Law: Companies Ordinance, 1984

Section: 255

Companies Ordinance (XLVII of 1984)--Ss. 255, 260 & 476---Powers and duties of auditors--Imposition of penalty for non-compliance with provisions of law by auditors---Auditors, audited annual accounts of the company for relevant years and made their report on accounts of the company---Enforcement Department of the Securities and Exchange Commission conducted examination of the company's accounts for relevant years and found certain discrepancies---Auditors, prima facie, did not comply with the requirements of law while issuing audit report for relevant years---Auditors had not signed the audit report in conformity with the requirements of S.255 of Companies Ordinance, 1984 and had committed a wilful default in terms of S.260 of Companies Ordinance, 1984 and had made themselves liable to punishment under subsection (1) of S.260 of Companies Ordinance, 1984--Auditors had failed to perform their professional duties with reasonable degree of care and skill and had committed a breach of fiduciary duty cast upon them by share-holders---Such failure in exercising due professional skill with diligence also amounted to a breach of trust which the society in general and statute in particular had reposed in .them---Careless and casual attitude and not exercising due diligence by the auditors while discharging their responsibilities and issuing their reports, could spell disaster for such trust and confidence---Auditors being the ultimate watchdog of share-holders' interest they were required to give a report on the accounts and books of accounts after conducting the audit in accordance with procedures and requirements of Companies Ordinance, 1984 and International Accounting and Auditing Standards---Share-holders were the ultimate entity to whom the auditors were responsible and they must keep that fact in mind while auditing books of accounts and reporting thereon---Auditors, in the present case having not performed their statutory duties with due care and in accordance with legal requirements, were liable to be imposed fine---Fine of Rs.100, 000 was imposed on auditors under subsection (1) of S.260 of Companies Ordinance, 1984. ORDER ASHFAQ AHMED KHAN, DIRECTOR…

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