As laid down by section 229 of the Companies Act, 1956 only the person appointed as the auditor of the company or where a firm is so appointed, only a partner in the firm practising in India may sign the auditor’s report or sign or authenticate any other document of the company required by law to be signed or authenticated by the auditor. The Department of Company Affairs, Government of India, in a communication dated 29th July, 1972 has expressed the view that when a single chartered accountant is practising, there cannot be any question of any firm name. Further it is stated that section 229 of the Act clearly provides that if a firm of chartered accountants is appointed as auditor, only a partner in the firm may sign the auditor’s report or sign or authenticate any other document required by law to be signed by the auditor. The practice of merely affixing the ‘firm name’ on the report or such other document is not correct in the eyes of law. In the Department’s view, the partner concerned should invariably sign in his own hand for and on behalf
of the firm appointed to audit and the company’s accounts. The practice of a separate disclosure to the Registrar of Companies about the identity of the partner of a firm the name of which is affixed to the auditor’s report and other documents annexed thereto would not suffice and is not a procedure
contemplated by the statute.
Penalty for non-compliance – If any auditor’s report or any document of the company is signed or authenticated otherwise than in conformity with the requirements of section 229, the auditor concerned and the person, if any, other than the auditor who signs the report or signs or authenticates the document shall, if the default is wilful, be punishable with a fine which may extend upto Rs. 10,000/- (section 233).
Reading and inspection of auditor’s report – The auditor’s report must be read before the shareholders of the company in general meeting and should be kept open for the inspection of every member of the company (section 230). It is no part of duty of the auditor either to send a copy of his report to or allow inspection thereof by each member of the company individually or to see that the report is read before the company in general meeting. For non-compliance with any of the requirements of sections 225 to 231, the company, and every officer of the company who is in default, will be liable to a fine which may extend up to Rs. 5000/- (section 232). In Re Allen Craig & Co. (London) Ltd. 1934, it was held that the duty of the auditors, after having signed
the report to be annexed to a balance sheet, is confined only to forwarding that report to the secretary of the company. It will be for the secretary or the directors to convene a general meeting and send the balance sheet and report to members (or other persons) entitled to receive it.