1.37  Query:    

Authentication of the documents etc., used

by the statutory auditors in his audit.

1. A public limited company has recently changed its accounting year from April-March to calendar year. The company has appointed different auditors for the conduct of statutory audit of its accounts and tax audit under section 44AB of the Income-tax Act.

2. As per the querist, during the course of the tax audit, the tax auditor has wished to have a look at the various schedules which have been audited by the statutory auditor to satisfy himself. However, the company did not have the copies of various schedules stamped by the statutory auditor. The company, thus, requested the statutory auditor to give certified copies of the schedules which were a part of the audit. The statutory auditor, however, refused to part with any paper of his file stating that all papers are the part of his audit and he can not part with any paper, and that he would not even certify the copies.

3.  In order to avoid the problem next year, the company has asked for the statutory auditor’s assurance that he would put his official stamp on all the schedules which the company would hand-over to the statutory auditor during the course of audit. The statutory auditor is, however, not in agreement with the company’s request to put his seal on second copy of the schedules and other relevant accounting records like trial balance, detailed workings of schedule to accounts etc., on the plea that these are strictly part of the audit and since he relies on the details and explanations which have been given by the company, there is no need for him to further certify to the company the documents he had relied upon. The company, as per the querist, is, however, keen to have the auditor’s official seal on all the documents which the company would hand-over to him since such certified documents will be useful for the following purposes:

(a)        Any external agency who further verifies the company’s books may rely on such certified documents as authentic since they have already undergone audit trails. Such use may come during tax-audit, income-tax assessment, sales tax assessment, cost audit, etc.

(b)        Sometimes, the audit working papers may undergo changes. In such cases, certified copy of such documents would only be the true and final document.

(c)        In the event of any doubt as to the true authenticity of the detials and explanations given to the statutory auditor, the certified copies will be the final reliable documents for the clients, especially since concerned staff may not be with the client company at the relevant time.

4. As per the querist, there are many instances where statutory auditors put their seal on office copy of clients to facilitate clients’ requirements for the above purposes.

5. The querist has sought the opinion of the Expert Advisory Committee as to the rights of the clients to seek the authenticated copies of all the documents which have been handed over to the statutory auditor for the audit purposes, and the responsibilities of the auditor to certify such documents.

                                                                       Opinion                                            March 7, 1995

1. The Committee is of the opinion that it is necessary for the statutory auditor to authenticate the balance sheet, the profit and loss account and the schedules that are part of/annexed to the balance sheet or profit and loss account, and which are laid before the company in general meeting during his tenure of office. He is not under any obligation to provide to the clients certified copies of other documents handed over to him for conduct of the audit.

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