1.32     Query

Responsibilities of Newly Appointed Auditors vis-à-vis Accounts

of Prior Years not Presented by Previous Auditors.

 I have been offered appointment in a Company as Statutory Auditor.  On enquiry, it is found that in the Annual General Meeting held in 1974 accounts for the year 1972 was adopted and the retiring auditors were re-appointed.  In the Annual General Meeting held in 1975, no accounts for 1973 and 1974 were placed as the audits were not completed. The retiring auditors were again re-appointed in the said Annual General Meeting of 1975. In the Annual General Meeting held in January 1976 the accounts could not be placed as the auditors again failed to submit their report.  In this Annual General Meeting held in January 1976 the retiring auditors have not been reappointed and new auditor has been appointed. Statutory obligations regarding the new appointment has been completed.

 Whether the new auditor the tenure of his office until next Annual General Meeting can sign and report on the accounts for 1973, 1974 and 1975?

                                                Opinion                                                                    April 5, 1976

 In this connection a reference to Section 224 and Section 227 of the Companies Act is invited.

According to Section 224(1) the Auditor is to hold office from the conclusion of the General Meeting in which he is appointed as Auditor to the conclusion of the next General Meeting.

 According to Section 227(2) it will be the duty of the auditor to make report to the members of the company on the accounts which are laid before the company in General Meeting during his tenure of office.

 From the reading of the above sections it would be clear that the auditor is not appointed to audit the accounts of any particular year.  On the other hand the Act contemplates the auditor holding the office to report on any accounts in the form of Profit and Loss Account and Balance Sheet which are laid before the company in its General Meeting and which are so required to be laid by the other provisions of the Act.

 Accordingly the query is answered in the affirmative.  In fact he is under an obligation to report on all the accounts namely, for the years 1973, 1974 and 1975 if the same are laid before the company in the general meeting held during his tenure of office.

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