Ministry of corporate affairs inserted a clause (d) in rule 11 of the Companies (Audit and Auditors) Rules, 2014. The Companies (Audit and Auditors) Amendment Rules, 2017 was published in official gazette on 30th March 2017 and came into force from that date.
Government of India has removed a dozen difficulties from the Companies Act, 2013. Yes, the Companies (Removal of Difficulties) Third Order, 2016 is twelfth order in Removal of difficulties series of Orders in these three years.
In this post we will discuss this Removal of Difficulties Order.
The Companies (Auditor’s Report) Order, 2016 is notified on 29th March 2016 in supersession of the Companies (Auditor’s Report) Order, 2015 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), vide number S.O. 990 (E), dated the 10th April, 2015, except as respects things done or omitted to be done before such supersession.
In an order dated 17th February 2016 Whole Time Member of Securities and Exchange Board of India, debars an auditor (Chartered Accountant is this case) from issuing any certificate. SEBI held that the Auditors had aided and abetted the Company in committing the alleged fraud.
Ministry of corporate Affairs issued a notification dated 14th December 2015 and published here in the Gazette of India dated 15th December 2015 regarding amendment in the Companies (Audit and Auditors) Rules, 2014.
A gazette notification posted here on official website of the Gazette of India and posted on website of Ministry of Corporate Affairs says that Section 13 and Section 14 of the Companies (Amendment) Act, 2015 came into force with effect from 14th December 2015. The official language of notification read, “The Central Government hereby appoints the 14th day of December, 2015 as the date on which the provisions of section 13 and 14 of the said Act shall come into force.”
Indian corporate world was shocked and corporate governance became a question when on 20th October 2014, M/s. R. H. Modi & Co., Chartered
Public Notice by Auditors
Accountants, auditor of C. Mahendra Exports Limited published a public notice in newspaper. It was alleged that the company “in a complete illegal and malafide manner filed, uploaded and circulated the Annual Report with the financial results of the company for financial year 2014 – 15 and the auditor report dated 7th September 2015 purported that the financial statements have been audited and Auditors Report signed by us (M/s. R. H. Modi & Co., Chartered Accountants).
The auditor in this public notice claimed that these financial statements have not been finalised and audited by them. The auditor claimed that despite their strong objection to the passing of company’s account in their present form, the same have been passed by the shareholders of the company in annual general meeting held on 26th September 2015.
The company filed its clarification before stock exchanges, which is available in site of Bombay Stock Exchange here and site of National Stock Exchange here. The company not only stated facts from their side but also raised several questions on point of law.
According to facts mentioned by the company, Managing Director and Statutory Auditors did not sign the financial statements and Auditors Report. The company presented following interesting queries:
- Can the auditor refuse to sign the auditor’s report due to dispute between the promoters?
- Can the Auditor not sign the Audit Report if the MD does not sign the accounts?
Fully clarification written by the company is worth academic reading.
This blog does not want to discuss on the matter which may soon go to inquiry by relevant professional bodies and regulators. However, development on this matter may be of academic interests.
Reply by Company P.1
Reply by Company P.2
Reply by Company P.3