1.42     Query

Re-opening of Accounts after these have been adopted

by the Board and signed by the Statutory Auditors.

  The accounts of a public limited company (a Government of India Undertaking under Section 617 of the Companies Act, 1956) were adopted on 12/8/77 by the Board under Section 215 of the Act.  The statutory auditors signed the accounts and issued their report to the shareholders on the same day.  A decision was taken by the Government of India after the closure of the accounts of the company to restore the payment of bonus at 8.33% to the employees coming under the purview of the Payment of Bonus Act.  The company obviously could not provide for the same in the accounts.  No mention to this effect was made in the notes forming part of the accounts.  The audit by the Comptroller and Auditor General was under progress.  The Annual General Meeting of the company was to be held on 23-9-1977.

 Whether the accounts for 1976-77 should be re-opened and provision be made for the liability arising from the payment of statutory minimum bonus.

                                                                        Opinion                                   September 29, 1977

As the accounts of the company are not treated as final unless the Comptroller and Auditor General audit is completed, there is no bar, if the Board of Directors wish to re-open the accounts and provide for the bonus liability, which would be a substantial amount, affecting the true and fair view of the state of affairs of the Company.  If the Board decides not to re-open the accounts, the Board cannot escape a note on the accounts and/or a mention in the Director’s Report about the non-provision of bonus liability.  The Committee is of the view that this liability of the Minimum bonus must either be adjusted in the accounts or a mention of the same would have to be made by the company either on the accounts or in the Director’s Report, taking into consideration the facts and circumstances of the case.

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