Run two separate checks before circulation
Section 145 of the Companies Act, 2013 covers signing the statutory auditor’s report and the handling of qualifying adverse matters before the company in general meeting. Validate the appointed auditor and, for a firm, the authority of the chartered accountant partner signing on its behalf under section 141(2). Then identify the qualifications, observations or comments on financial transactions or matters that adversely affect the company’s functioning. Read them before the company in general meeting and make them open to inspection by any member. Section 145 also addresses signing or certifying other company documents by the appointed auditor as required by law.
Read the applicable text: Companies Act, 2013: sections 134, 141(2), 145 and 146.
Trace the reading to the signed report
Record the page, paragraph, audited financial statements and effect of each potentially adverse matter. For a standalone and consolidated report, track the source and scope separately. Resolve classification questions with the auditor and company secretary before the meeting. Avoid substituting a reassuring management summary or edited extracts for the actual relevant audit text. Keep the signed reports and inspection copy aligned.
Reconcile the Board’s response on its own terms
Section 134(3)(f), where applicable, calls for Board explanations or comments on qualifications, reservations, adverse remarks or disclaimers by the auditor and secretarial auditor as specified. Build a crosswalk: audit text, Board response, general-meeting reading decision and inspection reference. A Board explanation does not cure an audit finding or replace the section 145 requirement. This workflow assumes a company with a general meeting and a full Board report; separately check exceptions for other company types.
Keep attendance and signing distinct
Under section 146, forward all notices and other communications about the general meeting to the auditor. Unless the company exempts attendance, the auditor attends in person or through an authorised representative who is qualified to be an auditor. The auditor has a right to be heard on business that concerns the auditor. Meeting attendance does not confer authority to sign the report. If a signed version changes before the meeting, reconcile circulation and the report put to members; resolve timing and procedural consequences on the actual facts. Preserve the minutes, meeting pack and evidence of member inspection arrangements.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Partner authority
Two audit reports are in the circulation pack. Only one is signed by an authorised chartered accountant partner of the firm appointed for that report. One of two reports passes the signing gate; hold the other for resolution.
Illustrative example 2: Adverse paragraph mapping
The signed report has five tracked matters. Review identifies two that fall within the section 145 reading requirement. If the script contains one of those two, there is one missing reading item, even though the pack has all five matters.
Illustrative example 3: Quantified inventory issue
A qualification describes inventory of ₹80 lakh, including ₹18 lakh for which the auditor lacked evidence. ₹18 lakh is 22.5% of inventory. Label the figure as exposure in the cited paragraph; it is not a proven overstatement.
Illustrative example 4: Two audit scopes
Standalone and consolidated reports flag the same ₹14 lakh subsidiary balance. Map two report references to one balance; adding them to present ₹28 lakh of distinct exposure would count the item twice.
Illustrative example 5: Board comments gap
Four findings require Board responses. The draft includes three traceable responses. The completion rate is 75%, and one item still needs a response.
Illustrative example 6: Version control
A revised signed report adds two tracked paragraphs and removes one from the prior list of six. The final source list has seven paragraphs. Reperform the reading test on that version.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the appointed auditor | Appointment record and audit engagement for the specific statements. |
| 2 | Check the signer | Signed report, partner identity, qualification and authority. |
| 3 | Lock report versions | Match signed standalone and consolidated reports to the approved pack. |
| 4 | Extract potentially adverse matters | Exact paragraph references and supporting financial statement notes. |
| 5 | Determine the reading set | Record the statutory basis and reviewer decision per item. |
| 6 | Prepare the chair’s script | Cross-reference and reproduce the relevant audit text accurately. |
| 7 | Arrange inspection | Final signed text, access instructions and inspection record. |
| 8 | Reconcile Board responses | Map section 134 explanations to their source without altering audit wording. |
| 9 | Handle late changes | Retain superseded versions and check circulation and meeting implications. |
| 10 | Preserve meeting evidence | Minutes, reading records and document version actually available to members. |
Sixteen practitioner FAQs
1. Who signs when a firm is appointed?
Check that a chartered accountant partner authorised under section 141(2) signs for the appointed firm.
2. Does every engagement team member have signing authority?
No. Confirm the role and authority of the actual signer.
3. Can the CFO certify the statutory report for the auditor?
No. Section 145 assigns signing to the appointed auditor, subject to section 141(2).
4. Should the whole report be read aloud under section 145?
Section 145 requires reading the qualifying adverse matters. Check applicable Secretarial Standard SS-2 for the meeting procedure and members’ attention to the Board’s explanations.
5. Is every observation necessarily adverse?
No. Evaluate the subject and adverse effect, and document borderline decisions.
6. Can the Board paraphrase a qualification as the reading?
Use the relevant text from the signed report and keep Board explanation separately identifiable.
7. Do members need to be able to inspect the adverse matters?
Yes. Section 145 makes the relevant matters open to inspection by members.
8. Does the Board’s remediation plan change the signed report?
No. Reconcile the response to the report actually signed.
9. Can a qualified meeting representative sign by reason of attending?
No. Attendance authority and statutory signing authority are separate.
10. What if the audit qualification is unquantified?
Carry the wording accurately. Do not invent a loss estimate.
11. What if the same item appears in two reports?
Track both report locations and avoid presenting overlapping exposure as two losses.
12. How should a disagreement with the auditor be presented?
Keep the original report wording and distinguish the Board’s own view.
13. Should the secretary treat a KAM as an adverse finding automatically?
No. Inspect what the paragraph actually says and apply the legal test to its contents.
14. What if the signed report is amended before the meeting?
Confirm the operative signed version and resolve circulation and meeting steps on the facts.
15. How much should minutes record?
Identify the relevant reading and inspection arrangements, with traceable report references.
16. Does an attendance exemption remove the reading requirement?
No. Section 146 attendance and section 145 reading address separate obligations.