Thirumalai Dasan K 18 November 2022

Residential welfare association financial statement

Dear Experts,

I am a founding member of the Residential Welfare Association in Chennai. The association was formed in 2015. After a year, I did not take part in the committee.

FY 2021-22 financial statement, signed by a statutory auditor there were many errors and a big hole in the finance and written off of around 14L, without any discussion and / or intimation in any of the meetings. I issued a notice to convene a separate meeting / EGM to discuss. Then they just reversed the written off amount and got the statutory auditor signature. To my knowledge, the same was corrected again and returns are not submitted to the registrar of societies yet.

I need an expert's opinion on (a) whether the statutory auditor can make changes after having signed and sealed. (b) If not, what actions can be initiated against the auditor and signatories of office bearers. Thanks and regards

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Rama chary Rachakonda (Secunderabad/Telangana state Highcourt practice watsapp no.9989324294 ) 23 July 2025

Generally, no. Once a statutory auditor has signed and sealed the financial statements, they are considered final. Any subsequent changes must follow a formal process:

Revised Audit Report: If errors are discovered post-signing, the auditor may issue a revised audit report, but only under exceptional circumstances and with proper documentation.

Disclosure Required: The revised report must clearly state the reasons for revision and reference the original report. Board Approval: The revised financials must be re-approved by the board and re-adopted by the members in a general meeting. If the auditor simply reversed a ₹14 lakh write-off without proper procedure or disclosure, it could be seen as a breach of professional standards under the Companies Act and ICAI guidelines.

if the changes were made improperly or the financial statements were manipulated, several actions may be considered:

🔹 Against the Auditor: Complaint to ICAI: File a complaint with the Institute of Chartered Accountants of India (ICAI) for professional misconduct, including:

Gross negligence False reporting Breach of auditing standards (e.g., SA 230, SA 240, SA 700)3 NFRA Action: If the auditor is registered with NFRA (National Financial Reporting Authority), they may face penalties, fines, or suspension. 🔹 Against Office Bearers: Registrar of Societies: You can file a complaint for non-submission of returns and financial irregularities. Civil Action: Members may initiate legal proceedings for breach of fiduciary duty or misappropriation of funds. EGM Resolution: Pass a resolution in the EGM to appoint an independent auditor to re-audit the accounts and investigate discrepancies.

🔹 Class Action (if applicable): Under Section 245 of the Companies Act, members can initiate a class action against the auditor and office bearers for damages due to misleading financial statements.

If you'd like, I can help you draft a formal complaint or notice to the Registrar or ICAI. Or we can explore how to structure your EGM agenda to ensure transparency and accountability. Let me know how you'd like to proceed.