Provisions.of Companies Act governing audit of Government Companies

1
Provisions.of Companies Act governing audit of
Government Companies

• 1. Introduction Basic Concepts
• The word 'Company' is an amalgamation of the
  Latin word 'Com' meaning "with or together" and
  Pains meaning "bread". Originally, it referred
  to a group of persons who took their meals
  together. A company is nothing but a group of
  persons who have come together or who have
  contributed money for some common person and who
  have incorporated themselves into a distinct
  legal entity in the form of a company for that
  purpose.

2
Introduction Basic Concepts

• A company as an entity has several distinct
  features which together make it a unique
  organization. The following are the defining
  characteristics of a company

3
Introduction Basic Concepts

• Separate legal entity
• Limited liability
• Perpetual succession
• Separate property

4
Introduction Basic Concepts

• Transferability of shares
• Common seal
• Capacity to sue and being sued
• Separate Management

5
Acts governing audit of Govt. Companies

• According to Indian Companies Act, 1956 following
  provisions are also applicable to Government
  Companies.
• Accounts Audit
• Books of Account to be kept by a Company
• Every company must maintain proper books of
  accounts of its affairs

6
Contd.

• Preparation of Balance Sheet and Profit and Loss
  Account
• The company has to prepare its balance sheet and
  profit loss account from the books of account
  maintained by it. Every Balance Sheet of a
  company must give a true and fair view of the
  state of affairs of the company as at the end of
  the financial year and must be in the prescribed
  format.

7
Contd

• Form of Balance Sheet
• Part 1 to Schedule VI of the Companies Act, 1956
  gives the format in which the balance sheet is to
  be prepared. The schedule gives 2 types of
  formats, the horizontal format and the vertical
  format. A company can prepare its balance sheet
  in either of the 2 formats

8
Contd

• Authentication of Balance Sheet and Profit Loss
  Account
• The balance sheet and profit loss account of a
  company must be signed on behalf of the Board of
  directors by two directors out of whom one must
  be the managing director, where there is one and
  the manager, or secretary, if any. The balance
  sheet and profit and loss account must be
  approved by the Board of directors before they
  are submitted to the auditors for the purpose of
  audit. The report of the auditors must be
  attached to the balance sheet and profit loss
  account.

9
Contd.

• The report of the Board of Directors must be
  attached to every balance sheet presented at the
  annual general meeting. The report must contain
  information regarding the following matters -
• The state of affairs of the company
• The amount, if any, which it proposes to
  carry to any reserves in such balance sheet
• The amount of dividend recommended

10
Contd

• Auditors of Government Companies
• The auditor of a Government company is appointed
  or re-appointed by the Comptroller and
  Auditor-General of India provided that the audit
  would be within the number of acceptable audits
  available to each auditor.

11
Contd.

• The Comptroller Auditor General of India has
  the power -
• To direct the manner in which the company's
  accounts are to be audited by the auditor so
  appointed and to give such auditor instructions
  in regard to any matter relating to the
  performance of his functions as such
• To conduct supplementary audit of the companies
  account.

12
Contd.

• The auditor must submit a copy of his audit
  report to the Comptroller and Auditor-General of
  India who shall have the right to comment upon or
  supplement, the audit report in such manner as he
  may think fit.