Public Limited Audit |

Public Limited Audit

A public limited company is referred to as a seperate legal business entity that makes its shares available for public trading on the stock exchange. To maintain its openness, a Public Limited Company is required by the Companies Act of 2013 to disclose its financial situation and status to the general public. A public limited business must therefore have its financial records audited. The main goal of the public limited audit is to evaluate if a business accurately portrays its financial status. Examining the data provided to the Auditor, such as the books of accounts, bank balance, and financial statements, is how it is done.

Overview

All publicly traded corporations are required to go through an audit. Regardless of the industry they are in or their yearly turnover, these businesses are required to have their annual accounts audited every fiscal year.

According to Section 143 of the 2013 Companies Act, public limited companies are required to get their annual financial statements audited by independent auditors or accountants each year.

In the Public Limited Audit, the auditors thoroughly go over the company's accounting records, transaction logs, and all other pertinent papers.

It is determined whether the financial accounts are fairly presented and devoid of material misstatements during the public limited audit.

Investors and other interested parties have access to the suggestions and findings that the auditors have prepared.

The main goal of the public limited audit is to offer needed assurance for investment decisions and other reasons to investors, participants in the capital market, and policymakers.

The efficacy of the company's internal controls over financial reporting is also evaluated by the auditors during public limited company audits in addition to the financial statements.

When the auditor points out a company's flaws and management fix them, it also serves the interests of investors.

What steps are included in an audit of a public limited company?

The following is the procedure for conducting a public limited audit-

Review of the minute book- The concerned company's minute book needs to be examined by the auditor, especially for any entries that have an impact on the financial statements.

Examining the profit and loss statement- In a public limited audit, the auditor is required to review and contrast the profit and loss account with the accounts from the prior year. They compare the two to determine whether there are any significant differences.

A comparison of costs- The auditor evaluates whether spending during the two time periods has declined or increased. They look at the turnover and then adjust as appropriate for any deviations that may have occurred throughout the audit period, such as sales tax or allowances.

Analysis of variation- The auditor should look into the reasons behind any variations in the gross net profit and keep an eye on the closing stock valuation.

Review of depreciation- The auditor must determine whether any adjustments are charged for the current year and, if so, what impact they have on the revenue account.

Checking non-recurring items- In a public limited audit, the auditor should look at non-recurring items. For instance, the gain or loss resulted from the sale of a fixed asset.

Assessment of assets- Any significant change in fixed assets from the prior year must be noted by the auditor, especially when it comes to asset assessment.

Examining the variation in assets- Any difference in the current assets from the prior years must be investigated by the auditor.

Prepayment and accruals are examined- The auditor should be alert to any changes in prepayments and accruals that are material in nature.

Examining additional items- Any significant deviation from the expected value should cause the auditor to pay close attention to the other balance sheet items.

Assets and Liabilities verification- The assets and debts owed must be verified by the auditor.

Commitment and losses- The auditor is required to determine whether there are any capital commitments, whether there are any items on which a subsequent loss could occur, and whether any provisions have been made for such losses.

Who is qualified to perform a Statutory Audit for a Public Limited Company?

A statutory public limited audit can be conducted by the individuals listed below-

A Chartered Accountant who works independently (CA)

A Firm of Chartered Accountants

An auditor of a company may be appointed from a Limited Liability Partnership (LLP) with the majority of partners operating in India.

The following businesses or people are ineligible to serve as auditors under the Companies Act of 2013

An organization registered under the Limited Liability Partnership Act of 2008 that isn't an LLP.

A representative or worker for the company in question.

Someone who has a business partnership with a firm employee.

Any person or individual who has guaranteed the company on behalf of another person more than Rs. 1000 or who owes the company more than Rs. 1,000 in debt.

After a year from the Companies (Amendment) Act of 2000's start date, any specific person has securities in the firm.

Anyone who has been found guilty by a court of a fraud-related offense and 10 years have not passed since that conviction.

What Function and Tasks Do Statutory Auditors Perform in a Public Limited Audit?

In a public limited audit, the auditor is charged with determining the accuracy and coherence of the financial statements of the firm.

Following a public limited audit, an auditor gives the company a report. It establishes the organization's level of precision and clarity.

According to Section 139 (1) of the Companies Act of 2013 in conjunction with Rule 3 of the Companies (Audit and Auditors) Rules of 2014, every company is required to designate an individual or a firm as an auditor at its first Annual General Meeting (AGM).

From that meeting until the end of the sixth Annual General Meeting, the Auditor will serve.

How the first auditor is chosen for the audit of public limited companies?

According to section 139(6), the Board must appoint the company's first auditor within 30 days of the company’s establishment.

A especial general meeting (EGM) must be convened within 90 days to nominate the first auditor if, for whatever reason, the Board does not designate within that time frame

The auditors' term will last until the end of the first AGM.

The following explains the process for appointing the first auditor for a public limited audit-

Inform the potential auditor of your plan to hire him as an auditor and inquire as to whether he is competent and not barred from serving in that capacity.

Obtain a certificate of consent from the Auditor.

Obtain a suggestion from the audit committee, if one was called for by section 177.

Every listed company must have an audit committee in accordance with section 177 of the Act and the Companies (Meetings of Board and its Powers) Rules, 2014, and the following classes of companies must have an audit committee on the board-

Every public company with paid-up capital of at least ten crore rupees;

Every public company having annual revenues of at least 100 crore rupees;

Every public company with outstanding debts of 50 crore rupees or more in loans, borrowings, debentures, or deposits

When a company is required to form an Audit Committee, the committee will suggest a person or entity to the Board for consideration as an auditor, among other things.

Conduct a Board meeting.

At the first board meeting, give your approval for the auditor's appointment.

Inform the Auditor and submit Form ADT-1 to ROC within 15 days.

Agreement to serve as an auditor.

Credentials

Call a meeting of the board to discuss the following-

Taking into account the information and documentation obtained and ensuring that the candidate's education and experience are appropriate for the company's size and scope of operations.

Advising the members on the auditor's name.

Conducting AGM

Get the Ordinary resolution employing the Auditor approved at the AGM by calling a meeting.

Inform the Auditor and submit Form ADT-1 to ROC within 15 days.

What makes a Public Limited Audit's audit report comprised?

Following the completion of the public limited audit, the auditor provides an opinion on the financial statements that fit into one of the following four categories in the audit report:
A) Clean or Unqualified Audit Opinion

Unqualified here refers to the auditor's professional judgment that the financial statements pass without any caveats or qualifications. This is the public limited audit's most typical result.

According to Indian Accounting Standards, an unqualified opinion means that the auditor has obtained sufficient evidence that the financial statements are accurate in all material respects and present the company's financial position as of the end of the most recent fiscal year, as well as its operating results and cash flows for the year, without material misstatement.

The terms "reasonable assurance" and "material" are crucial because they show that the Auditor does not limit the scope of the audit procedures to provide 100% certainty or to find every mistake.

The Auditor uses chosen processes to find material misstatements that could influence an investor's or another user's choice depending on the audit opinion.
B) Unqualified Opinion with a Justification
When the auditor thinks the financial statements are fairly presented in all material aspects and are in accordance with Indian Accounting Standards, they often produce this kind of report. They should talk about other information as well. For instance, a company's ability to continue as a going concern may be seriously questioned, or an auditor may point out a change in an accounting principle from a prior year.
C) Qualified Opinion
The auditor reports that, in his or her qualified judgment, the financial statements are fairly presented in all material ways and are compliant with Indian Accounting Standards. One or more particular exceptions exist in this case, which the Auditor details. The auditor, for instance, might have discovered thus analysed diversion from Indian AS that materially affected the financial accounts. In other cases, it's possible that an auditor won't be able to gather enough proof to examine one or more aspects of the financial statements.
D) Oppositional or Disclaimer Opinion
When an auditor believes the financial statements as a whole are materially misstated or do not comply with the required accounting standards, they are given a failing grade known as an unfavourable opinion. An unfavourable assessment typically denotes serious issues that will make it challenging for a business to get investors or obtain funding. A disclaimer of opinion is when an auditor fails to provide an opinion either because they did not have access to enough material to do so or because the company limited the audit's scope. This would also often indicate serious issues.

How does Estabizz do its public limited audits?

Our Estabizz specialists include professionals with public limited auditing experience and credentials.

Preparing a public limited audit technique that is effective and efficient by outlining the goals and parameters.

Obtain the written confirmation that the audit area is adequately regulated.

By evaluating the audit areas' strengths and shortcomings and reporting their effectiveness

By reviewing the audit evidence, reporting the audit areas' effectiveness, and assessing the audit areas' strengths and shortcomings.

By delivering a report of all the findings, along with appropriate recommendations and conclusions, to notify management of the effectiveness of operations and the sufficiency of controls.

Evaluating every activity that the management takes in relation to reporting methods and follow-ups.

To abide by moral and professional requirements in order to assure the accuracy and reliability of audit work

How you can contact Estabizz?

Fill the form.

Get a call back.

Submit the required documents.

Track the progress of your application.

Get the expected results.

Our Blog

Overview What steps are included in an audit of a public limited company?
Who is qualified to perform a Statutory Audit for a Public Limited Company?
What Function and Tasks Do Statutory Auditors Perform in a Public Limited Audit?
How the first auditor is chosen for the audit of public limited companies?
What makes a Public Limited Audit’s audit report comprised?
How does Estabizz do its public limited audits?
How you can contact Estabizz?

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