Page 250 - CA Inter Audit PARAM

CA Ravi Taori

QNO Sec-143 (1) - Duty to Report- Enquiry under - non Old Course -- (P16M/M16M/N17M/M18M)
CoAud.65 reporting on matters- Satisfied
Bhaskar CNO - CA.300
The auditor of XYZ Ltd. did not report on the matters specified in sub-section (1) of Section 143 of the
Companies Act, 2013, as he was satisfied that no comment is required. Explain.
OR
The auditor of Trilok Ltd. did not report on the matters specified in sub-section (1) of Section 143 of the
Companies Act, 2013, as he was satisfied that no comment is required.
OR
The auditor of X Ltd. did not report on the matters specified under sub-section (1) of section 143 of the
Companies Act, 2013, as he was satisfied that no comment is required. However, the management of
the company wanted the auditor to disclose the findings of enquiry thinking that it would provide a
good impression on the stakeholders. Now, agreeing with the thought of the management, the auditor
is thinking to disclose his findings of enquiry. Comment.
Answer Part I -- Relevant Standards & Laws
▪ Section 143(1) of the Companies Act, 2013

Part II -- Requirements of Relevant Standards & Laws
➢ Section 143(1) of the Companies Act deals with
• Duties of an auditors requiring auditor to make an enquiry in respect of specified matters.
• The matters in respect of which the enquiry has to be made by the auditor include
relating to
• loans and advances,
• transactions represented merely by book entries,
• investments sold at less than cost price,
• loans and advances shown as deposits, etc.
• Since the law requires the auditor to make an enquiry, the Institute opined that 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 the auditor is
satisfied as a result of the enquiries, he has no further duty to report that he is so
satisfied.

Part III – Case Discussion
• Auditor of XYZ Ltd. did not report on the matters specified in sub-section (1) of Section
143 of the Companies Act, 2013.

Part IV – Conclusion
• The auditor of XYZ Ltd. is correct in non-reporting on the matters specified in Section
143(1).

QNO Sec-143 (3)-IFCR- Private companies Old Course -- (N19E/M21M/ M21R)
CoAud.72 Bhaskar CNO - CA.300
Explain the meaning of Internal Financial Controls clearly stating reporting requirement (with reference
to audit) on adequacy of internal financial controls. Also discuss about its (reporting requirement on
adequacy of internal financial controls) applicability on various types of Companies.

OR

As required under Section-143(3)(i) of the Companies Act, 2013 an auditor is required to report in the
auditor’s report whether the company has adequate internal financial controls with reference to
financial statements in place and the operating effectiveness of such controls. State the Private
companies to which the above provision is not applicable.
Answer ➢ Explanation given in Clause (e) of Sub-section 5 of Section 134 explains the meaning of internal
financial controls as, “the policies and procedures adopted by the company for ensuring the
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