The Companies Act, 2013 is come into effect
from April 01, 2014. As against old Act, more responsibility is bestowed on
auditors, irrespective of whether Statutory Auditor or Secretarial Auditor or Cost
Auditor.
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Chapter 10 of the new Act is dealing with
Audit and Auditors which includes Sections 139 to 148.
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Through Section 143(12) of
the new Act, a responsibility is given to auditors as follows:
If
the auditor has sufficient reason to believe that an offence involving fraud,
is being or has been committed against the company by officers or employees
of the company, he shall report the matter to the Central Government not
later than sixty days of his knowledge of the fact.
The Act, through this section advising the directors and other officers of the companies to manage the company strictly within the legal frame work of the country and the whistle is given to the professionals like Company Secretaries, Chartered Accountants, and Cost Accountants |
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The Companies (Audit and Auditors) Rules, 2014, explains the procedure of such reporting as follows:
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1.
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auditor shall forward his report to the Board or the Audit
Committee, as the case may be, immediately after he comes to knowledge of the
fraud, seeking their reply or observations within forty-five days;
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2.
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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 of
receipt of such reply or observations;
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3.
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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 failed to receive any reply
or observations within the stipulated time.
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4.
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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
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5.
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The report shall be on the letter-head of the auditor
containing postal address, e-mail address and contact number and be signed by
the auditor with his seal and shall indicate his Membership Number.
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6.
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The report shall be in the form
of a statement in a prescribed form as specified in the above rules (Form ADT-4).
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7.
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The provision of this rule shall
also apply, mutatis mutandis, to a cost auditor and a secretarial auditor
during the performance of his duties under section 148 and section 204
respectively.
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If any auditor, cost accountant or company secretary in practice
do not comply with the provisions of sub-section (12), he shall be punishable with fine which shall not be less than
one lakh rupees but which may extend to twenty-five lakh rupees.
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Further Section 147 (2) also provides that If an auditor of a company contravenes any
of the provisions of section 139, section 143, section 144 or section 145,
the auditor shall be punishable with fine which shall not be less than
twenty-five thousand rupees but which may extend to five lakh rupees:
Provided
that if an auditor has contravened such provisions knowingly or
willfully with the intention to deceive the company or its shareholders or
creditors or tax authorities, he shall be punishable with imprisonment for a
term which may extend to one year and with fine which shall not be less than
one lakh rupees but which may extend to twenty-five lakh rupees.
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Where an
auditor has been convicted under sub-section (2), he
shall be liable to—
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(i)
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refund the
remuneration received by him to the company; and
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(ii)
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pay for
damages to the company, statutory bodies or authorities or to any other
persons for loss arising out of incorrect or misleading statements of
particulars made in his audit report.
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Some other
important points in Chapter X of the Companies Act, 2013
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Ø Auditor
should attend all General Meetings of the companies either by himself or through
a qualified representative.
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Ø Auditors
are exempted from providing certain services directly or indirectly to the company
or its holding or subsidiary company. A detailed list is provided in Section 144
of the Act.
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Ø Besides
Balance sheet and profit and loss account, the auditor should report on cash
flow statement also.
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Friday, April 18, 2014
Auditors’ responsibility is manifold under the Companies Act, 2013
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