Emerging Researcher - Volume I, Issue III, July -September 2014, ISSN : 2348-5590 64 Role of Audit to Protect the Investor's interest under Companies Act, 2013 Radheshyam Prasad  Dr. Tabrez Ahmad  Introduction Audit is a formal examination and verification of financial accounts and records of any organisation. It has become an essential requirement for good corporate governance as it plays a major role in ensuring transparency and accountability in the corporate financial administration, thus auditors are often referred to as gatekeepers. A company carries on business with capital provided by persons who are not in control of the use of the money supplied by them. They would, therefore, like to see their investments are safe, being used for intended purposes and the annual accounts of the company present a true and fair view of the state of affairs of the company. For this purpose, the accounts of the company must be checked and audited by a duly qualified and independent person who is neither employed in the company nor is in any way indebted or otherwise obliged to the company. 1 The contract under which the work of a company’s auditor is with the company should be as a separate person. Like anyone who renders professional services for reward, a company’s auditor owes the company an implied contractual duty of care in and about the manner in which the audit is performed. 2 The nature of an auditor’s duty of care in the performance of an audit was considered by Lopes LJ in Re Kingston Cotton Mill Co (No-2) 3 which is relevant even today also- “It is the duty of an auditor to bring to bear on the work he has to perform that skill, care and caution which a reasonably competent, careful and cautious would use. What is reasonable skill, care and caution must depend on the particular circumstances of each case. An auditor is not bound to be a detective, or as was said, to approach his work with suspicion or with a foregone conclusion that there is something wrong. He is a watchdog, but not a bloodhound……an auditor does not guarantee the discovery of all fraud.” 4 According to Lord Denning, “An auditor is not bound to be confined to the mechanics of checking vouchers and making arithmetical computations. He is not to be written off as a professional adder-upper and subtractor. His vital task is to take care to see that errors are not made, be they errors of computation, or errors of omission or commission, or downright untruths. To perform this task properly he must come to it with an inquiring mind- not suspicious of dishonesty, I agree- but suspecting that someone may have made a mistake somewhere and that a check must be made to ensure that there has been none 5 .”  Research Scholar, College of Legal Studies, University of Petroleum and Energy Studies (UPES), Dehradun, Uttrakhand, India.  Professor of Law, College of Legal Studies, University of Petroleum and Energy Studies, Dehradun (Uttrakhand) 1 Majumdar A.K and Kapoor, Company Law and Practice, 15 th ed, Taxmann, Page No. 819. 2 Equitable Life Assurance Society v. Ernst and Young (2003) EWCA Civ 1114 (2003) 3 (1896) 2 Ch 279 at pp 28-89 4 As quoted by Mayson, French and Ryan in their book “Company Law” 26 th edition 2009-10, Oxford at p.528 5 Fomento (Sterling Area) Ltd v. Selsdon Fountain Pen Co Ltd (1958) 1 WLR 45