Law: Companies Ordinance, 1984

Section: 255

Companies Ordinance (XLVII of 1984)--Ss. 255, 260 & 476 Companies (General Provisions and Forms) Rules 1985, R.17 A Securities And Exchange Commission of Pakistan Act (XLII of 1997), S.33 Imposition of penalty Appeal Penalty was imposed on appellant/ statutory auditors after issuing show cause notice on allegation that appellants had committed violation of law by not disclosing material facts to the members of the Company of which appellants were statutory auditors as required by S.260 of Companies Ordinance, 1984 and had not prepared the audit report in conformity with requirements of S.255 of Companies Ordinance, 1984 Appellant had failed to disclose number of employees of Company concerned in their report; had failed to disclose staff liability separately; had failed to express an adverse opinion on the going concern assumption and also failed to modify report so as to express a qualified, disclaimer or an adverse opinion ¬Effect Appellants were obligated to audit the account of Company concerned according to `International Accounting Standards' as well as International Standards on Auditing' as applicable in Pakistan which had clearly laid down the requirements on auditors to disclose number of employees in addition to required disclosure of employee benefit¬---Appellants could not argue that they used their discretion in not reporting the number of employees or employees liabilities in their report Plea of appellants that same were not material facts, was unacceptable With regard to issue of appellant's failure to qualify their report, argument that report should be considered as qualified as it was not unqualified, was untenable Where the auditor gave a qualified opinion, they were required to express clearly the nature of qualification along with the reasons for such qualification and express their opinion subject to reservations that they had Auditors should not leave it to the shareholders to determine the facts by making diligent inquiry and as professional Accountants and statutory auditors appointed by shareholders, there was a fiduciary duty cast upon the appellants Characteristically, the fiduciary was required to have greater knowledge and…

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