Correct Answer Explanation: c) Books, accounts and vouchers of the company
The correct answer is option (c) “Books, accounts and vouchers of the company.” This is because a statutory auditor is granted the right of access to these specific items in order to carry out their audit duties effectively.
Statutory auditors play a crucial role in ensuring the accuracy and reliability of a company’s financial statements. They are appointed by the shareholders of a company to independently examine and verify its financial records and transactions.
To perform their duties effectively, auditors require unrestricted access to certain key documents and records of the company.
Here’s a detailed explanation of why option (c) is correct:
This term refers to the financial books and records maintained by the company. These include ledgers, journals, cash books, and other accounting records. Access to these books allows the auditor to trace financial transactions, verify account balances, and ensure that all financial information is accurately recorded.
This includes the financial statements of the company, such as the balance sheet, income statement, and cash flow statement. These statements provide a summary of the company’s financial performance and position over a specific period.
Reviewing these accounts enables the auditor to assess the overall financial health of the company and identify any discrepancies or irregularities.
Vouchers are supporting documents that provide evidence of financial transactions. They can include invoices, receipts, contracts, and other relevant documents. Access to vouchers is essential for the auditor to verify the authenticity and legitimacy of transactions recorded in the company’s books.
By examining vouchers, the auditor can confirm that expenses, revenues, and other financial activities are accurately documented.
Now, let’s go through the other options and explain why they are not correct:
a) Books and accounts of a company:
While this option acknowledges the importance of both books and accounts, it falls short in not mentioning vouchers. Vouchers are essential documents that provide tangible evidence of financial transactions.
Without access to vouchers, an auditor may be unable to independently verify the validity and accuracy of recorded transactions. Therefore, option (a) is not as comprehensive as option (c), which explicitly includes vouchers in the list of items to which a statutory auditor has a right of access.
b) Books, accounts and documents of the company:
Option (b) expands the scope to include “documents” in addition to books and accounts. However, the term “documents” is vague and can encompass a wide range of materials beyond financial records. This could potentially lead to confusion and misinterpretation.
In contrast, option (c) specifically enumerates “books, accounts, and vouchers,” providing a clear and precise definition of the documents to which a statutory auditor is entitled access. By specifying “vouchers,” option (c) ensures that the auditor can examine concrete evidence of financial transactions.
d) Notices and documents of the company:
Option (d) introduces the term “notices” along with “documents.” This broad terminology could encompass a wide variety of materials, including legal notices, memos, correspondence, and other non-financial documents.
While access to such notices and documents may have its own significance, it does not directly address the key financial documents that are crucial for an audit. In particular, it does not mention access to vouchers, which are essential for verifying the accuracy and authenticity of financial transactions.
Therefore, option (d) is too broad in scope and does not adequately specify the necessary access rights for a statutory auditor.
In summary, option (c) stands out as the correct choice because it provides a precise and comprehensive list of the specific documents to which a statutory auditor has the right of access: books, accounts, and vouchers of the company.
This clarity ensures that the auditor can effectively carry out their duties of examining and verifying the company’s financial records. The other options either omit important elements (such as vouchers) or use broad and potentially ambiguous terms, making them less accurate in describing the auditor’s access rights.