Books of Accounts(sec 209)

Which books to be maintained? All sums of money received and spent the related matters. All sales and purchases of goods by the company. Assets and liabilities of the company. In the case of company engaged in production, processing, mining or manufacturing activities, the particulars relating to Utilization of materials, Labour Other items of cost prescribed by the Central Government.

Books of Accounts(sec 209)

Where the books should be kept?
The books of accounts are normally kept at the registered office of the company. The books may be kept at a place within the same city, town or village where the registered office is situated, if the company by special resolution authorizes the directors. The books of accounts relating to transactions at branch office (in or outside India) can be kept at the branch office itself. However, branch office should send proper summarized quarterly returns to the registered office.

Books of Accounts(sec 209)

Inspection of Books of Accounts (Section 209A )
inspecting authority need not assign any reason. no prior notice of inspection to company is necessary. It is the duty of every director, other officer, or employee of the company to produce to the person making inspection all such books of accounts and other books and papers of the company in his custody or control. In case of default, every officer of a company who is in default shall be punishable with fine which shall not be less than Rs. 50000 and also with an imprisonment for a term not exceeding one year.

Auditor
Auditor : An accountant who conducts an audit to verify the accuracy of the financial records and accounting practices of a business or government.

Appointment of Auditors

Appointment of first auditor(sec 224)

Appointed by Board of Directors in the first Board Meeting. Such meeting should be held within 30 days of the Incorporation of the company. In the failure from the part of the directors, the Shareholders can appoint the Auditor in General Meeting.

Appointment of Auditors
Auditor at AGM
The auditors are to be appointed by the shareholders of the company in an annual general meeting by passing an ordinary resolution.
Section 224(1) state that every company shall, at each annual general meeting, by passing an ordinary resolution appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next annual general meeting. Intimation should be send to him about his appointment within the 7 days of appointment in AGM. Company should collect written certificate from the auditor or auditors proposed to be so appointed to the effect that the appointment.

Appointment of Auditors
Appointment of Auditor in case of casual vacancy:
Where a vacancy is caused by the resignation of an auditor the vacancy shall be filled only by the company in a general meeting. The Board of Directors may fill the vacancy arising due to death, disqualification etc in the office of the auditor. However they cannot fill the casual vacancy arising due to resignation of auditor.

Appointment of Auditors
Appointment by Central Government:
Where no auditors are appointed/ reappointed at an annual general meeting or, Appointment is made by an ordinary resolution even though a special resolution is necessary (within seven day of such meeting the company shall intimate this failure to the central government which may appoint a person to fill the vacancy. Under section 619, the central government can appoint or reappoint the auditor of a government company (on the advice of the Comptroller and Auditor General of India).

Appointment of Auditors
Appointment by Special Resolution: In the case of a company in which not less than 25% of the subscribed share capital is held, whether singly or jointly by: A public financial institution or a Government company or the Central Government or any State Government. Any financial or other institution established by any provincial or state act in which a state Government holds not less than 51% of the subscribed share capital, A nationalized bank or an insurance company carrying on general insurance business.

Qualification of Auditor (Section 226 )

A Chartered Accountant: A person should be a practicing Chartered Accountant within the meaning of the Chartered Accountant Act,1949. A firm of Chartered Accountants: A firm whereof all the partners are chartered accountants practicing in India may be appointed as an auditor by its firm name. In such a case any partner so practicing may act in the name of the firm. A Certified Auditor: The holder of a certificate under the Restricted Auditors Certificate (Part B States Rule) 1956, can be appointed as an auditor of company.

Disqualification of an Auditor (Sec 226)

(a) An officer or employee of the company; (b) A person who is partner with an employee of the company or employee of an employee of the company; (c) Any person who is indebted to a company for a sum exceeding Rs. 1,000/- or who have guaranteed to the company on behalf of another person for a sum exceeding Rs. 1,000/-. (d) A person who is holding any security of that company, after a period of one year from the date of commencement of Companies (Amendment) Act, 2000.

Cost Audit

It is the detailed checking of the costing system, techniques and accounts to verify their correctness and to ensure adherence to the objective of the cost accountancy.

Qualification of Cost Auditors (Sec 226)

A Cost Accountant: A person should be a practicing Cost Accountant within the meaning of the Cost Accountant Act,1949.

A firm of Cost Accountants: A firm whereof all the partners are cost accountants practicing in India may be appointed as an auditor by its firm name. In such a case any partner so practicing may act in the name of the firm.

Powers of the Central Government to order Investigation

Discretionary Powers: On report of the registrar(section 235)
Sue moto by the central Government (Section 237(b)) Mandatory Powers: The company by special resolution or The court by order