The Committee discussed other miscellaneous matters in relation to definition of certain
terms such as “derivative”, “employees stock option”, “net worth” etc. the need for rules
relating to “Transfer of Profit to Reserves” and “Declaration of Dividend out of Reserves”
and related matters.

The measure of depreciation is based on three important parameters viz. depreciable
amount, estimated useful life and estimated scrap value.

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