Consequences of Non-Compliance
If a company fails to appoint an auditor or its audit reveals misstatements deliberately ignored without corrective action, then penalties applicable as per law include:
- Imprisonment up to 1 year plus fines on officers and company in default
- Disqualification of current directors from future appointments
- Deactivating operations by revoking license and registration
- Prohibit raising fresh capital from market
- Legal prosecution by regulators against company directors
Thus through financial inspection and verification mechanisms, statutory audits enhance stakeholders’ trust, regulatory compliance and ethical growth across industries. The deterrence effects also enable proactive prevention of corporate frauds or failures.
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