Powers (or) Rights of an Auditor [Sec.143]
The Companies Act has conferred certain rights on auditor's so as to enable them to discharge their duties smoothly.
1. Right to Access Books and Vouchers: Every auditor of a company has a right to access book of accounts and vouchers of the company at all times. Vouchers include all documents, correspondence, agreements, etc.
Books include financial, accounting, statutory and statistical books of the company. The term all times means only during the normal business hours.
2. Right to Obtain Information and Explanation:
An auditor has the right to seek information and explanation from the directors and officers of the company. That will enable him to perform his duties successfully. Every officer of the company must furnish the necessary information to the auditor. If the officer refuses to do so, the auditor may report to the members of the company.
3. Right to Sign Audit Report [Sec.145]:
The auditor has the right to sign the auditor’s report. The auditor can also sign or authenticate any document which the law requires to furnish.
4. Right to receive Notices and attend General Meeting [Sec.146]:
The company must send all notices and communications to the auditor relating to any general meeting. The auditor shall attend the meeting either through himself or through his representative, who shall be an auditor. The auditor in general meeting must be given reasonable opportunity to speak on any part of the business, which concerns him as the auditor.
5. Right to visit Branches:
The auditor has the right to access all books and vouchers kept at the head office or at any branches of the company. In case the accounts of branches are audited by a person other than the company’s auditor, he shall be entitled to visit the branch office. The company auditor can get copies of accounts certified by the branch auditor.
6. Right to get Remuneration:
The remuneration of the auditor of a company shall be fixed in its general meeting for auditing the books of accounts of the company. The auditor can claim remuneration from the appointing authority. At the time of winding up of the company, he can claim remuneration as creditor of the company.
7. Right to Report to Members:
The auditor has the right and duty to report to the members of the company regarding the accounts examined by him. He is also required to give his opinion about whether the financial statements give a true and fair picture of the state of affairs of the company.
8. Right to seek Legal and Technical Advice:
The auditor has the right to seek expert advice in respect of legal or technical matters at the expense of the company.
9. Right to give Suggestions to the Board: The auditor has the right to suggest some modifications in the books of accounts to the Board. The Board should comply with the suggestions made by the company auditor. If not, the auditor should report the same to the members. But the auditor cannot make changes in the books of accounts of his own.
10. Right to Correct Wrong Statements: The auditor has the right to correct wrong statements made by the directors relating to the accounts. But it should be remembered that any statement by him to this effect will not relieve himself for any omission or incompleteness in his report.
11. Right to be Indemnified:
The auditor has the right to be indemnified out of the assets of the company against any liability incurred by him in defending himself against the civil or criminal proceedings by the company if it is proved that the auditor has acted honestly.