A company is required to prepare a financial statements for the period ending 31st March every year. Such financial statements must be given a true and fair view of the state of affairs of the company and comply with the accounting standards notified by the central government under Section 133 of the Companies Act. Such financial statement must be prepared in the form and format which may be prescribed for a specific type of company for a private limited company schedule VI is the appropriate forum. The expression financial statement includes the following items:
- A balance sheet as at the end of the financial year;
- A profit and loss account,or in the case of a company carrying on any activity not for profit,an income & expenditure account for the financial year;
- Cash flow statement for the financial year;
- A statement for changes in equity, if applicable; and
- Any explanatory note annexed to, or forming part of, any document referred.
Appointment of First Auditor:
To conduct audit of the company the first auditor must be appointed by the Board of Directors within a period of 30 days from the date of incorporation of the company. An auditor means a chartered accountant or a firm of chartered accountants, which is qualified to be the auditor of the company and who have given his consent to be appointed as audit of the company. However, in case the Board of Directors fails to appoint the first auditors than the shareholders of the company in the extraordinary general meeting can appoint the first auditor within 90 day
Appointment of Subsequent Auditor:
In the first general meeting the auditor need to be appointed to hold office for a period of 5 years. However, the appointment of auditor must be ratified in every subsequent annual general meeting.
Audit and Auditors Report:
Audit is a very serious business and auditors are expected to be vigilant and careful while doing audit of a company. The auditors are not required to verify each and every transaction of the company, however he must develop an audit plan which ensures that sufficient information and management representation is gathered so that the auditor is able to ascertain whether the financial statement gives true and fair view of the State of Affairs as at the end of its financial year.
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