Partnership Firm Audit Limit

1. Agreement between Auditor and firm is essential because the rights and duties depend on it.
   
2. He should be equally fair to each firm partner, even if his appointment may be due to the efforts of a single partner only.
   
3. An Auditor might sometimes be required to do bookkeeping work also. Thus Auditor should clearly define his scope of work in writing to avoid any future dispute.
   
4. The Auditor should submit a written report at the end.
   
5. An Auditor should carefully read the partnership deed and note down all the essential provisions regarding;

1. Nature of business
   
2. Profit sharing Ratio
   
3. Interest on capital and drawings
   
4. Loans and drawings
   
5. Borrowing power of partner
   
6. Salary and remuneration
   
7. Capital of the partner
   
8. Restriction on the rights of a partner
   
9. Basis of valuation of goodwill at the time of admission, retirement and death of any partner
   

Important Provisions of Indian Partnership Act, 1932

1. Partners are entitled to share the profit and loss of the firm equally.
   
2. Partner is not entitled to any remuneration.
   
3. Partner is only entitled to get interested @ 6% on the amount advanced by him in addition to his share of capital.
   
4. Goodwill is to be included in assets at the time of dissolution of a firm.
   
5. After dissolution, losses and deficiencies are to be paid first from profit, following out of capital and at last, if necessary, by the contribution of each partner in profit sharing ratio.
   
6. Every partner has implied authority to bind the firm for acts done in the usual course of business.
   
7. No partner has any implied authority to submit a dispute relating to business to arbitration, to open a bank account on his name on behalf of the firm, to compromise of claim which the firm may have against the third party, withdraw a suit on behalf of the firm, to acquire any immovable property and enter into partnership on behalf of a partnership firm.