Board’s report ‑ Whether directors should hold another meeting to consider reservation, qualification, etc., made in auditors’ report - Companies Law - Letter: No. 8/22(215)/76‑CL-V,

Letter: No. 8/22(215)/76 ‑ CL-V, dated 16 ‑ 8-1978. Subject:-Board s report ‑ Whether directors should hold another meeting to consider reservation, qualification, etc., made in auditors report Query: Section 215(3) requires the balance sheet and the profit and loss account to be approved by board of directors before signing on behalf of the board and also before submitting these to the auditors for their report. Section 217(3) requires the board to give fullest information and explanations in its report on every reservation, qualification or adverse remark contained in the auditors report. It is, however, not clear as to whether the company should hold a second meeting of the board of directors after receiving the auditors report for giving the information and explanations on the auditors remarks in a supplementary directors report or the information and explanation can be given in the directors report, approved on the same day as the accounts, on the basis of the draft auditors report, made available by the auditors for the prior information of the board of directors? Answer: The board s remarks on the auditors report are to be given as an addendum to the report and are to form part of the main body of the report as per section 217(3). In case the auditors remarks are not available to the board at the time of its consideration and authentication of the balance sheet and profit and loss account under section 215(3), the board has to meet once again to consider the reservations, qualifications made in auditors report and give their explanations to the said remarks. It is expected that the auditors and the board work in a harmonious manner.