Role of an Auditor in a Company Auditor Roles and Responsibilities

Role of an Auditor in a Company  Auditor Roles and Responsibilities

Introduction of an Auditor

Owning a company is a difficult responsibility as there are several guidelines and laws that all companies need to fulfill. It is necessary to keep up with such consistency; hence the company relies upon the job of an auditor. The job of a company auditor in a company is very big as they help and assist with guaranteeing two things: effectiveness and efficiency. 

Companies need to get their financial statements audited for each financial year. Companies Act 2013 tells us that every one of the resources partners to the company's review in Sec 139 to Sec 142. However, Sec 128 to Sec 132 tells us that the arrangements affix with the organization's records. Moreover, the Companies Act, 2013 gives inspectors certain jobs, privileges, and obligations. Below is a detailed module about an auditor and its role and responsibilities according to the Indian company guidelines and laws.

What are an Audit and Auditing?

An audit is generally defined as a key objective examination related to the financial statements of a body or company that reaches out to a make out if it is compatible with the generally accepted principles that are related to accounting.

In other words, an audit is an examination that is not dependent on the records of the accounts which are undertaken to establish if they are rightly and fully reflected upon by the transactions to which they are related.

Auditing is related to the systematic examination of notes of accounts, vouchers and documents. It is also referred to know about how far the financial statements present a true and fair view of the concern.

Compliance means ensuring that the books of all the company's accounts are maintained properly by the body as and when required by law.

Who is an Auditor?

In the field of accounting, an auditor is a person that is solely responsible for the evaluation of the reliability and validity of a company’s financial records and statements. An auditor can also be an individual who carefully inspects and verifies the accuracy of a company's financial and operational records. Public companies often use a public accounting firm to conduct an audit of their financial records. 

An auditor of a company may be an internal auditor (who is a person whose primary work is to audit their own company), or he can be an external auditor (who is a person who is not from the company and belongs outside the company), an auditor frequently is hired by an auditing company that looks after the financial records and statements of various clients.

To act as an auditor, a person should be certified by the regulatory authority of accounting and auditing or possess certain specified qualifications.

Suppose a person wishes to act as an external auditor of the company. In that case, a person should possess a certificate that shows and proves that the person or an auditor has successfully practiced auditing from the respective authority.

The directors must sign the balance sheet before the auditor signs the audit report, formally approving the accounting. When the audit is completed, the auditors must sign and date their report. A private corporation is required to transmit a copy of the auditor's report to each of its members. It must also file its financial statements, including the auditor's report, with Companies House within nine months of the end of the firm's relevant financial term.

Auditor, Roles, and Responsibilities 

  1. Searches for financial documents and records to make sure that the company's financial records are up to mark and abide by the terms and conditions and the laws of the company and government.
  2. He is responsible for computing the taxes owed by the company, preparing the returns of the taxes, and making sure all the taxes are paid before the due date and deadline.
  3. All the finance-related books, financial, and documents must be updated efficiently and applied to and accept all accounting procedures.
  4. They must manage and organize all the company's financial documents or organization.
  5. All the finance-based operations must be assessed, and the auditor must make the correct and best management related to the recommendations.
  6. They must suggest various ways and techniques reduce the company's cost, revenue enhancement, and profit improvisation.

How does a company appoint an auditor?

If the company's auditor is convinced that they have examined all of the required accounts and are happy with them, the auditor will usually provide an 'unqualified' report. A 'qualified' report will notify shareholders and anyone viewing the financial statements that the auditor did not obtain all of the required material, disagrees with the firm on some important point, or suspects fraud.

Each financial year, an organization must employ an auditor. However, if audited accounts are not required, the board of directors may determine that an auditor is not required. This must be a logical decision of all the owners of the company. In reality, the board of directors should consider if not having audited books may affect banks' confidence to extend credit to your firm.

By board resolution, the directors can appoint an auditor. If the board fails to select an auditor, the corporation members might appoint one by ordinary resolution.

Conclusion

This article tells us about the fundamental roles of auditors, the rights of company auditors, and auditor roles and responsibilities. An auditor is considered an important aspect of the company and the company’s finance.

An auditor looks after the financial condition and finance-related work of the company. Still, they must also suggest many different ways and techniques reduce the company's cost, revenue enhancement, and profit improvisation.

In the field of accounting, an auditor is a person that is entirely responsible for the evaluation of the reliability and validity of a company’s financial records and statements. He serves as an important body in the field of accounts in an organization and a company.

Contact Us for Audit And Assurance Services in Delhi, Noida, Gurgaon, and all across India: write to us at accounts@especia.co.in. Or Call On :(+91)-9711021268 +91-9310165114

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