# Section 145 — Auditor to Sign Audit Reports etc.

## 1. Signing Requirement

The auditor of the company shall sign:

The Audit Report, and
Any other document of the company.

(This includes certification, statements, etc., that the auditor is required to authenticate.)

## 2. Reading at the General Meeting

The Qualifications, Observations or Comments made by the auditor on financial transactions or matters having an adverse effect on the functioning of the company mentioned in the audit report shall be:

Read out before the company at the General Meeting, AND
Open to inspection by any member of the company.

## Two-Part Obligation

```

Auditor's Report

│

┌───┴───┐

SIGNED READ OUT (qualifications/adverse remarks) at GM

```

## Key Takeaways

Only qualifications, observations, or comments with adverse effect need to be specially read out (not the entire report).
The report (including such remarks) must be available for member inspection.

Worked example

### Example 1

Example 1: Auditor of LMN Ltd qualifies the report stating 'inventory valuation is not in accordance with AS 2, overstating profit by ₹50 lakh.' → This qualification must be read out at the AGM and is open to member inspection.

### Example 2

Example 2: Auditor signs the financial statements with an unqualified (clean) report. → Still required to be laid at AGM, but no special reading-out obligation since there are no qualifications/adverse comments.

### Example 3

Example 3: Auditor notes that a director's related-party transaction adversely affects company functioning. → This observation must be read out at the AGM.

⚠️ Common exam mistakes

Believing the entire audit report must be read out — only qualifications/adverse observations must be specially read.
Forgetting the inspection right of members — the report must be open to inspection.
Confusing 'signing of audit report' (Sec 145) with the manner of preparation of report (Sec 143).
Assuming only the AGM is contemplated — Section 145 refers to the general meeting where accounts are placed.

Bare-Act text Section 145 · Companies Act, 2013 · click to expand

The person appointed as an auditor of the company shall sign the auditor's report or sign or certify any other document of the company in accordance with the provisions of sub-section (2) of section 141 and the qualifications, observations or comments on financial transactions or matters, which have any adverse effect on the functioning of the company mentioned in the auditor's report shall be read before the company in general meeting and shall be open to inspection by any member of the company.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →