Company Auditors: Why every Company needs an audit done
Why every company needs to carry out an annual audit
An annual audit provides the stakeholders of the company as well as third parties intending to do business with a company, reasonable assurance as to the fairness of a company's financial information. It is thought to be reliable as it involves third-party verification.
Every private and public company in Malaysia must have its accounts audited and it must appoint an independent auditor to carry out its audit. The first auditors of the Company are appointed by the Board of Directors. The Board also has the authority to appoint an auditor in the event of a casual vacancy, caused by resignation or retirement of the auditors. However, if the Board does not appoint an auditor, the members or shareholders of the Company can appoint an auditor by passing an ordinary resolution.
An auditor has the duty to report to the members on the financial statements and on the company's accounting and other records that are relevant to those financial statements. Auditors have the duty to form an opinion on whether they have obtained all information and explanation they require, whether proper records have been kept as required by the Companies Act, 2016, whether the returns received from branch offices are adequate, and whether the procedures and methods used by a holding or subsidiary company in arriving at the amount taken into any consolidated accounts were appropriate to the circumstances of the consolidation, and the auditor shall state in his report, the particulars of any deficiency, failure or shortcomings as the case may be.