Process of auditing a statutory report :
Under section 165, every company limited by shares and every company limited by guarantee and having a Share Capital shall, within a period of not less than one month or more than six months from the date at which the company is entitled to commence business, hold a General Meeting of the Members of the company, which shall be called ‘the Statutory Meeting’.
The Board of Directors shall, at least twenty-one days before the day on which the meeting is held, forward a report, called Statutory Report, to every member of the company. A shorter period than twenty-one days may be agreed to by all the members entitled to attend and vote at a meeting.
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ADVERTISEMENTS:
The Statutory Report must state:
1. The total number of shares allotted as fully paid and partly paid and, in either case, the consideration for which they have been allotted.
2. The total amount of cash received in respect of such shares.
ADVERTISEMENTS:
3. An abstract of the receipts of the company and of the payments made there out up to a date within seven days of the date of the report and the balance in hand under the following heads:
(i) Receipts from shares and debentures and other sources.
(ii) Payment made there out and particulars of the balance in hand.
(iii) An account or estimate of the preliminary expenses of the company showing separately any commission or discount paid or to be paid on the issue or sale of shares or debentures.
ADVERTISEMENTS:
4. The names, addresses and occupations of the Directors of the company and of its auditors ; and also, if there by any, of its Manager and Secretary and the changes, if any, which have occurred in such names, addresses and occupations since the date of the incorporation of the company.
5. The particulars of any contract which is to be submitted to the shareholders at the meeting for the approval.
6. The extent, if any, to which each underwriting contract, if any, has not been carried out and the reason thereof.
7. The arrears, if any, due on calls from every Director and from the Manager.
8. The particulars of any commission or brokerage paid or to be paid to any Manager or Director in connection with the sale or issue of shares or debentures.
The Statutory Report has to be certified as correct by not less as two Directors of the Company; one of them shall be a Managing Director where there is one.
The auditor of the company has to certify the Statutory Report as correct so far as it relates to the shares allocated by the company and cash received in respect of such shares and the receipts and payments of the company.
The provisions of Section 165 do not apply to a private Company Management:
A private company is not required to hold a Statutory Meeting and its Board of Directors is also not required to prepare or circulate a Statutory Report. If a private company is converted into a public company, the position in regard to the Statutory Meeting and the Statutory Report will remain unaltered.
The management of companies now includes:
(1) Directors, (2) Managing Directors, (3) Manager, (4) Legal Advisor, and (5) Auditors – all of whom work under the control and direction of the Board of Directors and are subordinate agencies of management.
Sections 152 to 388 of the Companies Act deal with the appointment, rights and duties, remuneration, etc. of these officers. An attempt has been made in the following lines to put these provisions briefly so far as they relate to the subject in hand.