Amendment in the Companies (Audit and Auditors) Rules’ 2014

Amendment in the Companies (Audit and Auditors) Rules’ 2014

blog

Dec 19

2024

Posted by: CS Shilpi Thapar

The Ministry of Corporate Affairs(MCA) vide its notification dated 14.12.2015 released following rules to amend  Companies (Audit and Auditors) Rules, 2014.

In the earlier Rule 13(1) of Companies (Audit and Auditors ) Rules, 2014,only word “Auditor” was used instead of Statutory Auditor. Further, there was no minimum monetary limits fixed for reporting of fraud by auditors to Central Government and time limit to report to Central Government was immediate but not later than 60 days of his knowledge of occurrence any such fraud. Moreover, details of each of the fraud reported to the Audit Committee or the Board  during the year was not specified to be disclosed in the Board’s Report :- (a) Nature of Fraud with description; (b) Approximate Amount involved; (c) Parties involved, if remedial action not taken: and (d) Remedial actions taken.

These Rules may be called the Companies (Audit and Auditors) Amendment Rules , 2015.

They shall come into force on the date of their publication in the Official  Gazette.

For Rule 13, the following rule shall be substituted’ namely:-

“13. Reporting of frauds by auditor and other matters:

(l) lf an auditor of a company’s in the course of the performance of his duties as statutory auditor, has reason to believe that an offence of fraud, which involves or is expected to involve individually an amount of rupees  one crore or above, is being or has been committed against the company by its officers or employees , the auditor shall report the matter  to the Central Government

 (2) The auditor shall report the matter to the Central Government as under :-

(a) the auditor shall report the matter to the Board or the Audit Committee, as the case may be, immediately but not later than two days of his knowledge of the fraud seeking their reply or observations within forty-five days;

(b) on receipt of such reply or observations, the auditor shall forward his report and the reply or observations of the Board or the Audit Committee along with his comments (on such reply or observations of the Board or the Audit Committee) to the Central Government within fifteen days from the date of receipt of such reply or observations ;

(c) in case the auditor fails to get any reply or observations from the Board or the Audit Committee within the stipulated period of forty-five days, he shall forward his report to the Central Government along with a note containing the details of his report that was earlier forwarded to the Board or the Audit Committee for which he has not received any reply or observations;

(d) the report shall be sent to the Secretary , Ministry of corporate Affairs in a sealed cover by Registered Post with Acknowledgement Due or by Speed Post followed by an e-mail in confirmation of the same;

(e) the report shall be on the letter-head of the auditor containing postal address’ email address and contact telephone  number or mobile number and be signed by the auditor with his seal and shall indicate his Membership Number; and

(f) the report shall be in the form of a statement as specified in Form ADT-4

(3) In case of a fraud involving lesser than the amount specified in sub-rule (l ), the auditor shall report the matter to Audit Committee constituted under section 177 or to the Board immediately but not later than two days of his knowledge of the fraud and he shall report the matter specifying the following:- (a) Nature of Fraud with description; (b) Approximate amount involved: and (c) Parties involved.

(4) The following details of each of the fraud reported to the Audit Committee or the Board under sub-rule (13) during the year shall be disclosed in the Board’s Report :- (a) Nature of Fraud with description; (b) Approximate Amount involved; (c) Parties involved, if remedial action not taken: and (d) Remedial actions taken.

(5) The provision of this  rule shall also apply, mutatis mutandis , to a Cost Auditor or a Secretarial Auditor during the performance of his duties under section 148 and section 204 respectively.”;

(ii) In the principal rules, after Rule 14 and before FORM NO. ADT-I, insert the word “Annexure”;

(iii) In the principal rules, in Form No. ADT-4,- (A) in line 3, for the word, figures and brackets..rule l3(4)’,, the word, figures, letter and brackets “rule 13(2)(f)” shall be substituted; and

(B) in line 25, in item No. (10), for the word, figures and brackets,,rule l3(l),’, the word, figures, letter and brackets “rule l3(2)(a),’shall be substituted.”

Suggestions: These Rules shall also apply, mutatis mutandis to Internal Auditor of the Company  during the performance of his duties.He also plays an important role in establishing and monitoring the Internal Controls in the Company and is equally accountable to stakeholders at large.

(Source: http://www.mca.gov.in/Ministry/pdf/Amendement_Rules_14122015.pdf)

Leave a Reply

Your email address will not be published. Required fields are marked *

  • Archives
  • Categories

 

This website is meant solely for the purpose of information and not for the purpose of advertising. Shilpi Thapar & Associates(STA) does not intend to solicit clients through this website. We don’t  take responsibility for decisions taken by the reader based solely on the information provided in the website. By clicking on “ENTER” the visitor acknowledges that the information provided in the website does not amount to advertising or solicitation and is meant only for his/her understanding about our activities and who we are.