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CS Executive · Company Law and Practice · Accounts and Auditors

While auditing Kaveri Foods Ltd, the auditor finds that she could not obtain some explanations she considered necessary for her audit. Under section 143, what must her report contain in this regard?

The auditor's report must state that she has not obtained all necessary information and explanations, give the details, and state the effect of the missing information on the financial statements. Section 143(3)(a) requires this, and a negative answer also needs reasons under section 143(4).

  1. AOnly a statement that the audit is incomplete, with no further details
  2. BA statement that she has not obtained all information, with details and the effect of such information on the financial statementsCorrect
  3. CNothing, since explanations from officers are optional
  4. DA direction to the Board to appoint another auditor

Explanation

Section 143(3)(a) requires the report to state whether the auditor sought and obtained all information and explanations necessary for the audit. If not, the details and the effect on the financial statements must be given. Under 143(4), a negative answer also requires reasons.

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