Para 2.5.14 — MSO (Audit)
Original Rule Text
2.5.14 Statutory auditors have to function within the parameters of the Companies Act, 1956. Their primary responsibility is to examine and certify the Profit and Loss Account and the Balance Sheet ensuring that they disclose a true and fair view of the company’s financial position. They are required to see that the managements have complied with various provisions of the Companies Act and the generally accepted Accounting Standards as well as the guidelines issued by the Institute of Chartered Accountants of India.
What This Means
Statutory auditors of government companies must work within the framework of the Companies Act, 1956. Their primary job is to examine and certify the Profit and Loss Account and Balance Sheet to ensure these financial statements give a true and fair picture of the company's financial health. They must also verify that the company management has complied with the Companies Act provisions and the generally accepted Accounting Standards and ICAI guidelines.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Statutory auditors operate within the Companies Act, 1956 framework
- 2Their primary duty is to certify the P&L Account and Balance Sheet
- 3Financial statements must disclose a true and fair view of the company's position
- 4Compliance with the Companies Act provisions must be verified
- 5Adherence to Accounting Standards and ICAI guidelines must be ensured
Practical Example
A statutory auditor of a government mining company examines the annual financial statements and finds that the company has not made provision for mine closure costs as required by Accounting Standard 29 (Provisions, Contingent Liabilities). The auditor qualifies the audit report noting that the financial statements do not present a true and fair view due to this non-compliance, and flags it for the CAG's attention.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the difference between a statutory auditor and CAG's auditor?▼
What does 'true and fair view' certification require?▼
What role does ICAI play in government company audits?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.