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The liabilities of an auditor can be summed under the following heads: 1. Civil liabilities 2. Criminal Liabilities 1. Civil Liabilities: (I) Liability for Negligence: The liability of an auditor arises where it is proved that his client has suffered a loss due to his professional negligence. The auditor may be held personally liable if it is proved, that had he exercised reasonable care and skill, he must have discovered the discrepancy. In a case, it was held that if an auditor fails to show as much skill and diligence as is expected of a man of ordinary prudence, he must suffer the consequences. (ii) Liability for misfeasance: According to section (340), the court may assess damages against the delinquent director and other officers of the company, including an auditor for misfeasance or breach of trust. In case of an auditor who also comes within the definition of officer in section 2 for purpose of the section, if he is guilty of neglect of duty or misfeasance, so as to cause los

The audit report is the final stage of the audit process. The results of the audit are communicated through the audit report. An audit report is the written opinion of an auditor regarding companies financial statements. Audit report is a document prepared by an auditor to certify the financial position and accounting records of a firm. Meaning of Audit Report The audit report is the statement included in the financial statements. It contains the opinion of the auditor in financial statements. The auditor reports to the shareholders who have appointed him. He has to provide his opinion on the truth and fairness of financial statements. Thus, the auditor protects the interest of shareholders through an audit report. Definition of Audit Report Lancaster has defined a report as “a report is a statement of collected and considered facts, so drawn up as to give clear and concise information to persons who are not already in possession of the full facts of the subject matter of the report.”

1. Title of the report The title of the audit report should help the reader to identify the report. It should disclose the name of the client. The title distinguishes the audit report from other reports. 2. Name of the Addressee The addressee normally refers to the person who appoints the auditor. If a company appoints the auditor, the addressee should be shareholders. As per law, the complete address of the addressee is required. Addressee for the statutory audit shall be shareholders and in case of Special Audit, it is Central Government. 3. Introductory Paragraph The introductory paragraph should specify that it is the auditor’s opinion on financial statements audited by him. The period covered by financial statements should be stated with exact dates. 4. Scope This part should include the matter-of-fact relating to the manner in which the audit examination was made. The audit examination should cover the company's accounts, Profit and Loss Account, Balance Sheet and Cash Flow S

A. Appointment of Auditor in case of Sole proprietor: The appointment of the Auditor in the case of a Sole trader is done by the owner of the business. In the case of sole traders, the auditor generally acts as an accountant who also prepares accounts besides checking their accuracy. As He is appointed by an individual he must get clear instructions from his client in writing as to what he is expected to do. His work and its scope will depend upon the agreement with his client since the appointment of an auditor are not under any statute, therefore the rights and the duties will depend upon the agreement. B. Appointment of Auditor in case of partnership: The Auditor of a partnership firm is made by the mutual consent of all the partner's Appointment of Companies Auditors: The provisions regarding appointment of the auditor are contained in section 139 of Companies Act 2013 1. Appointment of auditor by members [sec 139(1)]: A company shall appoint an individual or a firm as an Aud

It is the duty of the auditor not only to verify the physical existence and ownership of the asset but also its valuation as shown in the Balance Sheet. He should not only check the arithmetical accuracy of the assets appearing in the Balance Sheet but should also make inquiries through information and explanation to know the correct state of affairs. The auditor has to be very careful and cautious while examining the valuation of various assets especially the current assets such as inventory, bills receivable, accounts receivable etc. As far as fixed assets are concerned, the same are valued on the basis of their historical costs and less proper amount of depreciation. An auditor may rely on the directors of the company or on the certificates of other professionals in respect of valuation of the assets, provided he uses reasonable care and skill. In matters relating to valuation of assets the auditor must adhere to the generally accepted principles of valuation, commercial practices a