Category Archives: Chapter X – CA2013

AUDIT AND AUDITORS

Counter Puzzle of Auditor Appointment


No doubt the Companies Act, 2013 is not a law but collection of legal puzzle. Compliance of its provisions became hell. This is not just because of poor drafting of law but poor reading of law. We student of the Companies Act, 2013 need to unlearn the Companies Act, 1956 first and finally. We need to know, learn, understand and educate ourselves that the Companies Act, 1956 is now only for reference purpose only.

In last post, we discussed puzzle of ADT – 1 here but every coin have second side also. In that post we start reading form the charging sub – section and in this post we will start reading form the compliance required by the Ministry i.e. ADT – 1 itself.

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Puzzle of Auditor Appointment (ADT – 1)


No doubt the Companies Act, 2013 is not a law but collection of legal puzzle. Compliance of its provisions became hell. This is not just because of poor drafting of law but poor reading of law. We student of the Companies Act, 2013 need to unlearn the Companies Act, 1956 first and finally. We need to know, learn, understand and educate ourselves that the Companies Act, 1956 is now only for reference purpose only.

In this post we will try to solve puzzle of ADT – 1, Rule 4 and Section 139.

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CARO 2015


Even though, Companies (Auditor’s Report) Order, 2015 is placed along with Removal of difficulty orders, both are complete of different genre.

Companies (Auditor’s Report) Order, 2015 is issued in exercise of powers conferred by Section 143(11). The Central Government may, in consultation with the National Financial Reporting Authority, by general or special order, direct, in respect of such class or description of companies, as may be specified in the order, that the auditor’s report shall also include a statement on such matters as may be specified therein. National Financial Reporting Authority under Section 132 is not yet constituted and this order is issued after consultation with the Institute of chartered Accountants of India. [I am not commenting on Legal status of the Order. However, it may be enough if a Removal of Difficulty order issued simultaneously.]

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Part of Companies Amendment Act became Effective


A draft notification posted here on website of Ministry of Corporate Affairs says that Section 1 to 12 and Section 15 to 23 of the Companies (Amendment) Act, 2015 came into force with effect from 29th May 2015. The official language of notification read, “the Central Government hereby appoints the 296 May, 2015 as the date on which the provisions of sections 1 to 12 and 15 to 23 of the said Act shall come into force.” The Amendment Act was got presidential assent and notified by Ministry of Law and Justice as such on 26th May 2015 in official gazette.

Two sections not notified yet deals with Fraud Reporting Procedure [Section 13 amending Section 143 of Principal Act] and Related Party Transactions [Section 14 amending Section 177 of Principal Act]. This is understood that Rules related to these sections are in drafting process.

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COST AUDIT after Amendment Rules 2014


We have discussed applicability of the Companies (Cost Record and Audit) Rules 2014 as amended by the Companies (Cost Record and Audit) Amendment Rules 2014. Certain companies shall maintain cost record as discussed earlier here. Earlier we have discussed Cost Audit under original Rules before these amendment here.

Applicability of Cost Audit [Rule 4]:

Ever company specified in ITEM (A) of Rule 3, shall get its cost record audited if –

the overall turnover of the company from its products and services during preceding financial year is rupees fifty crore or more, or

the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under [item (a) of] Rule 3 is rupees twenty five crore or more. [Rule 4(1)]

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COST RECORD after Amendment Rules 2014


The Companies (Cost Record and Audit) Rules 2014 as amended by the Companies (Cost Record and Audit) Amendment Rules 2014 shall be applicable from the date of its publication in official gazette of India and published in official gazette. I am yet to find notification in official gazettee untill 20th January 2015. Earlier we have discussed Cost Record under original Rules before these amendment here.

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Amendment in Section 143(5)


Section 143(5) of the Companies Act 2013, as discussed earlier here originally read as under:

In the case of a Government company, the Comptroller and Auditor-General of India shall appoint the auditor under sub-section (5) or sub-section (7) of section 139 and direct such auditor the manner in which the accounts of the Government company are required to be audited and thereupon the auditor so appointed shall submit a copy of the audit report to the Comptroller and Auditor-General of India which, among other things, include the directions, if any, issued by the Comptroller and Auditor-General of India, the action taken thereon and its impact on the accounts and financial statement of the company.

On 4th September 2014 Ministry of Corporate Affairs came out with the Companies (Removal of Difficulties) Seventh Order, 2014. Which come it force from date of its publication which is 4th September 2014. According to this order, Section 143(5) now read as under:

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