धारा 25B · Powers and duties of auditors and auditor's report

¹[25B. Powers and duties of auditors and auditor's report.---(1) Every auditor of the Corporation shall have a right of access at all times to the books of account and vouchers of the Corporation, and shall be entitled to require from the officers of the Corporation such information and explanation as the auditor may consider necessary for the performance of his duties as auditor, and shall, amongst other matters, inquire into the following matters, namely:---

(a) whether loans and advances made by the Corporation on the basis of security have been properly secured;

(b) whether the terms on which loans and advances have been made are prejudicial to the interests of the Corporation or its members;

(c) whether transactions of the Corporation which are represented merely by book entries are prejudicial to its interests;

(d) whether so much of the assets of the Corporation as consist of shares, debentures and other securities have been sold at a price less than that at which they were purchased;

(e) whether loans and advances made by the Corporation have been shown as deposits;

(f) whether personal expenses have been charged to revenue account;

(g) where it is stated in the books and documents of the Corporation that any shares have been allotted for cash, whether cash has actually been received in respect of such allotment, and if no cash has actually been so received, whether the position as stated in the account books and the balancesheet is correct, regular and not misleading:

Provided that the auditor shall also have the right of access to the records of all the subsidiaries and associate companies of the Corporation, in so far as they relate to consolidation of the Corporation's financial statements with those of such subsidiaries and associate companies.

(2) The auditor shall make a report to the members on the accounts examined by the auditor and on every financial statement which is required by or under law to be placed in general meeting, and such report shall, after taking into account applicable provisions of this Act and any other law for the time being in force, the standards referred to in section 24B, and matters that are required to be included in the audit report under the provisions of this Act or any other law for the time being in force, and to the best of the information and knowledge of the auditor, state that the said accounts and financial statements give a true and fair view of the state of the Corporation's affairs as at the end of its financial year and profit or loss and cash flow for the year.

(3) The auditor's report shall also state---

(a) whether the auditor has sought and obtained all the information and explanations which to the best of the auditor's knowledge and belief were necessary for the purpose of audit and if not, the details thereof and the effect of such information on the financial statements;

(b) whether, in the auditor's opinion, proper books of account as required by law have been kept by the Corporation so far as appears from the auditor's examination of those books and proper returns adequate for the purposes of audit have been received from branches not visited by the auditor;

(c) whether any report referred to in the proviso to sub-section (6) has been sent to the Corporation's auditor, and the manner in which the Corporation's auditor has dealt with it in preparing the auditor's report;

(d) whether the Corporation's balance-sheet and profit and loss account dealt within the report are in agreement with the books of account and returns;

(e) whether, in the auditor's opinion, the financial statements comply with applicable standards;

(f) the observations or comments of the auditor on financial transactions and matters which have any adverse effect on the functioning of the Corporation;

(g) whether any director is disqualified to be or remain a director under clause (i) of section 4A;

(h) any qualification, reservation or adverse remark relating to the maintenance of accounts and matters connected therewith;

(i) whether the Corporation has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls;

(j) such other matters as may be prescribed.

(4) Where any of the matters required to be included in the audit report under this section is answered in the negative or with a qualification, the report shall state the reasons therefor.

(5) All qualifications, observations or comments mentioned in the report of the auditor appointed for the Corporation, in respect of financial transactions or matters that have any adverse effect on the functioning of the Corporation, shall be read out in general meeting and shall be open to inspection by any member.

(6) In respect of a branch or an office of the Corporation, the accounts shall be audited either by the auditor appointed for the Corporation (herein referred to as Corporation's auditor) in this section or by any other person qualified for appointment as an auditor of the Corporation and appointed as such under section 25, or where the branch or office is situated in a country outside India, the accounts of the branch or office shall be audited either by the Corporation's auditor or by an accountant or by any other person duly qualified to act as an auditor of the accounts of the branch or office in accordance with the laws of that country, and the duties and powers of the Corporation's auditor with reference to the audit of the branch or office and the auditor thereof, if any, shall be such as may be prescribed:

Provided that the auditor for a branch or office shall prepare a report on the accounts of the branch or office, examined by such auditor and shall send it to the Corporation's auditor, who shall deal with it in the Corporation's auditor's report in such manner as the Corporation's auditor may consider necessary.