law: Companies Act, 2013 
  143.
  
   Powers
  
  and duties of auditors and auditing standards.
  1.      Every auditor of a
  
  company shall have a right of access at all times to the books of account and
  
  vouchers of the company, whether kept at the registered office of the company
  
  or at any other place and shall be entitled to require from the officers of the
  
  company such information and explanation as he may consider necessary for the
  
  performance of his duties as auditor and amongst other matters inquire into the
  
  following matters, namely:—
  a.     
  
    whether
  
  loans and advances made by the company on the basis of security have been
  
  properly secured and whether the terms on which they have been made are
  
  prejudicial to the interests of the company or its members;
  b.    
  
    whether
  
  transactions of the company which are represented merely by book entries are
  
  prejudicial to the interests of the company;
  c.     
  
    where
  
  the company not being an investment company or a banking company, whether so
  
  much of the assets of the company as consist of shares, debentures and other
  
  securities have been sold at a price less than that at which they were
  
  purchased by the company;
  d.    
  
    whether
  
  loans and advances made by the company have been shown as deposits;
  e.     
  
    whether
  
  personal expenses have been charged to revenue account;
  f.     
  
    where
  
  it is stated in the books and documents of the company that any shares have
  
  been allotted for cash, whether cash has actually been received in respect of
  
  such allotment, and if no cash has actually been so received, whether the
  
  position as stated in the account books and the balance sheet is correct,
  
  regular and not misleading:
  Provided
  
  that the auditor of a company which is a holding company shall also have the
  
  right of access to the records of all its subsidiaries in so far as it relates
  
  to the consolidation of its financial statements with that of its subsidiaries.
  1.     
  2.      The auditor shall
  
  make a report to the members of the company on the accounts examined by him and
  
  on every financial statements which are required by or under this Act to be
  
  laid before the company in general meeting and the report shall after taking
  
  into account the provisions of this Act, the accounting and auditing standards
  
  and matters which are required to be included in the audit report under the
  
  provisions of this Act or any rules made there under or under any order made
  
  under sub-section (11 ) and to the best of his information and knowledge,
  
  the said accounts, financial statements give a true and fair view of the state
  
  of the company’s affairs as at the end of its financial year and profit or loss
  
  and cash flow for the year and such other matters as may be prescribed.
  3.      The auditor’s report
  
  shall also state—
  a.     
  
    whether
  
  he has sought and obtained all the information and explanations which to the
  
  best of his knowledge and belief were necessary for the purpose of his audit
  
  and if not, the details thereof and the effect of such information on the
  
  financial statements;
  b.    
  
    whether,
  
  in his opinion, proper books of account as required by law have been kept by
  
  the company so far as appears from his examination of those books and proper returns
  
  adequate for the purposes of his audit have been received from branches not
  
  visited by him;
  c.     
  
    whether
  
  the report on the accounts of any branch office of the company audited under
  
  sub-section (8 ) by a person other than the company’s auditor has been sent
  
  to him under the proviso to that sub-section and the manner in which he has
  
  dealt with it in preparing his report;
  d.    
  
    whether
  
  the company’s balance sheet and profit and loss account dealt with in the
  
  report are in agreement with the books of account and returns;
  e.     
  
    whether,
  
  in his opinion, the financial statements comply with the accounting standards;
  f.     
  
    the
  
  observations or comments of the auditors on financial transactions or matters
  
  which have any adverse effect on the functioning of the company;
  g.    
  
    whether
  
  any director is disqualified from being appointed as a director under
  
  sub-section (2 ) of section 164;
  h.     
  
    any
  
  qualification, reservation or adverse remark relating to the maintenance of
  
  accounts and other matters connected therewith;
  i.      
  
    whether
  
  the company has adequate internal financial controls system in place and the
  
  operating effectiveness of such controls;
  j.      
  
    such
  
  other matters as may be prescribed.
  1.     
  2.     
  3.     
  4.      Where any of the
  
  matters required to be included in the audit report under this section is
  
  answered in the negative or with a qualification, the report shall state the
  
  reasons therefor.
  5.      In the case of a
  
  Government company, the Comptroller and Auditor-General of India shall appoint
  
  the auditor under sub-section (5 ) or sub-section (7 ) of section
  
  139 and direct such auditor the manner in which the accounts of the Government
  
  company are required to be audited and thereupon the auditor so appointed shall
  
  submit a copy of the audit report to the Comptroller and Auditor-General of
  
  India which, among other things, include the directions, if any, issued by the
  
  Comptroller and Auditor-General of India, the action taken thereon and its
  
  impact on the accounts and financial statement of the company.
  6.      The Comptroller and
  
  Auditor-General of India shall within sixty days from the date of receipt of
  
  the audit report under sub-section (5 ) have a right to,—
  a.     
  
    conduct
  
  a supplementary audit of the financial statement of the company by such person
  
  or persons as he may authorise in this behalf; and for the purposes of such
  
  audit, require information or additional information to be furnished to any
  
  person or persons, so authorised, on such matters, by such person or persons,
  
  and in such form, as the Comptroller and Auditor-General of India may direct;
  
  and
  b.    
  
    comment
  
  upon or supplement such audit report:
  Provided
  
  that any comments given by the Comptroller and Auditor-General of India upon,
  
  or supplement to, the audit report shall be sent by the company to every person
  
  entitled to copies of audited financial statements under sub section (1 )
  
  of section 136 and also be placed before the annual general meeting of the
  
  company at the same time and in the same manner as the audit report.
  1.     
  2.     
  3.     
  4.     
  5.     
  6.     
  7.      Without prejudice to
  
  the provisions of this Chapter, the Comptroller and Auditor- General of India
  
  may, in case of any company covered under sub-section (5 ) or sub-section
  
  (7 ) of section 139, if he considers necessary, by an order, cause test
  
  audit to be conducted of the accounts of such company and the provisions of
  
  section 19A of the Comptroller and Auditor-General’s (Duties, Powers and
  
  Conditions of Service) Act, 1971, shall apply to the report of such test audit.
  8.      Where a company has a
  
  branch office, the accounts of that office shall be audited either by the
  
  auditor appointed for the company (herein referred to as the company’s auditor)
  
  under this Act or by any other person qualified for appointment as an auditor
  
  of the company under this Act and appointed as such under section 139, or where
  
  the branch office is situated in a country outside India, the accounts of the branch
  
  office shall be audited either by the company’s auditor or by an accountant or
  
  by any other person duly qualified to act as an auditor of the accounts of the
  
  branch office in accordance with the laws of that country and the duties and
  
  powers of the company’s auditor with reference to the audit of the branch and
  
  the branch auditor, if any, shall be such as may be prescribed:
  Provided
  
  that the branch auditor shall prepare a report on the accounts of the branch
  
  examined by him and send it to the auditor of the company who shall deal with
  
  it in his report in such manner as he considers necessary.
  1.     
  2.     
  3.     
  4.     
  5.     
  6.     
  7.     
  8.     
  9.      Every auditor shall
  
  comply with the auditing standards.
  10.   The Central
  
  Government may prescribe the standards of auditing or any addendum thereto, as
  
  recommended by the Institute of Chartered Accountants of India, constituted
  
  under section 3 of the Chartered Accountants Act, 1949, in consultation with
  
  and after examination of the recommendations made by the National Financial
  
  Reporting Authority:
  Provided
  
  that until any auditing standards are notified, any standard or standards of
  
  auditing specified by the Institute of Chartered Accountants of India shall be
  
  deemed to be the auditing standards.
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  10.  
  11.   The Central
  
  Government may, in consultation with the National Financial Reporting
  
  Authority, by general or special order, direct, in respect of such class or
  
  description of companies, as may be specified in the order, that the auditor’s
  
  report shall also include a statement on such matters as may be specified
  
  therein.
  12.   Notwithstanding
  
  anything contained in this section, if an auditor of a company, in the course
  
  of the performance of his duties as auditor, has reason to believe that an
  
  offence involving fraud is being or has been committed against the company by
  
  officers or employees of the company, he shall immediately report the matter to
  
  the Central Government within such time and in such manner as may be
  
  prescribed.
  13.   No duty to which an
  
  auditor of a company may be subject to shall be regarded as having been
  
  contravened by reason of his reporting the matter referred to in sub-section (12 )
  
  if it is done in good faith.
  14.   The provisions of
  
  this section shall mutatis mutandis apply to—
  a.     
  
    the
  
  cost accountant in practice conducting cost audit under section 148; or
  b.    
  
    the
  
  company secretary in practice conducting secretarial audit under section 204.
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  15.   If any auditor, cost
  
  accountant or company secretary in practice do not comply with the provisions
  
  of sub-section (12 ), he shall be punishable with fine which shall not be
  
  less than one lakh rupees but which may extend to twenty-five lakh rupees.