Section 143 of the Companies Act, 2013 outlines the statutory powers and duties of auditors in relation to the audit of financial statements of companies. It covers various aspects, including the scope of the audit, the auditor's right to access books and records, the duty to report on financial statements, reporting on internal controls, reporting on fraud, and the auditor's responsibility to provide additional information to the Central Government, among other matters.
A practicing-chartered accountant is typically qualified to be a company auditor. Chartered accountants are professionals who have completed the necessary education and training to become members of a recognized accounting body, such as the Institute of Chartered Accountants in their respective country. They are authorized to provide accounting, auditing, and financial advisory services. Being a practicing-chartered accountant indicates that the individual is actively engaged in the profession and has the necessary experience and expertise to perform audits for companies.
The amount received for premium on the issue of shares should be shown in the "Share Premium account." Share premium refers to the amount received by a company on the issuance of shares that exceeds the nominal or face value of the shares. It represents the premium or additional amount paid by investors over the stated value of the shares.
When the auditor is an employee of the organization being audited, the audit is classified as an "internal audit." Internal audits are conducted by individuals or teams within the organization who are independent of the areas being audited but are employed by the same company. The purpose of internal audits is to assess and evaluate the company's internal controls, risk management processes, financial statements, and compliance with laws and regulations. Internal audits play a crucial role in helping organizations identify areas for improvement, ensure compliance, and enhance operational efficiency.
Shareholders generally have the authority to remove a company auditor before the expiry of their term. The specific procedures for removing an auditor may be outlined in the company's bylaws or governing documents. In many jurisdictions, shareholders hold the ultimate decision-making power in a company, and they can exercise their rights to remove an auditor through voting at a shareholders' meeting. The exact requirements for removal, such as the percentage of votes needed or the reasons for removal, may vary depending on local laws and the company's articles of incorporation. It is advisable to consult the relevant laws and company regulations for specific details on the removal process.
The share premium account is typically shown in the balance sheet under the category of "Reserves & Surplus." Reserves and surplus are components of shareholders' equity, representing accumulated profits, reserves, and other retained earnings of the company.
