Audit reports are not just routine documents – they carry the auditor’s professional opinion on the truth and fairness of a company’s financial statements. To ensure authenticity, accountability, and transparency, the Companies Act, 2013 under Section 145 lays down clear rules on who should sign audit reports, how they must be signed, and how qualifications or adverse remarks are to be presented before members.

What Does Section 145 Say?

Who Must Sign the Audit Report?

• • The audit report, as well as any other document requiring an auditor’s certification, must be personally signed by the appointed auditor.
  • When the auditor is a firm or LLP, only those partners who are qualified Chartered Accountants (CAs) can sign, ensuring accountability and professional expertise at all levels.

Extended to More Documents

• • It’s not restricted to the annual audit report alone. Any document that needs attestation or certification by an auditor under statutory rules falls within Section 145’s scope. This includes financial statements, special audit confirmations, and regulatory filings—strengthening reliability across all official paperwork.

Public Disclosure – Ensuring Shareholder Empowerment

• • All adverse comments or qualifications by the auditor, whether about financial transactions, compliance or the company’s general functioning, must be read out in the company’s general meeting.
    • This step is crucial for keeping shareholders fully informed and preventing management from sidestepping critical issues.
    • Examples: Statements on non-compliance with accounting standards, fraudulent activities, or doubts about the company’s financial health must be disclosed publicly.

Right to Inspect

• • Empowering all shareholders, the law makes sure that anyone holding shares in the company can inspect the auditor’s report and any critical remarks made in it. Access is not limited by shareholding percentage, making this a tool for widespread accountability.

Step-by-Step Compliance for Auditors

1. Confirm Authority – Ensure that the person signing is either the sole auditor or a partner of the audit firm who is a Chartered Accountant in practice.
2. Complete Audit & Form Opinion – Conduct audit in line with ICAI’s standards and prepare the audit report.
3. Date & Place of Report – The report must be signed only after financial statements are approved by the Board. Place and date are mandatory.
4. Signature Format – Sign in personal name and in the firm’s name (if applicable). Mention Membership Number, Firm Registration Number, Place, Date.
5. Generate UDIN – Obtain UDIN and quote it in the report.
6. Adverse Remarks Handling – If there are qualifications, adverse comments or reservations, ensure they are properly stated in the report. These must be presented before members at the AGM.

Step-by-Step Compliance for Companies

1. Attach Auditor’s Report with the financial statements circulated to members before the AGM.
2. At AGM – Ensure any qualification, adverse remark or observation is read out in full for members.
3. Inspection Rights – Keep the auditor’s report open for inspection at the AGM and thereafter for members.
4. Board’s Report Response – Under Section 134, the Board must give explanations or comments on every adverse remark in the auditor’s report.

Auditor’s Presence – The auditor must be given notice of the general meeting and is entitled to attend and respond to queries (Section 146).