Powers and Duties of Auditors
Section 143 arms the auditor with a right of access to books at all times and prescribes the content of the audit report — including the famous section 143(12) duty to report fraud to the Central Government or the audit committee.
The provision, in plain terms
The auditor has a right of access at all times to the books of account and vouchers of the company (including subsidiaries, for consolidation purposes) and may seek information necessary for the audit. Sub-section (1) lists specific inquiries (loans against inadequate security, book entries prejudicial to the company, etc.). Sub-section (3) prescribes report contents including internal financial controls reporting. Sub-section (12): an auditor who believes an offence of fraud involving prescribed amounts (₹1 crore or more) is being committed against the company by officers or employees must report it to the Central Government; smaller frauds are reported to the audit committee or Board.
Points worth memorising
- Right of access 'at all times' to books, vouchers and records — including those of subsidiaries for CFS purposes.
- Section 143(1) inquiries: six specified matters the auditor must inquire into (reported only if adverse).
- Section 143(3): report contents — true and fair view, CARO annexure, internal financial controls (for applicable companies).
- Section 143(12): fraud ≥ ₹1 crore → report to Central Government (Form ADT-4, within prescribed timelines); below threshold → audit committee/Board and disclosure in Board's report.
- Applies mutatis mutandis to cost auditors and secretarial auditors.
How the exam tests it
Core to CA Intermediate Auditing & Ethics and Final Advanced Auditing — fraud-reporting timelines and thresholds under 143(12) are near-certain MCQ territory; 143(1) inquiry list appears in descriptive questions.
Tested at: intermediate · final
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Talk to usWhat is the fraud reporting threshold under section 143(12)?
Frauds involving ₹1 crore or more must be reported to the Central Government in Form ADT-4 after following the board-response procedure; frauds below ₹1 crore are reported to the audit committee or Board and disclosed in the Board's report.
Does the auditor's right of access extend to subsidiary books?
Yes — for the purposes of consolidation, the auditor of a holding company has access to the records of subsidiaries and associates so far as they relate to the consolidated financial statements.