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CA Ravi Taori

QNO Sec-143(1)- Inquiry By Auditor Old Course-- (P16M/N16E/N20M/N18M/SM20/SM21)
CoAud.63 Bhaskar CNO - CA.300 New Course—(S24M)

The auditor is not required to report on the matters specified in sub-section (1) of Section 143 unless he
has any special comments to make on any of the items referred to therein. If he is satisfied as a result
of the inquiries, he has no further duty to report that he is so satisfied. Explain clearly stating the matters
for which the auditor has to perform his duty of inquiry under this section.

OR
Write a short note on Audit enquiry under Section 143(1) of the Companies Act, 2013.
OR
The auditor has to make inquires on certain matters under section 143(1) of Companies Act, 2013.
Answer Part I -- Relevant Standards & Laws
▪ Section 143(1) of the Companies Act, 2013
Part II -- Requirements of Relevant Standards & Laws
➢ Sections 143 of the Companies Act, 2013 specifies:
The duties of an auditor of a company in a quite comprehensive manner. It is noteworthy that
scope of duties of an auditor has generally been extending over all these years.

➢ Section 143(1) - Duty of Auditor to Inquire on certain matters:
It is the duty of auditor to inquire into the following matters-
• whether loans and advances made by the company on the basis of security have been
properly secured and whether the terms on which they have been made are prejudicial
to the interests of the company or its members;
• whether transactions of the company which are represented merely by book entries are
prejudicial to the interests of the company;
• where the company not being an investment company or a banking company, whether
so much of the assets of the company as consist of shares, debentures and other
securities have been sold at a price less than that at which they were purchased by the
company;
• whether loans and advances made by the company have been shown as deposits;
• whether personal expenses have been charged to revenue account;
• where it is stated in the books and documents of the company that any shares have been
allotted for cash, whether cash has actually been received in respect of such allotment,
and if no cash has actually been so received, whether the position as stated in the account
books and the balance sheet is correct, regular and not misleading.

➢ Research Committee of the Institute of Chartered Accountants of India
The opinion of the Research Committee of the Institute of Chartered Accountants of India on
section 143(1) is reproduced below:
• The auditor is not required to report on the matters specified in sub-section (1) unless he
has any special comments to make on any of the items referred to therein.
• If he is satisfied as a result of the inquiries, he has no further duty to report that he is so
satisfied. In such a case, the content of the Auditor’s Report will remain exactly the same
as the auditor has to inquire and apply his mind to the information elicited by the enquiry,
in deciding whether or not any reference needs to be made in his report. In our opinion,
it is in this light that the auditor has to consider his duties under section 143(1).”
• Therefore, it could be said that the auditor should make a report to the members in case
he finds answer to any of these matters in adverse.

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