Presented To

Shuvabrata Saha
Assistant Professor
Dept. of Accounting
& Information
Systems,
Comilla University.

Presented By

Name ID No.
Ishrat Jahan
(Group Leader)
0906032
Priya Saha
0906004
Takia Begum
0906014
Balai Chandra Das
0906022
Mahmuda Akter
0906024
Shakuit Hossain
0906038
Lia Begum

0906043
Abdul Kader

0906048

Company Audit
A company is said to be an artificial person created by law
having a separate legal entity distinct from its
shareholders. The management and control of the affairs of
the company is done by other persons generally known as
directors. Hence, it becomes essential for a company to
appoint an independent auditor, to verify and certify the
truth and fairness of the financial statements.

Company
Auditor
According to section 212(1), which provides that no person shall be appointed
an auditor of any company unless he is a Chartered accountant within the
meaning of the Bangladesh Chartered Accountants order, 1973.
According to the Companies Act 1994, an auditor must have the following
qualifications:

Occupational qualification General qualification
(a)A Chartered accountant should have
all the qualifications of a
Chartered accountant within the
meaning of the Bangladesh Chartered
Accountants order, 1973.
(b) Without Chartered accounted, no
person shall be appointed as an auditor.
Such as a B.Com. or M. Com can not be
as an Company Auditor.

1. Knowledge in Business, Accountancy,
Economics and
different Laws.
2. Knowledge in Mechanical Methods and
different Language.
3. Honesty and Intelligence.
4. Sharp and impartial Attitude.
5. A man of deserving personality.
6. Patient and gentle behavior.
7. Free from Suspicious mentality.
8. Strategic and conscious approach
9. Common Sense.
According to section 212(2) and 212(3) of the Companies Act, none
of the following persons shall be qualified for appointment as
auditor of a company namely-
According to section 212(2):
(a) an officer or employee of the company ;
(b) a person who is partner, or who is in the
employment of an officer or employee of the company ;
(c) a person who is indebted to the company for an
amount exceeding one thousand taka, or who has given any
guarantee or provided any security in connection with the
indebtedness of any third person to the company for an amount
exceeding one thousand taka. ;
(d) a person who is a director or member of a private
company, or a partner of a firm, which is the managing agent of the
company ;
(e) a person who is a director, or the holder of shares
exceeding five percent in nominal value of the subscribed capital ,
of any body corporate which is the managing agent of the company.

According to section 212(3): A person
shall not be qualified for appointment as an
auditor of a company, if-
he, according to sub-section (2), is disqualified
for appointment as auditor of any other body
corporate which is that companys subsidiary or
holding company or a subsidiary of that
companys holding company ;
he would be disqualified for such appointment,
had the said body corporate been a company.

According to section 212(4):If an
auditor becomes subject, after his appointment
to any of the disqualifications specified in sub
sections (2) and (3), he shall be deemed to have
vacated his office as such.



Appointment of Company Auditor is compulsory under the Companies
Act 1994 section 210.The provisions regarding appointment of the
auditors according to Section 210 are:
1. Appointment of Auditor by the Board of Directors of the
Company:
First Auditor[Section 210 (6)]:
According to the Companies Act 1994 Section 210 (6) provides that the
appointment of first auditors by the Board of Directors within one
month of the
If the first Auditor is not appointed by the Board of Directors, within
one month of registration, the company in general meeting appoint
the first auditor.
Casual vacancy[Section210 (7)]:
According to the Companies Act 1994 Section 210 (7) about casual
vacancy If due to death, insanity or insolvency etc ,a casual vacancy
of the auditor arises, the board of directors can fill this vacancy.
Cont.
2. Appointment of Auditor in the Annual general meeting of the
company:

The shareholder of the company appoints the accounts Auditor in
the annual general meeting in different situations such as;
If the Board of Directors fails to appoint the first Accounts
auditor within one month in this case the accounts auditor must be
appointed in the annual general meeting.
According to Section [210 (1)] every company appoints the
Accounts Auditors in each of the annual general meeting. And they
are existed in their position until the next annual general meeting.
And
Within 7 days the shareholder must inform the information of the
appointment to the new accounts auditor.
3 . Appointment by central Government:

Where at an general meeting ,no auditors are appointed or re-
appointed, the central government may appoint a person to fill the
vacancy.
Cont.
4. Appointment by special resolution:
Companies Act 1994 Section 210 provides that in
the case of a company in which 25% or more of the
subscribed share capital is held, whether individually
or collectively by
A public financial institution or a government company
or a state government or
Any financial or other institution established by any
state Act in which a state government holds not less
than 51% of the subscribed share capita
A nationalized bank or an insurance company carrying
on general insurance business the appointment of
auditor shall be made by a special resolution.
5. Appointment of Auditors of Government or certain
other companies: Companies Act provides that the
auditor of a government company shall be appointed or
re-appointed by the central government on the advice
of the comptroller and auditor general.
According to the provisions of section
224(2),retiring auditor, whatsoever authority
appointed, shall be atomically re-appointed by
passing an ordinary resolution except in the
following circumstances;
Where he is not qualified for re-appointment.
Where he has given to the company a notice in
writing of his willingness to be re-appointed.
Where a resolution has been passed at the
meeting, appointing somebody else instead of
him or providing expressly that he shall not be
re-appointed.
Where a notice has been given of an intended
resolution to appoint some person in the place
of retiring auditor, and by reason of death
incapability or disqualification of that person,
the resolution can not be proceeded with.

The company act 1994 under section 210(10)
remains, the details of remuneration of company
auditor which are present below:

In case of an auditor appointed by the board of
directors, his remuneration may be fixed by the
board of directors.
In case of an auditor appointed by the central
govt. , his remuneration may be set by the central
govt.
Under section- 210(10) In all other respects, it
must be fixed by the companys shareholder in
general meeting or in such manner as the company
in general meeting may determine.
If an auditor renders services other than the
audit work, he will be entitled to get additional
remuneration for such work.

Removal before the Expiry of the term:
Under section 210(6), it is provided that the shareholder can remove in a
general meeting the first auditor appointed by the board of directors.
Under section 210(9), it is provided except the first auditor, auditors
appointed u/s 210 could be removed before the expiry of the term in a
general meeting.

Removal after the Expiry of the term:(section 211(1))
The notice must be given by a member on the behalf of companys
shareholders, for intended to removal the present auditor before at least
14 days of annual general meeting.
On receipt of such a notice, the company shall forward a copy thereof to
the retiring auditor.
After getting the copy of notification, the auditor may make written
representation to the company and he can request for knowing the
shareholder.
Under sub-section 212(2) and 212(3), after appointed, if any auditor will
be unable behind any causes so that he will be entitled as removed from
his position.


Every auditor of a company shall have right to access at all
times to the books and accounts and vouchers of the company
to examine and inspect. [Sec.213(1) ]
An auditor shall be entitled to collect any sort of information
and explanations as he may think necessary for the
performance of his duties. [Sec.213(1)]
Where a company has a branch office and the accounts of the
branch office are not audited by any appropriate qualified
auditor, the company auditor has right to visit the branch
office. [Sec.214(1) Ka ]
Like any member of the company the company auditor is
entitled to receive all notices and communication relating to
any general meeting of the company. [Sec.217]
The auditor of the company is entitled to attend any general
meeting of the company. The act entitles him to present his
speech on any part of the business, which concerns him as an
auditor in that meeting. [Sec.217]
Only the person appointed as an auditor of the
company, or where a firm is so appointed, only a
partner in the firm practicing in Bangladesh shall put
his signature on the auditors report, or any other
document required of the company by law to be
signed or authenticated by the auditor. [Sec.215]
The auditor has right to receive remuneration on the
completion of his work.[Homes Vs Quilter (1980)]
The auditor has right to indemnified out of the
assets of the company against any liability incurred
by him in defending himself against any civil or
criminal proceedings by the company, if he is not
held guilty by the law. [Sec.202 & 396]
If the auditor receives the removal notice, he is
entitled to make his representation. [Sec.211(3)]
If require, the auditor is entitled to take any kind of
legal and technical advice in the performance of
conduct of audit. [Ref. London And General Bank
(1845)]

Status of
a
company
auditor

1.Representative of the shareholders: Generally an
auditor is appointed by the shareholders in the
annual general meeting. In some cases, an auditor
is appointed by the board of directors and
government. Though an auditor is appointed by
the board of directors and government, actually he
is an agent of the shareholders.
2.An officer of the company: Alike company manager,
secretary etc. an auditor is not considered officer
of the company. But an auditor has been described
as an officer of the company under the company
act section 331,332,333.
3.A servant of the company: Like any other employee
or director of a company, an auditor also renders
his services to the company. The employee get
remuneration from the company for their services
the auditor is receiving remuneration from the
company, (not termed as audit fees) for the
services rendered by him for the company. Hence
like employees of the company, the auditor may
also be considered as a servant of the company.



The right of lien means right of one person to retain the property of
another person who owes money to the former. The right of lien of an
auditor of a limited company indicates his right to retain documents and
records of the company for his unpaid fees. The Companies Act is silent
about the right of the lien of auditors on clients documents and records.
Also there are many conflicting legal judgments regarding this issue. The
Institute of Chartered Accountants of England and Wales has issued a
guideline in this regard.
Based on that guideline, the auditors lien can be discussed under the
following heads:
Lien on books of accounts
Lien on working papers
Lien on communication documents
Lien on clients money
General or special lien
Before commencing the actual audit work of a
company, the auditor should go through the following
preparatory work:

1.Ensuring whether his appointment is in order
2.Examination of Certificate of incorporation and
commencement of business
3.Inspection of statutory books and documents
4.Inspection of contracts
5.Study of Last balance sheet, Accounts and the last
audit report
6.Collection of list of the officers of the company
and the books written by them
7.Enquiry of written statement about internal
check.
8.Examination of the books of the company.

Liabilities
of auditors
Contractual
Liabilities
Statutory
Liabilities
Civil
Liabilities
Liabilities
for
negligence
Liabilities
for
misfeasance
Criminal
Liabilities
Other
Liabilities
Contractual Liabilities
If an auditor takes responsibility of doing
any particular job on the basis of contract
with his client, then he will be held
responsible or liable for any kind of fault or
breach of contract and this type of liabilities
are called contractual liabilities.
The auditor may be sued in a civil court
for the damages arising out of negligence
or misfeasance in the performance of his
duties.
Civil
Liabilities
An auditor of a company can be held
guilty of criminal offences, if he willfully
makes a false statement in any report,
return, certificate or balance sheet.
Criminal
Liability
Liability to
third parties
In general, the auditor is not liable to third parties since no
contractual obligations exists between the auditor and the third
parties. The third parties, however , can hold him liable, if there has
been any fraud on the part of the auditor.
Liability for
unlawful act
of the client
An auditor may obtain knowledge about the unlawful acts or defaults
committed by his client during the course of his audit, The question
arises whether he should inform the proper authorities about it and
whether he can be held liable if he does not do so.
Liability of
Joint
auditors
If any company appoint joint auditor, then the company should clearly
identify the liabilities of the each auditors on contract. It may
mention the individual liability of each auditor or the joint liabilities
imposed on both equally.