What is “Discharge of Contract by Agreement”? The fundamental rule of law says that a thing can be brought to an end or destroyed in the same manner in which it was constituted. By applying this principle, an agreement or a contractual obligation can also be terminated by executing another agreement which may either be…
Board Resolution for Appointment of First Auditor: A Draft
What is this resolution for? The board resolution provided in the below paragraphs is for the first auditor’s appointment in a company. Auditors are to be appointed by every company to ensure that its financial statements for the relevant fiscal year accurately and fairly reflect the company’s state of affairs. It also serves as a…
Liabilities of Auditor under Common law and Statutory law
The importance of functions performed by an auditor has increased a lot during the past centuries. This has resulted in the auditor’s legal liability being established not only to the shareholders/clients but also to third parties. The liabilities of the auditor of a company in relation to his work have been expressly specified in several…
Verification of Liabilities, its Objectives and Procedures
Just as verification of assets, it is equally important for an auditor to verify the liabilities appearing in his client’s books. Liabilities are financial obligations of a business other than the owner’s equity. These may be long-term or short-term depending on the time for which resources are procured. For example, loans and borrowings, debentures, or…
Qualities of an Auditor: Things One Should Know!
Audits are crucial to any organization as the report given by an auditor has a say on the reliability of financial statements. To ensure that audits are performed correctly, it is important to consider that the effectiveness of an audit depends upon the competence of the auditor performing it. Auditors, who occupy a position of…
“Auditor is a watchdog, not a bloodhound”
The duty of an auditor with regard to the detection and prevention of fraud and error has been a matter of discussion for a long time. It has been laid down by several legal decisions and has been considered in many professional pronouncements. In this blog, we are going to throw light on some of…
Partial Audit: All you need to know about!
A partial audit, as the name suggests, is an audit done for examining a specific area of transactions in an entity, rather than the entire books of accounts from start to end. These are audits in which the terms of the audit engagement place significant constraints on the scope of the auditor’s work. Such an…
SA 240 on Auditor’s Responsibility for Fraud: An overview
SA 240 entitled “The Auditor’s Responsibility to Consider Fraud and Error in an Audit of Financial Statements” gives guidance on what ought to be the responsibility of an auditor for identifying fraud and error and reporting on them. The important guidelines laid down under SA 240 regarding an auditor’s responsibility towards fraud and error are…
Revocation of Continuing Guarantee and its Ways
Revocation of Continuing Guarantee: Continuing guarantees are widely utilized in commercial transactions. Because of this guarantee, it is easier for a debtor to obtain goods on credit even if he does not have the money available. In this blog, we have discussed the meaning of a contract of continuing guarantee and how and when can…
Unenforceable Contracts: Common Causes for them
Enforceable and unenforceable contracts: A contract can be either enforceable or unenforceable. An enforceable contract can be described as one against which a legal remedy would be available if the contract is not fulfilled. This means that the parties thereto can take legal recourse in case there is a breach of contract. On the other…