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April-07 Q 3
April-07 Q 3
Q.3 (D) What are the special liability has been imposed by the Companies
Act,1956 on the company auditor.
Ans : Under the Companies Act,1956 an auditor may be subjected to Civil &
Criminal liabilities. Civil Liabilities in the Companies Act :
The civil liability arises when it is proved that the company has suffered
losses as a result of the failure of the auditor to conduct his audit with due
care and skill.
III. False Statement , etc. – Section 638 of the Act, the auditor is liable to
criminal prosecution if he, in any return, certificate, balance sheet,
prospectus, statement or other document makes a statement which is
false in any material particular, knowing it to be material, is punishable
with imprisonment for a term which may extend to two years and also
with a fine.