Section 143 of the Companies Act, 2013
Section 143 of the Companies Act, 2013 outlines the powers and duties of auditors and auditing standards.
✅ Section 143 – Powers and Duties of Auditors and Auditing Standards
Key Provisions:
Right of Access:
The auditor of a company has the right to access all books of account, vouchers, and other records of the company at all times.
Right to Information:
The auditor may require information and explanation from:
The company’s officers,
Subsidiaries, and
Associate companies, as necessary for auditing.
Reporting Duties:
The auditor must make a report to the members of the company on:
Whether the accounts give a true and fair view,
Whether they comply with accounting standards, and
Other matters prescribed under the law.
Fraud Reporting (Section 143(12)):
If the auditor finds any fraud committed or suspected, he must report it:
To the Central Government if the fraud is above the prescribed amount (currently ₹1 crore),
To the Audit Committee/Board if below the threshold, and disclose in the auditor's report.
Audit of Government Companies:
For companies where the Central or State Government holds 25% or more shares, the Comptroller and Auditor-General (CAG) of India appoints the auditor.
The auditor must submit the report to the CAG, who may conduct a supplementary audit.
Auditing Standards:
The auditor shall follow the auditing standards recommended by the Institute of Chartered Accountants of India (ICAI) and notified by the Central Government.
Penalties for Contravention:
If an auditor contravenes provisions knowingly or willfully:
Fine between ₹1 lakh to ₹25 lakhs,
May also face imprisonment in case of fraud under Section 147.
📌 Example:
If an auditor detects manipulation of revenue by the management and fails to report it, he may be penalized under Section 143(12) and Section 147.
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