Powers of an auditor

Auditors of limited companies are given burdensome
duties by the companies act. They are required to make a report on, amongst
other things, the truth and fairness of the annual accounts. If they are
negligent in any way and fail to discover that

the accounts contain an untruth
or do not fairly present the position they may be sued by the company and have
to compensate it for any loss arising as a result of the ‘false’ accounts.

Because of these responsibilities the act has given
the auditors extensive rights and powers. In practice however, whilst the act
lies down provisions requiring directors and employees of a company to provide
the auditor with information and insists that information is true and correct,
this is something which cannot really be enforced.

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