Law:

Section:

Companies Ordinance (XLVII of 1984)-------Ss. 255, 260 & 476---Powers and duties of the auditors---Failure of auditors to perform their professional duties With reasonable degree of care and skill---Imposition of penalty---Auditors were alleged to have been making audit reports to the members of the company otherwise than in conformity with the requirement of S.255 of the Companies Ordinance, 1984---Review of the accounts and underlying records of the company had shown that audited reports were materially misstated--Auditors appeared to have failed to discharge their duties and responsibility laid down in the Companies Ordinance, 1984---Apprehension was that auditors had failed to design audit procedure in a manner so as to have enabled the discovery of violation and had failed to appropriately modify all the relevant reports---Capital requirement for the business of a company was contributed by its shareholders who might not necessarily be the persons managing the company---In the case of a listed company, the general public also contributed towards the equity of the company---Such persons did not have any direct control over the company except that they elected Directors for a period of three years and entrusted the officers of the company to them in the hope that they would manage the company to their benefits---Shareholders, in circumstances were the stake-holders and the ultimate beneficiaries-Practically however, shareholders had no control over the way their company was managed by the Directors appointed by them, it was, in circumstances necessary that there must be some arrangement in place whereby the share holders must get some independent view as to how the Directors have managed the affairs of the company---Law, in circumstances, had provided that shareholders should appoint an auditor, who would be responsible to audit the books of accounts and make out a report to them at the end of each year---Such was the only safeguard provided by the law to the shareholders to ensure that the business was carried on by the Directors in accordance with sound business principles and prudent commercial practices and no money of the company was wasted or…

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