The role of an auditor in India has been defined by corporate laws. In this article, let us take a deep dive on the role of the company's auditor.
What is an Auditor role in a Company?
Auditors are professionals who work for a company to check whether it is following the correct legal and ethical guidelines. They also help the company to make changes to its policies and procedures if necessary. They also help the company to make changes to its policies and procedures if necessary. In addition, they can help to spot any potential financial problems that a company may be facing.
Why Do Companies Need Auditors?
- Auditors play a critical role in the governance and operations of companies. They help to ensure that companies are operating within the law, identifying and preventing any wrongdoing. Auditors also provide valuable insights into company performance and potential risks
- Auditors can provide important support to management by helping to identify and address problems early. In addition, auditors can help ensure compliance with relevant regulations
- Auditors play an important role in monitoring financial reporting and ensuring accuracy of figures. They also identify potential risks associated with a company’s financial statements
- Auditors can play a crucial role in detecting fraudulent activities, highlighting compliance issues, and recommending corrective measures.
The Role of Auditor as per Company Laws in India
What Are the Roles of an Auditor in a Company?
In India, a Company auditor is mandated by the company law to audit the financial statements of the company. The auditor is supposed to identify any irregularities and to recommend corrective measures. In addition, the auditor is responsible for performing other functions such as reviewing management’s performance, advising on accounting standards and practices, and providing other services as may be requested by the board of directors or management.
Roles and Responsibilities of a Company’s Auditors Under Companies Act 2013
As per the Companies Act, 2013: https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf an auditor is a person appointed by the company to examine and report on the financial statement of the company. The auditor must also certify that the financial statement is in accordance with Generally Accepted Accounting Principles (GAAP).
The main responsibilities of an audit or include:
- Reviewing and reporting on the financial statements of the company
- Certifying that the financial statements are in accordance with GAAP
- Making suggestions for improvement if necessary
- Reporting any suspected fraudulent activity to the appropriate authorities.
- It is important to note that auditors are not permitted to make any independent decisions or recommendations regarding matters covered by their review of the financial statements. They must base their opinions on facts and figures found in the company’s financial statements.
Types of Auditor
The role of auditors in companies is governed by company laws in different countries. In India, the auditor is primarily responsible for safeguarding the financial health of the company, including detecting and preventing fraud. The following are the different types of auditors:
- Internal auditors is an officer or employee of a company who performs internal auditing functions as part of their job. They generally audit internal control over financial reporting, but may also audit other areas such as compliance with applicable laws and regulations.
- External auditors are independent third parties who are hired by a company to perform an independent audit. External auditors may be retained by the company or they may be contracted out to perform an audit.
- Governmental auditors are officers or employees of government agencies who are hired by a company to perform an independent audit of its financial statements.
How to Hire an Auditor?
Auditor role play a very important role in any business or organisation. They are responsible for ensuring that all financial transactions within the company are legitimate and accurate. They also help to ensure that the company is following all the relevant laws and regulations. If you are planning to start or expand your business in India, it is important to know how to hire an auditor. Here are some tips:
- Ask around. Your peers and colleagues may be able to recommend an accountant they know who can meet your needs. Alternatively, you can search online for local auditing firms
- Check out reviews. Once you have narrowed down your search, check out reviews of the auditing firms you are considering to see which ones have received positive feedback from other businesses
- Consider price tags. Make sure to consider the price tag of the auditor before making a decision. You want to find an accountant who is affordable but also reliable and qualified; Vakilsearch provides reliable services
- Ask questions. When interviewing potential auditors, make sure to ask about their experience working with companies of different sizes and industries. You want someone who will be able to provide sound advice and support as your business grows.
Conclusion
Auditing is the process of examining financial statements and other relevant information to determine whether they present fairly, in all material respects, the financial position of a company as of a certain date and whether they reflect fair value of assets and liabilities at that date. Auditors play an important role in ensuring that companies are compliant with Indian laws. They provide objective assurance about the financial health of a company by conducting audits and issuing reports that can help prevent or identify possible illegal or unethical behavior.
