Authentication and signing of balance sheet and profit and loss account on the same date by auditors - Companies Law - No. 7/74,

Circular: No. 7/74, dated 26 ‑ 4 ‑ 1974. Subject:- Authentication and signing of balance sheet and profit and loss account on the same date by auditors It has been represented by the Institute of Chartered Accountants of India that some of the Registrars of Companies are raising queries about the adequacy or otherwise of audit in cases where there is no time gap or very little time gap between the date of approval of accounts under section 215 by the board of directors of the company concerned and the date of the audit report thereon. The Department is of the view that responsibility for the preparation of the accounts of a company belongs to the directors who have to approve them before the auditors make their report thereon. The Act is apparently silent on when the auditors may commence their work of audit. In other words, it does not clarify whether they have simply to await the directors report on the accounts or proceed with the audit work in the meantime immediately after their appointment at the last annual general meeting. The auditors report comes at the end of the audit process and section 215 mentions nothing of the process preceding the preparation of the audit report by the auditors. Section 227 gives the auditor access at all times to the books and accounts and vouchers of the company, which amply suggests that they do not have to remain idle at any time after their appointment as auditors. Subject to the convenience of the company, he may actually commence the checking up of vouchers, etc., and the company may prepare trial balance, etc., which will save time for the auditors in the preparation of their report in due course. Thus, if the auditor signs the balance sheet on the same date on which the directors have approved it, it may not be inferred from this solitary circumstance that the auditor has not performed the audit efficiently.