Lecture Auditor and Secretary

AUDITOR AND SECRETARY
1
AUDITOR
Functions of the auditor:

Conduct audit work and present reliable and
independent financial reports.The auditor's
report contains a professional opinion based
on the audited company's accounts. The
report will be distributed to members and the
Registrar.
2
WHO CAN BE APPOINTED AS AUDITOR
Section 2 of the Companies Act 2016 provides
that "approved company auditor" means 'a
person who has been approved under section
263 as an auditor and whose approval has not
been revoked’.
This definition shows that an auditor must be
one whose appointment has been approved by
the Minister.
Sections 262-287 of CA 2016 – contain
provisions on auditors (Please refer to the CA
2016)
3
Powers And Duties Of
Auditors
Every company auditor must report to the
members about the financial statements,
company accounts and any records
relating to the financial position.
The powers and duties of auditors are
provided under section 266 of the
Companies Act 2016, namely:
4
.
Duty to report financial statements
The auditor should report to the
members on the financial statements, the
company's accounting records and other
records related to the financial
statements, and the report should:
For public companies, presented before
the company at its annual general
meeting; orfor private companies,
distributed to its members; or presented
before the company at a member's meeting . 5
DUTY OF AUDITOR
Duty of care and skill
(1) Examining the company's accounts based on the
company's records and books – if there are no
circumstances that create doubt, he has the right to
assume that the company's employees are honest
Case: Re Kingston Cotton Mill Co. – the managing
director falsified the company's accounts to show the
good performance of the company. The auditor makes
a verification of the account based on the statement of
the managing director. Court: the auditor is not liable in
negligence because there is no reason to suspect the
honesty of the managing director.
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DUTY OF AUDITOR
If the auditor depends on the company's internal
control system, it is necessary to check the
control system.
3 conditions that need to be followed before it is
decided that an auditor is acting reasonably:
1. Proper investigation to ascertain the
company's strengths and weaknesses
2. Review the system to determine the extent to
which it can be used
3. The system needs to be tested
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DUTY OF AUDITOR
 If the auditor suspects something, he has a
responsibility to investigate further – more carefully
than usual and it is not enough to just rely on officials.
 In the case of Re Thomas Gerrard and Son Ltd – the
managing director of the company had for several
years systematically falsified accounts by changing the
date of invoices. This matter was detected by the
auditor but after receiving an explanation from the
managing director, no further investigation was made.
The Court held that auditors are negligent for not
investigating & they are not entitled to be satisfied with
the managing director's statements alone
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DUTY OF AUDITOR
Examining the account within the time period and get
proper facilities.
Ensure that the subordinates assigned the task are
qualified.
Case: Pacific Acceptance Corporation Ltd v Forsyth –
the task of auditing is left to the audit clerk to do most
of the work. Improper matters were detected but no
further investigation was made.
Court held that: there is no obstacle to handing over
tasks to assistants but if it is handed over to people
who are inexperienced or beyond their experience, it
is the auditor's own negligence.
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Conclusion
Auditors are among the important
positions mentioned under the
provisions of the company law.
They have different qualification
requirements and jurisdiction.
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COMPANY SECRETARY
Requirement for a secretary
235. (1) A company shall have at least one secretary who shall be—
(a) a natural person;
(b) eighteen years of age and above; and
(c) a citizen or permanent resident of Malaysia,
who shall ordinarily reside in Malaysia by having a principal place of
residence in Malaysia.
(2) A secretary shall be—
(a) a member of a body as set out in the Fourth Schedule; or
(b) a person licensed by the Commission under section 20G of
the Companies Commission of Malaysia Act 2001.
(3) For the purposes of paragraph (2)(a), the Minister may prescribe
any professional body or any other body by notification in the Gazette
and may impose any terms and conditions as he thinks fit.
(4) The company and every director who contravene this section
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commit an offence
COMPANY SECRETARY
Appointment of a secretary
236. (1) The Board shall appoint a secretary and determine the terms
and conditions of such appointment.
(2) Notwithstanding subsection (1), the appointment of the first
secretary shall be made within thirty days from the date of
incorporation of a company.
(3) No person shall be appointed as a secretary unless—
(a) he has consented in writing to be appointed as a secretary;
(b) he is qualified under subsection 235(2); and
(c) he is not disqualified under section 238.
(4) The company and every person who contravene this section
commit an offence.
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COMPANY SECRETARY
Under the Companies Act 2016 in Malaysia, the role of a company
secretary is significant, with key responsibilities including:
Appointment: Every company must appoint a company secretary
within 30 days of its incorporation, ensuring compliance with legal
requirements.
Qualifications: The company secretary must possess certain
qualifications, as prescribed by the Companies Commission of
Malaysia (SSM).
Duties and Responsibilities: The company secretary acts as a liaison
between the company and regulatory authorities, ensuring compliance
with statutory requirements. They facilitate communication between the
board of directors and shareholders, maintain company records, and
handle administrative tasks.
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COMPANY SECRETARY
Corporate Governance: They play a crucial role in upholding corporate
governance standards, advising the board on matters of corporate
governance, and ensuring adherence to relevant regulations and best
practices.
Disclosure and Reporting: The company secretary is responsible for
ensuring accurate and timely disclosure of company information,
including financial statements, annual reports, and other regulatory
filings.
Meetings and Minutes: They facilitate board meetings, general
meetings, and committee meetings, preparing agendas, circulating
notices, and recording minutes to document decisions and actions
taken
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Disqualification to act as a secretary
238. (1) A person shall be disqualified to act as a secretary if—
(a) he is an undischarged bankrupt;
(b) he is convicted whether in or outside Malaysia of any offence
referred to in section 198; or
(c) he ceases to be a holder of a practicing certificate issued by
the Registrar under section 241.
(2) Notwithstanding subsection (1), if the Registrar is of the opinion
that a person has failed to act honestly or use reasonable diligence in
the discharge of his duties as a secretary, the Registrar may require the
person to show cause why his practising certificate should not be
revoked or why he should not be disqualified from acting as a secretary
of a company.
(3) If a person continues to act as a secretary for a company after
the person is disqualified under this section without leave of the Court,
the secretary and every director who knowingly permits the person to
act in that capacity commit an offence
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DISQUALIFICATION
a bankrupt who has not been discharged

has been convicted of an offense
inside/outside Malaysia in relation to
company management
ceases to be a member of a recognized body
or
ceases to be the holder of a license issued by
the registrar.
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CONCLUSION
One cannot act as the secretary of a company

unless – he or she is a member of a professional
body, or any other body recognized by the
government.it is licensed by the registrar.
Overall, the company secretary plays a vital role in
ensuring compliance, good governance, and
effective communication within the company,
thereby contributing to its smooth operation and
legal compliance under the Companies Act 2016
in Malaysia.
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AUDITOR AND SECRETARY

Functions of the auditor:

a bankrupt who has not been discharged

One cannot act as the secretary of a company

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