companies act audit and accounts.pdf
TRANSCRIPT
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 111
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1
CA GOPAL KRISHNA RAJU | FCA AICWA ACS PGDOR PGDFM D ISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
The Companies Act 2013Accounts Audit amp Auditors
Thursday 29th MAY 2014983115983151983156983156983157983154983152983157983154983137983149983085983105983140983161983137983154 983107983120983109 983123983156983157983140983161 983107983145983154983139983148983141
The Companies Act 2013
1866 1882 1913 1956 2013
470 sections 95 definitions XXIX
Chapters VII Schedules
Willingness to listen patience to
understand strength to support
Letrsquos say yes to 3As ndash Accept Adjust and
Appreciate
Letrsquos say no to 3Cs ndash Criticize Condemn
and complain
Concept of De-conditioning
Applicability Date 1st APRIL 2014
Sections
Rules (more than 4 times the act)
Forms ndash 117 (44 + 73)
E-forms and physical forms
Old Act vs New Act comparison study
New Act ndash Fresh Study
Applicability of Audit report (SA 700 705 amp 706) and CARO for FY2013-2014 on ly
For FY 2014-2015
Guidance Note on Companies Act 2013 ndash CLampCGC
New Audit Report Format - AASB
Registered Companies as on 31st March 2014
The total number of companies registered in the country as on
31st March 2014 stood at 1394819
Of them 270915 companies were closed 142373
companies were lying dormant 5090 companies were under
liquidation 23696 companies were in the process of being
struck-off and 312 companies were in the process of being re-
activated
Taking the above into account there were 952433 active
companies as on 31st March 2014
Part IX A ndash Companies Act 1956 Chapter I to XII ndash Producer
Companies
Section 581A ndash 581ZT
Shall be applicable mutatis mutandis to a producer company in a
manner as if the companies act 1956 has not been repealed until a
special act is enacted for producer companies
Until a date is notified us 434 for NCLT All CLB and CL court shall
continue to apply as if the CA 1956 has not been repealed
465 Repeal of certain enactments and savings Chapter IX ndash Accounts of Companies
Section Particulars ndash 11 sections (8 Notified with rules)
128 Books of Account etc to be kept by company
129 Financial Statement
130 Re-opening of accounts on courtrsquos or tribunalrsquos orders
131 Voluntary revision of financial statements or Boardrsquos Report
132 Constitution of National Financial Reporting Authority
133 Central Government to prescribe accounting standards
134 Financial statement Boardrsquos Report etc
135 Corporate Social Responsibility (Separate Rules notified)
136 Right of member to copies of audited financial statement
137 Copy of financial statement to be filed with registrar
138 Internal Audit
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2
The Companies (Accounts) Rules 2014Rules Particulars ndash 13 Rules
1 Short title and commencement
2 Definitions
3 Manner of Books of Accounts to be kept in electronic form
4 Conditions regarding maintenance amp inspection of certain financial information by directors
5 Form of statement containing the salient features of financial statements of subsidiaries
6 Manner of Consolidation of accounts
7 Transitional provisions with respect t o accounting standards
8 Matters to be included in Boardrsquos Report
9 Disclosure about CSR Policy
10 Statement containing salient features of financial statements
11 Manner of circulation of financial statements in certain cases
12 Filing of financial statements and fees to be paid thereon
13 Companies required to appoint Internal Auditor
The Companies (Accounts) Rules 2014
Rules Particulars ndash 13 Rules Form
1 Short title and commencement -
2 Definitions -
3 Manner of Books of Accounts to be kept in electronic form -
4 Conditions regarding maintenance amp inspection of certain financial information by directors -
5 Form of statement containing the salient features of financial statements of subsidiaries AOC-1
6 Manner of Consolidation of accounts -
7 Transitional provisions with respect to accounting st andards -
8 Matters to be included in Boardrsquos Report AOC-2
9 Disclosure about CSR Policy -
10 Statement containing salient features of financial st atements AOC-3
11 Manner of circulation of financial statements in certain cases -
12 Filing of financial statements and fees to be paid thereon AOC-4
13 Companies required to appoint Internal Auditor -
Chapter X ndash Audit amp Auditors
Section Particulars ndash 10 sections notified with rules
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
The Companies (Audit and Auditors) Rules 2014
Rule Particulars ndash 14 Rules
1 Short title and commencement
2 Definitions
3 Manner and procedure of selection and appointment of auditors
4 Conditions for appointment and notice to Registrar
5 Class of Companies
6 Manner of rotation of auditors by the companies on expiry of their term
7 Removal of the auditor before expiry of his term
8 Resignation of auditor
9 Liability to devolve on concerned partners only
10 Disqualifications of auditor
11 Other matters to be included in auditors report
12 Duties amp powers of the companyrsquos auditor with reference to the audit of the branch amp the branch auditor
13 Reporting of Frauds by Auditor
14 Remuneration of the Cost Auditor
The Companies (Audit and Auditors) Rules 2014
Rule Particulars ndash 14 Rules ndash 4 Forms Forms
1 Short title and commencement -
2 Definitions -
3 Manner and procedure of selection and appointment of auditors -
4 Conditions for appointment and notice to Registrar ADT-1
5 Class of Companies -
6 Manner of rotation of auditors by the companies on expiry of their term -
7 Removal of the auditor before expiry of his term ADT-2
8 Resignation of auditor ADT-3
9 Liability to devolve on concerned partners only -
10 Disqualifications of auditor -
11 Other matters to be included in auditors report -
12 Duties amp powers of the companyrsquos auditor with reference to the audit of the branch amp the branch
auditor
-
13 Reporting of Frauds by Auditor ADT-4
14 Remuneration of the Cost Auditor -
bull Useful lives to compute depreciation
bull Silent Revolution is Depreciation
bull From rates-provided regime To useful-life regime ndashPrescribed
bull Method of depreciation ndash Choice
bull Significant table work (increased reduced)
bull Useful Life ndash Age = Remaining life
bull Revised GN on Transition accounting on depreciation
bull Residual Value
7212019 Companies act Audit and accountspdf
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3
Schedule II - Depreciation
Part A
bull Depreciation = Cost ndash Residual Value
bull Useful Lives = Available for use
bull Depreciation includes amortization
bull Useful life in part C is maximum
bull Can we have useful life less than Part C
bull 15 parts
bull For intangible assets = provision of AS-26 is applicable forthe time being in force except PPP projects
Schedule IISchedule IISchedule IISchedule II ndash ndashndash ndash Part BPart BPart BPart B
Part Bbull The useful life or residual life of any specific asset as
notified for accounting purposes by a regulatory authorityshall be applied
bull NESD ndash No extra shift depreciation
bull Life is less than schedule II ndash Disclose
bull Methods of depreciation ndash Disclose
bull Methods ndash Silent SLM WDV Annuity Sum of theyears digits Units of production
bull Max Life ndash 60 years (building other than factory buildingwith RCC frame)
Componentizationhellip
Part Bhellip
bull Min Life ndash 3 years ndash End user devices viz desktops laptops pads
amp temporary structures
bull Componentization of assets Note 4 to Schedule
bull Useful life is for whole of the asset where cost of a part of the
asset is significant to total cost of the asset and useful life of that
part is different from the useful life then separate UL is
applicable for that part
Schedule II - UL
Part Chellip snippets
bull Plant amp Machinery ndash General (CPP ndash 25 years Others ndash 15
years)
bull PampM ndash Special
bull Motor Vehicles ndash 10 years
bull Hire Vehicles ndash 6 years
SCHEME OF THE ACT
470Sections
29 Chapters7 Schedules
A very substantial part of the Act is in the form of ruleswhich are being prescribed separately
658Sections
13 Parts15Schedules
1 Accounting Standards
2 Associate Company
3 Auditing Standards
4 Authorised Capital
5 Books of Accounts
6 Called up capital
7 Charge
8 Chartered Accountant
9 Chief Executive Officer
10 Chief Financial Officer
11 Company Limited By Guarantee
12 Company Limited by Shares
13 Company Liquidator
14 Contributory
15 Control
16 Cost Accountant
17 Deposit
18 Expert
19 Financial Institution
20 Financial Statement
21 Foreign Company
22 Free Reserves
23 Global Depository Receipts
24 Independent Director
25 Indian Depository Receipt
26 Interested Director
27 Issued Capital
28 Key Managerial Personnel
29 Notification
30 Official Liquidator
31 One Person Company
32 Ordinary or Special Resolution
33 Postal Ballot
34 Promoter
35 Public Financial Institution
36 Register of Companies
37 Related Party
38 Remuneration
39 Serious Fraud InvestigationOffice
40 Small Company
41 Subscribed capital
42 Sweat Equity Shares
43 Turnover
44 Unlimited Company
45 Voting Right
46 Whole Time Director
983118983141983159 983108983141983142983145983150983145983156983145983151983150983155 983145983150983156983154983151983140983157983139983141983140 983145983150 983123983141983139983156983145983151983150 983090983098983085
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bull 2(18) ldquoChief Executive Officerrdquo means an officer of a company who
has been designated as such by it
bull 2(19) ldquoChief Financial Officerrdquo means a person appointed as a Chief
Financial Officer of a company
bull 2(66) ldquoprescribedrdquo means prescribed by rules made under this Act
983108983109983110983113983118983113983124983113983119983118983123 983127983112983113983107983112 983112983105983126983109 983106983109983109983118 983108983113983123983107983119983118983124983113983118983125983109983108
District Court
Industrial Company
Industrial Undertaking
Information memorandum
Issued generally
State Level Institution
Option in Securities
Operating Agency
Public Holiday
Share with Differential Rights
Sick Industrial Company
983108983109983110983113983118983113983124983113983119983118983123 983127983112983113983107983112 983112983105983126983109 983106983109983109983118 983108983113983123983107983119983118983124983113983118983125983109983108
District Court
Industrial Company
Industrial Undertaking
Information memorandum
Issued generally
State Level Institution
Option in Securities
Operating Agency
Public Holiday
Share with Differential Rights
Sick Industrial Company
ldquofinancial statementrdquo in relation to a company includesmdash
i a balance sheet as at the end of the financial year
ii a profit and loss account or in the case of a company carrying on any activity not
for profit an income and expenditure account for the financial year
iii cash flow statement for the financial year
iv a statement of changes in equity if applicable and
v any explanatory note annexed to or forming part of any document referred to in
sub-clause (i) to sub-clause (iv)
One Person Company Small Company Dormant Company ndash may not include Cash
Flow Statement
Financial Statement ndash 2(40)
Meaning ldquoFinancial yearrdquo in relation to any company or body corporate
means the period ending on the 31st day of March every year
Breathing time within a period of two years from such
commencement align its financial year as per the provisions of this
clause
Exception Incorporated on or after 1st January of a year then the period
ending on the 31st day of March if the following year
Financial Year ndash 2(41)
Relative ndash 2(77)
lsquolsquorelativersquorsquo with reference to any person means any one who is related
to another if mdash
i they are members of a Hindu Undivided Family
ii they are husband and wife or
iii one person is related to the other in such manner as may
be prescribed
List of Relatives as prescribed ndash only 8 only 8 only 8 only 8bull The Companies (Specification of definitions details) Rules 2014
bull Rule 4
bull A person shall be deemed to be the relative of another if he or she is related to another in the
following manner namely-
1 983110983137983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983110983137983156983144983141983154)
983090 983117983151983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983117983151983156983144983141983154)
983091 983123983151983150 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983123983151983150)
983092 983123983151983150991257983155 983127983145983142983141
983093 983108983137983157983143983144983156983141983154
983094 983108983137983157983143983144983156983141983154991257983155 983112983157983155983138983137983150983140
983095 983106983154983151983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983106983154983151983156983144983141983154)
983096 983123983145983155983156983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983123983145983155983156983141983154)
What happened to Step-Daughter Is she not a relative
7212019 Companies act Audit and accountspdf
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5
Expert - Section 2(38)
bull Definition - ldquoexpertrdquo includes an engineer a valuer a
chartered accountant a company secretary a cost accountant
and any other person who has the power or authority to issue a
certificate in pursuance of any law for the time being in force
Professional Indemnity Insurance ndash need of the hour
bull 247(4) ndash Serious liabilitybull refund the remuneration received by him to the company and
bull pay for damages to the company or to any other person for lossarising out of incorrect or misleading statements of particulars made
in his report
All companies having subsidiary(s) need to prepare consolidated
accounts
ldquoSubsidiaryrdquo includes associate and joint ventures
Rule 5 amp 6 ndash The Companies (Accounts) Rules 2014
Form AOC-1 The Statement containing salient features of the
FS of subsidiaries associate companies Joint ventures
Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)
1956 Position
Consolidated is not mandated for any company
Only listing agreement requires consolidation for listed companies
having subsidiaries (clause 32 of Listing agreement and AS 21)
Chapter IX ndash Accounts of Companies
Section Particulars
128 Books of Account etc to be kept by company
129 Financial Statement
130 Re-opening of accounts on courtrsquos or tribunalrsquos orders
131 Voluntary revision of financial statements or Boardrsquos Report
132 Constitution of National Financial Reporting Authority
133 Central Government to prescribe accounting standards
134 Financial statement Boardrsquos Report etc
135 Corporate Social Responsibility
136 Right of member to copies of audited financial statement
137 Copy of financial statement to be filed with registrar
138 Internal Audit
ldquobook and paperrdquoand ldquobook or paperrdquo include
Books of account
Deeds
Vouchers
Writings
Documents
Minutes and registers maintained on paper or in electronic form
book and paper and book or paper- 2(12)
ldquobooks of accountrdquo includes records maintained in respect of mdash
1 a ll sums of money received and expended by a company and matters inrelation to which the receipts and expenditure take place
2 all sales and purchases of goods and services by the company
3 the assets and liabilities of the company and
4 the items of cost as may be prescribed under section 148 in the case of acompany which belongs to any class of companies specified under that
section
Refer us 209(1) of The Companies Act 1956
Books of Account - 2(13)
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6
Transitional provisions with respect to
Accounting Standards
bull The Companies (Accounts) Rules 2014
bull Rule 7
bull ICAI ndash AS continues as on date Standards as specified under companies
act 1956 shall be deemed to be the accounting standards until accounting
standards are specified by central government us 133
bull NACAS as of now NFRA later Till NFRA is constituted us 132 the central
government may prescribe the accounting standard or any addendum as
recommended by ICAI in consultation with and after examination of
recommendations made by NACAS constituted us 210A of companies Act
1956
NACAS National Advisory Committee on Accounting Standards
E-Mode ndash Rule 3
bull The Companies (Accounts) Rules 2014
bull Books of Accounts ndash Accessible (in India) Complete unaltered
bull C I A ndash Principles of Information Security but C is missing ndash only IampA is
addressed in rule
bull Rule 3(6) The company shall intimate to the registrar on an annual
basis at the time of filing of financial statement
a Name of the service provider
b The internet protocol address of service provider
c The location of the service provider (wherever applicable)
d Where the books of account and other books and papers are maintained on cloud
such address (physical) as provided by the service provider
E-Mode
bull Financial Statements ndash Section 136 ndash (Right of members to copies of audited
financial statements)
bull 21 days Notice to be sent
bull Along with a copy of the financial statements including consolidated
financial statements if any auditorrsquos report and every other documentrequired by law to be annexed or attached to the financial statements
bull To be Hosted in Website ndash Listed Company (as per Act)
E-Mode
bull The Companies (Accounts) Rules 2014
bull Rule 11 May be sent in e-mode ndash
bull All listed companies and all public companies having Net-worth gt 1 Cr amp
Turnover gt 10 Cr ndash the financial statements may be sent ndash
a By electronic mode to such members whose shareholding is in de-mat form and
whose email ids are registered with depository for communication purposes
b Where shareholding is held otherwise than by dematerialized format to such
members who have positively consented in writing for receiving by electronic mode
and
c By dispatch of physical copies through any recognized mode of delivery as specified
us 20
Boardrsquos Report shall also contain
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
i the financial summary or highlights
ii the change in the nature of business if any
i ii th e details of directors or key managerial personnel who were appointed or have
resigned during the year
iv the names of companies which have become or ceased to be its Subsidiaries joint
ventures or associate companies during the year
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
(v) the details relating to deposits covered under Chapter V of the Act-
(a) accepted during the year
(b) remained unpaid or unclaimed as at the end of the year
(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so
number of such cases an d the total amount involved-
ndash (i) at the beginning of the year
ndash (ii) maximum during the year
ndash (iii) at the end of the year
(vi) the details of deposits which are not in compliance with the requirements of Chapter V of
the Act
(vii) the details of significant and material orders passed by the r egulators or courts or tribunals
impacting the going concern status and companyrsquos operations in future
(viii) the details in respect of adequacy of internal financial controls with reference to the
Financial Statements
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7
All companies including private companies who are meeting
eligibility criteria (NW ge 500 cr Turnover ge 1000 cr NP ge 5 cr)
are required to constitute a CSR committee consisting of at
least 3 directors out of which 1 must be ID and spend at least
2 of average NP on CSR activities
Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135
1956 Position
No requirement to spend on CSR activties
CSR ndash Sec 135 amp CSR Rules
bull Net Profit ndash PBT
bull Tax treatment of CSR in accordance with proposed notification (beingstatutory expenditure ndash should be tax deductible) -
bull Professional Opportunity ndash Company Setup Trust Section 8 company Society
bull Other Trusts ndash minimum 3 year track record ndash CEO of IICA ndash DirectorGeneral Mr Bhaskar Chatterjee ndash Accreditation to NGOs ndash Govt Ratingfor NPOs ndash Partnering with ldquo Tata institute of social sciencesrdquo
bull CSR Index ndash BSE amp IICA ndash To Develop
bull Min 8000 eligible companies
bull Min Rs 12000 crores pay-off
138 - Internal Audit
bull Welcome move ndash Professional opportunity ndash Mandatory IA for listed amp Public
companies
bull CA CMA Board nominated professional
bull Rule is silent ndash Board AC to formulate - Scope Functioning periodicity
amp methodology in consultation with IA
bull Internal Auditor may or may not be
an employee of the company
bull CA means a CA whether engaged in
practice or not
Rule 13
The Companies (Accounts) Rules 2014 (all limits in preceding FY)
983110983151983148983148983151983159983145983150983143 983139983151983149983152983137983150983145983141983155 983156983151 983137983152983152983151983145983150983156 983113983150983156983141983154983150983137983148 983105983157983140983145983156983151983154 983149983137983150983140983137983156983151983154983145983148983161
983159983145983156983144983145983150 983094 983149983151983150983156983144983155 983151983142 983139983151983149983149983141983150983139983141983149983141983150983156 983151983142 983155983141983139983156983145983151983150
o Listed company
o Unlisted public company
bull Paid-up capital ge 50 crores
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores
bull Os Deposits ge 25 crores
o Private Company
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores (from banks or PFIs)
Rule 13(1) To appoint an internal auditor or a firm of internal auditors
NFRA
National Financial Reporting Authority
bull To be constituted by a notification of the Central Government
bull It shall consist of a Chairman (to be appointed by CG) and other members not
exceeding 15 in number
bull Chairperson and members shall make a declaration to the Central Government
regarding no conflict of interest or lack of independence in respect of his or
their appointment
bull Chairperson and members who are in full-time employment with NFRA 983155983144983137983148983148 983150983151983156
983138983141 983137983155983155983151983139983145983137983156983141983140 983159983145983156983144 983137983150983161 983137983157983140983145983156 983142983145983154983149 (including related consultancy firms) during the
course of their appointment and two years after ceasing to hold such
appointment
Constitution of NFRA
bull Yet to constitute by notification ndash Still in Draft Rules stage
bull Role of NFRA 132(2)
1 make recommendations to the Central Government on the formulation and laying
down of accounting and auditing policies and standards for adoption by
companies or class of companies or their auditors as the case may be
2 monitor and enforce the compliance with accounting standards and auditing
standards in such manner as may be prescribed
3 oversee the quality of service of the professions associated with ensuring
compliance with such standards and suggest measures required for
improvement in quality of service and such other related matters as may be
prescribed and
4 perform such other functions relating to clauses (a) (b) and (c) as may be
prescribed
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29-05-2014
8
Powers of NFRA
bull Powers of NFRA 132(4)
ndash have the power to investigate either suo motu or on a
reference made to it by the Central Government
ndash imposing penalty (5 Lakh 10 Lakhs)
ndash debarring the member or the firm from engaging himself or
itself from practice
Composition of
QRB
983124983144983141 983139983157983154983154983141983150983156 983139983151983149983152983151983155983145983156983145983151983150 983151983142 983156983144983141 983106983151983137983154983140 983139983151983150983155983145983155983156983155 983151983142 983156983144983141 983142983151983148983148983151983159983145983150983143983098983085
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983141983150983156983154983137983148 983111983151983158983141983154983150983149983141983150983156
1 983117983154 983117 983107 983114983151983155983144983145 983113983122983123 (983122983141983156983140) 983110983151983154983149983141983154 983107983144983137983145983154983149983137983150 983107983141983150983156983154983137983148 983106983151983137983154983140 983151983142 983108983145983154983141983139983156 983124983137983160983141983155 983117983145983150983145983155983156983154983161 983151983142 983110983145983150983137983150983139983141 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983119983113983108983105991251 983107983144983137983145983154983152983141983154983155983151983150 (983159983141983142 2162012)
2 983117983154 983120 983117983157983154983137983148983145 983117983151983144983137983150983137 983122983137983151 983112983161983140983141983154983137983138983137983140983085 983117983141983149983138983141983154 (983159983141983142 132014)3 983117983154 983117983137983150983151983146 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251983117983141983149983138983141983154 (983159983141983142
1492011)4 983117983154 983126 983123 983123983157983150983140983137983154983141983155983137983150 983107983144983145983141983142 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983123983141983139983157983154983145983156983145983141983155 983137983150983140 983109983160983139983144983137983150983143983141 983106983151983137983154983140 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251983117983141983149983138983141983154 (983159983141983142 5112012)5 983117983154 983111983137983157983156983137983149 983111983157983144983137 983108983145983154983141983139983156983151983154 983111983141983150983141983154983137983148 (983107983151983149983149983141983154983139983145983137983148983085983113) 983119983142983142983145983139983141 983151983142 983156983144983141 983107983151983149983152983156983154983151983148983148983141983154 amp 983105983157983140983145983156983151983154 983111983141983150983141983154983137983148 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154
(983159983141983142 1262012)
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983151983157983150983139983145983148 983151983142 983156983144983141 983113983107983105983113 1 983107983105 983115 983122983137983143983144983157 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983106983137983150983143983137983148983157983154983157 991251 983117983141983149983138983141983154 (983159983141983142 132014)2 983107983105 983117983137983150983151983146 983110983137983140983150983145983155 983126983145983139983141983085983120983154983141983155983145983140983141983150983156 983113983107983105983113 983113983150983140983151983154983141 991251 983117983141983149983138983141983154 (983159983141983142 132014)3 983107983105 983123983157983138983151983140983144 983115 983105983143983154983137983159983137983148 983113983149983149983141983140983145983137983156983141 983120983137983155983156 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983115983151983148983147983137983156983137 991251 983117983141983149983138983141983154 (983159983141983142 132014)4 983107983105 983122983137983146983147983157983149983137983154 983123 983105983140983157983147983145983137 983117983157983149983138983137983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)5 983107983105 983107983144983137983154983137983150983146983151983156 983123983145983150983143983144 983118983137983150983140983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)
983123983152983141983139983145983137983148 983113983150983158983145983156983141983141983155 1 983117983154 983122 983115 983120983137983150983140983137 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983122983141983155983141983154983158983141 983106983137983150983147 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831412 983117983154 983120983154983145983156983144983158983145 983112983137983148983140983141983137 983120983137983155983156 983107983151983157983150983139983145983148 983117983141983149983138983141983154 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831413 983117983154 983124 983115983137983154983156983144983145983147983141983161983137983150 983123983141983139983154983141983156983137983154983161 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831414 983117983154983155 983122983141983150983157983147983137 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 983145983150983158983145983156983141983141
983123983141983139983154983141983137983156983154983161 983156983151 983156983144983141 9831069831519831379831549831401 983117983154 983117983151983144983145983156 983106983137983145983146983137983148
Financial Review and Reporting Board
Chairman CA Nilesh Vikamsey
Peer Review Board
Chairman CA Naveen N D Guptha
Revision of FS or BR ndash 131
bull ldquoIf it appears FS do not comply with section 129rdquo
bull Revision of any of the 3 preceding FY
bull Approval of tribunal with notice to IT department
bull Tribunal will issue notice amp hear auditor (Audit Working Papers ndashnecessary)
bull Carry out audit procedures necessary to changed circumstances ndashremuneration please ndash [us 142 to be fixed in GM]
bull AS 5 ndash Prior Period Items AS 4 ndash Events Occurring after BS date AS 7 ndash Construction Contracts AS 22 ndash Accounting for Taxes on Income
bull Only one revision allowed unlike gt 1 revision a llowed under IT act
Chapter X ndash Audit amp Auditors
Section Particulars
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
Appointment of Auditors
bull India believes audit rotation is a positive step
bull Rule 6 ndash The Companies (Audit and Auditors) Rules 2014
bull 3 year time frame for implementation ndash Maximum number of
consecutive years for which he may be appointed in the same
company (including the Transitional Period) 3 to 4 years for Individual
auditor 3 to 9 years in case of audit firm
bull Firm Rotation ndash Mandatory
bull Partner Rotation ndash Optional Voluntary ndash Members may resolve to
provide for ndash Section 139(3)
7212019 Companies act Audit and accountspdf
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9
Applicability of Rotation
bull Section 139(2)
bull Rule 5 The companies (Audit and Auditors) Rules 2014
bull Class of Companies excludes OPC and Small Companies
bull Includes
bull All unlisted public companies having paid up capital of 10 croresor more
bull All private limited companies having paid up capital of 20 croresor more
bull Public borrowings from FI banks public deposits of 50 croresof more
bull 143(12) - Notwithstanding anything contained in this section if an
auditor of a company in the course of the performance of his duties
as auditor has 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 immediately report the matter
to the Central Government within such time and in such manner as
may be prescribed
Fraud Reporting ndash Section 143(12)
Rule 13 ndash Report to CG
bull The companies (Audit and Auditors) Rules 2014
bull Fraud is being or has been committed against the company by officers
or employees of the company
bull Report the matter to the CG within 60 days following a procedure
bull Forward his report to board AC (immediately) ndash seeking their reply
within 45 days
bull On receipt of reply forward his report and the reply or observations of
board AC along with his comments to CG within 15 days
bull No reply from Board AC ndash even then forward to CG
Rule 13 ndash Report to CG
bull To whom
bull The Secretary Ministry of Corporate Affairs in a sealed cover by
Registered Post with ack due or Speed Post followed by an e-mail in
confirmation of the same
bull The report shall be on letter head of the auditor containing address e-
mail address and contact number and be signed by the auditor with his
seal and shall indicate his MNo
bull Form ADT-4
bull Your Attention Please This shall apply mutatis-mutandis to cost
accountant in practice and secretarial auditor
Auditors to attend General Meeting
bull 231 (Old) ndash Entitled to attend ndash optional attendance
bull 146 ndash attend either by himself or through his authorised
representative who shall also be qualified to be an auditor
any general meeting and shall have right to be heard at such meeting
on any part of the business which concerns him as the auditor ndash
Mandatory attendance
143 - Powers amp duties of Auditors and
Auditing Standards
bull 143(1)(f) - Share Capital SAMPA ndash Cash COTC where it is stated in thebooks and documents of the company that any shares have been allotted for cashwhether cash has actually been received in respect of such allotment and
if no cash has actually been so received whether the position as stated in the
account books and the balance sheet is correct regular and not
misleading
bull 143(3) ndashThe Auditorrsquos report shall also state (a) to (j) ndash SA 700 705 706 may gofor revision
bull 143(4) ndash Where any of the matters required to be included in the audit report underthis section is answered in the negative or with a qualification the report shall
state the reasons therefor
bull 143(9) - Every auditor shall comply with the auditing standards ndash 58 so
far pronounced by ICAI from SA 200 to SA 4410 ndash SA SQC SIA
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10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
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11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
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2
The Companies (Accounts) Rules 2014Rules Particulars ndash 13 Rules
1 Short title and commencement
2 Definitions
3 Manner of Books of Accounts to be kept in electronic form
4 Conditions regarding maintenance amp inspection of certain financial information by directors
5 Form of statement containing the salient features of financial statements of subsidiaries
6 Manner of Consolidation of accounts
7 Transitional provisions with respect t o accounting standards
8 Matters to be included in Boardrsquos Report
9 Disclosure about CSR Policy
10 Statement containing salient features of financial statements
11 Manner of circulation of financial statements in certain cases
12 Filing of financial statements and fees to be paid thereon
13 Companies required to appoint Internal Auditor
The Companies (Accounts) Rules 2014
Rules Particulars ndash 13 Rules Form
1 Short title and commencement -
2 Definitions -
3 Manner of Books of Accounts to be kept in electronic form -
4 Conditions regarding maintenance amp inspection of certain financial information by directors -
5 Form of statement containing the salient features of financial statements of subsidiaries AOC-1
6 Manner of Consolidation of accounts -
7 Transitional provisions with respect to accounting st andards -
8 Matters to be included in Boardrsquos Report AOC-2
9 Disclosure about CSR Policy -
10 Statement containing salient features of financial st atements AOC-3
11 Manner of circulation of financial statements in certain cases -
12 Filing of financial statements and fees to be paid thereon AOC-4
13 Companies required to appoint Internal Auditor -
Chapter X ndash Audit amp Auditors
Section Particulars ndash 10 sections notified with rules
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
The Companies (Audit and Auditors) Rules 2014
Rule Particulars ndash 14 Rules
1 Short title and commencement
2 Definitions
3 Manner and procedure of selection and appointment of auditors
4 Conditions for appointment and notice to Registrar
5 Class of Companies
6 Manner of rotation of auditors by the companies on expiry of their term
7 Removal of the auditor before expiry of his term
8 Resignation of auditor
9 Liability to devolve on concerned partners only
10 Disqualifications of auditor
11 Other matters to be included in auditors report
12 Duties amp powers of the companyrsquos auditor with reference to the audit of the branch amp the branch auditor
13 Reporting of Frauds by Auditor
14 Remuneration of the Cost Auditor
The Companies (Audit and Auditors) Rules 2014
Rule Particulars ndash 14 Rules ndash 4 Forms Forms
1 Short title and commencement -
2 Definitions -
3 Manner and procedure of selection and appointment of auditors -
4 Conditions for appointment and notice to Registrar ADT-1
5 Class of Companies -
6 Manner of rotation of auditors by the companies on expiry of their term -
7 Removal of the auditor before expiry of his term ADT-2
8 Resignation of auditor ADT-3
9 Liability to devolve on concerned partners only -
10 Disqualifications of auditor -
11 Other matters to be included in auditors report -
12 Duties amp powers of the companyrsquos auditor with reference to the audit of the branch amp the branch
auditor
-
13 Reporting of Frauds by Auditor ADT-4
14 Remuneration of the Cost Auditor -
bull Useful lives to compute depreciation
bull Silent Revolution is Depreciation
bull From rates-provided regime To useful-life regime ndashPrescribed
bull Method of depreciation ndash Choice
bull Significant table work (increased reduced)
bull Useful Life ndash Age = Remaining life
bull Revised GN on Transition accounting on depreciation
bull Residual Value
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3
Schedule II - Depreciation
Part A
bull Depreciation = Cost ndash Residual Value
bull Useful Lives = Available for use
bull Depreciation includes amortization
bull Useful life in part C is maximum
bull Can we have useful life less than Part C
bull 15 parts
bull For intangible assets = provision of AS-26 is applicable forthe time being in force except PPP projects
Schedule IISchedule IISchedule IISchedule II ndash ndashndash ndash Part BPart BPart BPart B
Part Bbull The useful life or residual life of any specific asset as
notified for accounting purposes by a regulatory authorityshall be applied
bull NESD ndash No extra shift depreciation
bull Life is less than schedule II ndash Disclose
bull Methods of depreciation ndash Disclose
bull Methods ndash Silent SLM WDV Annuity Sum of theyears digits Units of production
bull Max Life ndash 60 years (building other than factory buildingwith RCC frame)
Componentizationhellip
Part Bhellip
bull Min Life ndash 3 years ndash End user devices viz desktops laptops pads
amp temporary structures
bull Componentization of assets Note 4 to Schedule
bull Useful life is for whole of the asset where cost of a part of the
asset is significant to total cost of the asset and useful life of that
part is different from the useful life then separate UL is
applicable for that part
Schedule II - UL
Part Chellip snippets
bull Plant amp Machinery ndash General (CPP ndash 25 years Others ndash 15
years)
bull PampM ndash Special
bull Motor Vehicles ndash 10 years
bull Hire Vehicles ndash 6 years
SCHEME OF THE ACT
470Sections
29 Chapters7 Schedules
A very substantial part of the Act is in the form of ruleswhich are being prescribed separately
658Sections
13 Parts15Schedules
1 Accounting Standards
2 Associate Company
3 Auditing Standards
4 Authorised Capital
5 Books of Accounts
6 Called up capital
7 Charge
8 Chartered Accountant
9 Chief Executive Officer
10 Chief Financial Officer
11 Company Limited By Guarantee
12 Company Limited by Shares
13 Company Liquidator
14 Contributory
15 Control
16 Cost Accountant
17 Deposit
18 Expert
19 Financial Institution
20 Financial Statement
21 Foreign Company
22 Free Reserves
23 Global Depository Receipts
24 Independent Director
25 Indian Depository Receipt
26 Interested Director
27 Issued Capital
28 Key Managerial Personnel
29 Notification
30 Official Liquidator
31 One Person Company
32 Ordinary or Special Resolution
33 Postal Ballot
34 Promoter
35 Public Financial Institution
36 Register of Companies
37 Related Party
38 Remuneration
39 Serious Fraud InvestigationOffice
40 Small Company
41 Subscribed capital
42 Sweat Equity Shares
43 Turnover
44 Unlimited Company
45 Voting Right
46 Whole Time Director
983118983141983159 983108983141983142983145983150983145983156983145983151983150983155 983145983150983156983154983151983140983157983139983141983140 983145983150 983123983141983139983156983145983151983150 983090983098983085
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4
bull 2(18) ldquoChief Executive Officerrdquo means an officer of a company who
has been designated as such by it
bull 2(19) ldquoChief Financial Officerrdquo means a person appointed as a Chief
Financial Officer of a company
bull 2(66) ldquoprescribedrdquo means prescribed by rules made under this Act
983108983109983110983113983118983113983124983113983119983118983123 983127983112983113983107983112 983112983105983126983109 983106983109983109983118 983108983113983123983107983119983118983124983113983118983125983109983108
District Court
Industrial Company
Industrial Undertaking
Information memorandum
Issued generally
State Level Institution
Option in Securities
Operating Agency
Public Holiday
Share with Differential Rights
Sick Industrial Company
983108983109983110983113983118983113983124983113983119983118983123 983127983112983113983107983112 983112983105983126983109 983106983109983109983118 983108983113983123983107983119983118983124983113983118983125983109983108
District Court
Industrial Company
Industrial Undertaking
Information memorandum
Issued generally
State Level Institution
Option in Securities
Operating Agency
Public Holiday
Share with Differential Rights
Sick Industrial Company
ldquofinancial statementrdquo in relation to a company includesmdash
i a balance sheet as at the end of the financial year
ii a profit and loss account or in the case of a company carrying on any activity not
for profit an income and expenditure account for the financial year
iii cash flow statement for the financial year
iv a statement of changes in equity if applicable and
v any explanatory note annexed to or forming part of any document referred to in
sub-clause (i) to sub-clause (iv)
One Person Company Small Company Dormant Company ndash may not include Cash
Flow Statement
Financial Statement ndash 2(40)
Meaning ldquoFinancial yearrdquo in relation to any company or body corporate
means the period ending on the 31st day of March every year
Breathing time within a period of two years from such
commencement align its financial year as per the provisions of this
clause
Exception Incorporated on or after 1st January of a year then the period
ending on the 31st day of March if the following year
Financial Year ndash 2(41)
Relative ndash 2(77)
lsquolsquorelativersquorsquo with reference to any person means any one who is related
to another if mdash
i they are members of a Hindu Undivided Family
ii they are husband and wife or
iii one person is related to the other in such manner as may
be prescribed
List of Relatives as prescribed ndash only 8 only 8 only 8 only 8bull The Companies (Specification of definitions details) Rules 2014
bull Rule 4
bull A person shall be deemed to be the relative of another if he or she is related to another in the
following manner namely-
1 983110983137983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983110983137983156983144983141983154)
983090 983117983151983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983117983151983156983144983141983154)
983091 983123983151983150 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983123983151983150)
983092 983123983151983150991257983155 983127983145983142983141
983093 983108983137983157983143983144983156983141983154
983094 983108983137983157983143983144983156983141983154991257983155 983112983157983155983138983137983150983140
983095 983106983154983151983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983106983154983151983156983144983141983154)
983096 983123983145983155983156983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983123983145983155983156983141983154)
What happened to Step-Daughter Is she not a relative
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5
Expert - Section 2(38)
bull Definition - ldquoexpertrdquo includes an engineer a valuer a
chartered accountant a company secretary a cost accountant
and any other person who has the power or authority to issue a
certificate in pursuance of any law for the time being in force
Professional Indemnity Insurance ndash need of the hour
bull 247(4) ndash Serious liabilitybull refund the remuneration received by him to the company and
bull pay for damages to the company or to any other person for lossarising out of incorrect or misleading statements of particulars made
in his report
All companies having subsidiary(s) need to prepare consolidated
accounts
ldquoSubsidiaryrdquo includes associate and joint ventures
Rule 5 amp 6 ndash The Companies (Accounts) Rules 2014
Form AOC-1 The Statement containing salient features of the
FS of subsidiaries associate companies Joint ventures
Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)
1956 Position
Consolidated is not mandated for any company
Only listing agreement requires consolidation for listed companies
having subsidiaries (clause 32 of Listing agreement and AS 21)
Chapter IX ndash Accounts of Companies
Section Particulars
128 Books of Account etc to be kept by company
129 Financial Statement
130 Re-opening of accounts on courtrsquos or tribunalrsquos orders
131 Voluntary revision of financial statements or Boardrsquos Report
132 Constitution of National Financial Reporting Authority
133 Central Government to prescribe accounting standards
134 Financial statement Boardrsquos Report etc
135 Corporate Social Responsibility
136 Right of member to copies of audited financial statement
137 Copy of financial statement to be filed with registrar
138 Internal Audit
ldquobook and paperrdquoand ldquobook or paperrdquo include
Books of account
Deeds
Vouchers
Writings
Documents
Minutes and registers maintained on paper or in electronic form
book and paper and book or paper- 2(12)
ldquobooks of accountrdquo includes records maintained in respect of mdash
1 a ll sums of money received and expended by a company and matters inrelation to which the receipts and expenditure take place
2 all sales and purchases of goods and services by the company
3 the assets and liabilities of the company and
4 the items of cost as may be prescribed under section 148 in the case of acompany which belongs to any class of companies specified under that
section
Refer us 209(1) of The Companies Act 1956
Books of Account - 2(13)
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6
Transitional provisions with respect to
Accounting Standards
bull The Companies (Accounts) Rules 2014
bull Rule 7
bull ICAI ndash AS continues as on date Standards as specified under companies
act 1956 shall be deemed to be the accounting standards until accounting
standards are specified by central government us 133
bull NACAS as of now NFRA later Till NFRA is constituted us 132 the central
government may prescribe the accounting standard or any addendum as
recommended by ICAI in consultation with and after examination of
recommendations made by NACAS constituted us 210A of companies Act
1956
NACAS National Advisory Committee on Accounting Standards
E-Mode ndash Rule 3
bull The Companies (Accounts) Rules 2014
bull Books of Accounts ndash Accessible (in India) Complete unaltered
bull C I A ndash Principles of Information Security but C is missing ndash only IampA is
addressed in rule
bull Rule 3(6) The company shall intimate to the registrar on an annual
basis at the time of filing of financial statement
a Name of the service provider
b The internet protocol address of service provider
c The location of the service provider (wherever applicable)
d Where the books of account and other books and papers are maintained on cloud
such address (physical) as provided by the service provider
E-Mode
bull Financial Statements ndash Section 136 ndash (Right of members to copies of audited
financial statements)
bull 21 days Notice to be sent
bull Along with a copy of the financial statements including consolidated
financial statements if any auditorrsquos report and every other documentrequired by law to be annexed or attached to the financial statements
bull To be Hosted in Website ndash Listed Company (as per Act)
E-Mode
bull The Companies (Accounts) Rules 2014
bull Rule 11 May be sent in e-mode ndash
bull All listed companies and all public companies having Net-worth gt 1 Cr amp
Turnover gt 10 Cr ndash the financial statements may be sent ndash
a By electronic mode to such members whose shareholding is in de-mat form and
whose email ids are registered with depository for communication purposes
b Where shareholding is held otherwise than by dematerialized format to such
members who have positively consented in writing for receiving by electronic mode
and
c By dispatch of physical copies through any recognized mode of delivery as specified
us 20
Boardrsquos Report shall also contain
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
i the financial summary or highlights
ii the change in the nature of business if any
i ii th e details of directors or key managerial personnel who were appointed or have
resigned during the year
iv the names of companies which have become or ceased to be its Subsidiaries joint
ventures or associate companies during the year
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
(v) the details relating to deposits covered under Chapter V of the Act-
(a) accepted during the year
(b) remained unpaid or unclaimed as at the end of the year
(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so
number of such cases an d the total amount involved-
ndash (i) at the beginning of the year
ndash (ii) maximum during the year
ndash (iii) at the end of the year
(vi) the details of deposits which are not in compliance with the requirements of Chapter V of
the Act
(vii) the details of significant and material orders passed by the r egulators or courts or tribunals
impacting the going concern status and companyrsquos operations in future
(viii) the details in respect of adequacy of internal financial controls with reference to the
Financial Statements
7212019 Companies act Audit and accountspdf
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7
All companies including private companies who are meeting
eligibility criteria (NW ge 500 cr Turnover ge 1000 cr NP ge 5 cr)
are required to constitute a CSR committee consisting of at
least 3 directors out of which 1 must be ID and spend at least
2 of average NP on CSR activities
Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135
1956 Position
No requirement to spend on CSR activties
CSR ndash Sec 135 amp CSR Rules
bull Net Profit ndash PBT
bull Tax treatment of CSR in accordance with proposed notification (beingstatutory expenditure ndash should be tax deductible) -
bull Professional Opportunity ndash Company Setup Trust Section 8 company Society
bull Other Trusts ndash minimum 3 year track record ndash CEO of IICA ndash DirectorGeneral Mr Bhaskar Chatterjee ndash Accreditation to NGOs ndash Govt Ratingfor NPOs ndash Partnering with ldquo Tata institute of social sciencesrdquo
bull CSR Index ndash BSE amp IICA ndash To Develop
bull Min 8000 eligible companies
bull Min Rs 12000 crores pay-off
138 - Internal Audit
bull Welcome move ndash Professional opportunity ndash Mandatory IA for listed amp Public
companies
bull CA CMA Board nominated professional
bull Rule is silent ndash Board AC to formulate - Scope Functioning periodicity
amp methodology in consultation with IA
bull Internal Auditor may or may not be
an employee of the company
bull CA means a CA whether engaged in
practice or not
Rule 13
The Companies (Accounts) Rules 2014 (all limits in preceding FY)
983110983151983148983148983151983159983145983150983143 983139983151983149983152983137983150983145983141983155 983156983151 983137983152983152983151983145983150983156 983113983150983156983141983154983150983137983148 983105983157983140983145983156983151983154 983149983137983150983140983137983156983151983154983145983148983161
983159983145983156983144983145983150 983094 983149983151983150983156983144983155 983151983142 983139983151983149983149983141983150983139983141983149983141983150983156 983151983142 983155983141983139983156983145983151983150
o Listed company
o Unlisted public company
bull Paid-up capital ge 50 crores
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores
bull Os Deposits ge 25 crores
o Private Company
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores (from banks or PFIs)
Rule 13(1) To appoint an internal auditor or a firm of internal auditors
NFRA
National Financial Reporting Authority
bull To be constituted by a notification of the Central Government
bull It shall consist of a Chairman (to be appointed by CG) and other members not
exceeding 15 in number
bull Chairperson and members shall make a declaration to the Central Government
regarding no conflict of interest or lack of independence in respect of his or
their appointment
bull Chairperson and members who are in full-time employment with NFRA 983155983144983137983148983148 983150983151983156
983138983141 983137983155983155983151983139983145983137983156983141983140 983159983145983156983144 983137983150983161 983137983157983140983145983156 983142983145983154983149 (including related consultancy firms) during the
course of their appointment and two years after ceasing to hold such
appointment
Constitution of NFRA
bull Yet to constitute by notification ndash Still in Draft Rules stage
bull Role of NFRA 132(2)
1 make recommendations to the Central Government on the formulation and laying
down of accounting and auditing policies and standards for adoption by
companies or class of companies or their auditors as the case may be
2 monitor and enforce the compliance with accounting standards and auditing
standards in such manner as may be prescribed
3 oversee the quality of service of the professions associated with ensuring
compliance with such standards and suggest measures required for
improvement in quality of service and such other related matters as may be
prescribed and
4 perform such other functions relating to clauses (a) (b) and (c) as may be
prescribed
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8
Powers of NFRA
bull Powers of NFRA 132(4)
ndash have the power to investigate either suo motu or on a
reference made to it by the Central Government
ndash imposing penalty (5 Lakh 10 Lakhs)
ndash debarring the member or the firm from engaging himself or
itself from practice
Composition of
QRB
983124983144983141 983139983157983154983154983141983150983156 983139983151983149983152983151983155983145983156983145983151983150 983151983142 983156983144983141 983106983151983137983154983140 983139983151983150983155983145983155983156983155 983151983142 983156983144983141 983142983151983148983148983151983159983145983150983143983098983085
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983141983150983156983154983137983148 983111983151983158983141983154983150983149983141983150983156
1 983117983154 983117 983107 983114983151983155983144983145 983113983122983123 (983122983141983156983140) 983110983151983154983149983141983154 983107983144983137983145983154983149983137983150 983107983141983150983156983154983137983148 983106983151983137983154983140 983151983142 983108983145983154983141983139983156 983124983137983160983141983155 983117983145983150983145983155983156983154983161 983151983142 983110983145983150983137983150983139983141 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983119983113983108983105991251 983107983144983137983145983154983152983141983154983155983151983150 (983159983141983142 2162012)
2 983117983154 983120 983117983157983154983137983148983145 983117983151983144983137983150983137 983122983137983151 983112983161983140983141983154983137983138983137983140983085 983117983141983149983138983141983154 (983159983141983142 132014)3 983117983154 983117983137983150983151983146 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251983117983141983149983138983141983154 (983159983141983142
1492011)4 983117983154 983126 983123 983123983157983150983140983137983154983141983155983137983150 983107983144983145983141983142 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983123983141983139983157983154983145983156983145983141983155 983137983150983140 983109983160983139983144983137983150983143983141 983106983151983137983154983140 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251983117983141983149983138983141983154 (983159983141983142 5112012)5 983117983154 983111983137983157983156983137983149 983111983157983144983137 983108983145983154983141983139983156983151983154 983111983141983150983141983154983137983148 (983107983151983149983149983141983154983139983145983137983148983085983113) 983119983142983142983145983139983141 983151983142 983156983144983141 983107983151983149983152983156983154983151983148983148983141983154 amp 983105983157983140983145983156983151983154 983111983141983150983141983154983137983148 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154
(983159983141983142 1262012)
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983151983157983150983139983145983148 983151983142 983156983144983141 983113983107983105983113 1 983107983105 983115 983122983137983143983144983157 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983106983137983150983143983137983148983157983154983157 991251 983117983141983149983138983141983154 (983159983141983142 132014)2 983107983105 983117983137983150983151983146 983110983137983140983150983145983155 983126983145983139983141983085983120983154983141983155983145983140983141983150983156 983113983107983105983113 983113983150983140983151983154983141 991251 983117983141983149983138983141983154 (983159983141983142 132014)3 983107983105 983123983157983138983151983140983144 983115 983105983143983154983137983159983137983148 983113983149983149983141983140983145983137983156983141 983120983137983155983156 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983115983151983148983147983137983156983137 991251 983117983141983149983138983141983154 (983159983141983142 132014)4 983107983105 983122983137983146983147983157983149983137983154 983123 983105983140983157983147983145983137 983117983157983149983138983137983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)5 983107983105 983107983144983137983154983137983150983146983151983156 983123983145983150983143983144 983118983137983150983140983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)
983123983152983141983139983145983137983148 983113983150983158983145983156983141983141983155 1 983117983154 983122 983115 983120983137983150983140983137 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983122983141983155983141983154983158983141 983106983137983150983147 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831412 983117983154 983120983154983145983156983144983158983145 983112983137983148983140983141983137 983120983137983155983156 983107983151983157983150983139983145983148 983117983141983149983138983141983154 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831413 983117983154 983124 983115983137983154983156983144983145983147983141983161983137983150 983123983141983139983154983141983156983137983154983161 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831414 983117983154983155 983122983141983150983157983147983137 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 983145983150983158983145983156983141983141
983123983141983139983154983141983137983156983154983161 983156983151 983156983144983141 9831069831519831379831549831401 983117983154 983117983151983144983145983156 983106983137983145983146983137983148
Financial Review and Reporting Board
Chairman CA Nilesh Vikamsey
Peer Review Board
Chairman CA Naveen N D Guptha
Revision of FS or BR ndash 131
bull ldquoIf it appears FS do not comply with section 129rdquo
bull Revision of any of the 3 preceding FY
bull Approval of tribunal with notice to IT department
bull Tribunal will issue notice amp hear auditor (Audit Working Papers ndashnecessary)
bull Carry out audit procedures necessary to changed circumstances ndashremuneration please ndash [us 142 to be fixed in GM]
bull AS 5 ndash Prior Period Items AS 4 ndash Events Occurring after BS date AS 7 ndash Construction Contracts AS 22 ndash Accounting for Taxes on Income
bull Only one revision allowed unlike gt 1 revision a llowed under IT act
Chapter X ndash Audit amp Auditors
Section Particulars
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
Appointment of Auditors
bull India believes audit rotation is a positive step
bull Rule 6 ndash The Companies (Audit and Auditors) Rules 2014
bull 3 year time frame for implementation ndash Maximum number of
consecutive years for which he may be appointed in the same
company (including the Transitional Period) 3 to 4 years for Individual
auditor 3 to 9 years in case of audit firm
bull Firm Rotation ndash Mandatory
bull Partner Rotation ndash Optional Voluntary ndash Members may resolve to
provide for ndash Section 139(3)
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29-05-2014
9
Applicability of Rotation
bull Section 139(2)
bull Rule 5 The companies (Audit and Auditors) Rules 2014
bull Class of Companies excludes OPC and Small Companies
bull Includes
bull All unlisted public companies having paid up capital of 10 croresor more
bull All private limited companies having paid up capital of 20 croresor more
bull Public borrowings from FI banks public deposits of 50 croresof more
bull 143(12) - Notwithstanding anything contained in this section if an
auditor of a company in the course of the performance of his duties
as auditor has 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 immediately report the matter
to the Central Government within such time and in such manner as
may be prescribed
Fraud Reporting ndash Section 143(12)
Rule 13 ndash Report to CG
bull The companies (Audit and Auditors) Rules 2014
bull Fraud is being or has been committed against the company by officers
or employees of the company
bull Report the matter to the CG within 60 days following a procedure
bull Forward his report to board AC (immediately) ndash seeking their reply
within 45 days
bull On receipt of reply forward his report and the reply or observations of
board AC along with his comments to CG within 15 days
bull No reply from Board AC ndash even then forward to CG
Rule 13 ndash Report to CG
bull To whom
bull The Secretary Ministry of Corporate Affairs in a sealed cover by
Registered Post with ack due or Speed Post followed by an e-mail in
confirmation of the same
bull The report shall be on letter head of the auditor containing address e-
mail address and contact number and be signed by the auditor with his
seal and shall indicate his MNo
bull Form ADT-4
bull Your Attention Please This shall apply mutatis-mutandis to cost
accountant in practice and secretarial auditor
Auditors to attend General Meeting
bull 231 (Old) ndash Entitled to attend ndash optional attendance
bull 146 ndash attend either by himself or through his authorised
representative who shall also be qualified to be an auditor
any general meeting and shall have right to be heard at such meeting
on any part of the business which concerns him as the auditor ndash
Mandatory attendance
143 - Powers amp duties of Auditors and
Auditing Standards
bull 143(1)(f) - Share Capital SAMPA ndash Cash COTC where it is stated in thebooks and documents of the company that any shares have been allotted for cashwhether cash has actually been received in respect of such allotment and
if no cash has actually been so received whether the position as stated in the
account books and the balance sheet is correct regular and not
misleading
bull 143(3) ndashThe Auditorrsquos report shall also state (a) to (j) ndash SA 700 705 706 may gofor revision
bull 143(4) ndash Where any of the matters required to be included in the audit report underthis section is answered in the negative or with a qualification the report shall
state the reasons therefor
bull 143(9) - Every auditor shall comply with the auditing standards ndash 58 so
far pronounced by ICAI from SA 200 to SA 4410 ndash SA SQC SIA
7212019 Companies act Audit and accountspdf
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10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
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11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
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3
Schedule II - Depreciation
Part A
bull Depreciation = Cost ndash Residual Value
bull Useful Lives = Available for use
bull Depreciation includes amortization
bull Useful life in part C is maximum
bull Can we have useful life less than Part C
bull 15 parts
bull For intangible assets = provision of AS-26 is applicable forthe time being in force except PPP projects
Schedule IISchedule IISchedule IISchedule II ndash ndashndash ndash Part BPart BPart BPart B
Part Bbull The useful life or residual life of any specific asset as
notified for accounting purposes by a regulatory authorityshall be applied
bull NESD ndash No extra shift depreciation
bull Life is less than schedule II ndash Disclose
bull Methods of depreciation ndash Disclose
bull Methods ndash Silent SLM WDV Annuity Sum of theyears digits Units of production
bull Max Life ndash 60 years (building other than factory buildingwith RCC frame)
Componentizationhellip
Part Bhellip
bull Min Life ndash 3 years ndash End user devices viz desktops laptops pads
amp temporary structures
bull Componentization of assets Note 4 to Schedule
bull Useful life is for whole of the asset where cost of a part of the
asset is significant to total cost of the asset and useful life of that
part is different from the useful life then separate UL is
applicable for that part
Schedule II - UL
Part Chellip snippets
bull Plant amp Machinery ndash General (CPP ndash 25 years Others ndash 15
years)
bull PampM ndash Special
bull Motor Vehicles ndash 10 years
bull Hire Vehicles ndash 6 years
SCHEME OF THE ACT
470Sections
29 Chapters7 Schedules
A very substantial part of the Act is in the form of ruleswhich are being prescribed separately
658Sections
13 Parts15Schedules
1 Accounting Standards
2 Associate Company
3 Auditing Standards
4 Authorised Capital
5 Books of Accounts
6 Called up capital
7 Charge
8 Chartered Accountant
9 Chief Executive Officer
10 Chief Financial Officer
11 Company Limited By Guarantee
12 Company Limited by Shares
13 Company Liquidator
14 Contributory
15 Control
16 Cost Accountant
17 Deposit
18 Expert
19 Financial Institution
20 Financial Statement
21 Foreign Company
22 Free Reserves
23 Global Depository Receipts
24 Independent Director
25 Indian Depository Receipt
26 Interested Director
27 Issued Capital
28 Key Managerial Personnel
29 Notification
30 Official Liquidator
31 One Person Company
32 Ordinary or Special Resolution
33 Postal Ballot
34 Promoter
35 Public Financial Institution
36 Register of Companies
37 Related Party
38 Remuneration
39 Serious Fraud InvestigationOffice
40 Small Company
41 Subscribed capital
42 Sweat Equity Shares
43 Turnover
44 Unlimited Company
45 Voting Right
46 Whole Time Director
983118983141983159 983108983141983142983145983150983145983156983145983151983150983155 983145983150983156983154983151983140983157983139983141983140 983145983150 983123983141983139983156983145983151983150 983090983098983085
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4
bull 2(18) ldquoChief Executive Officerrdquo means an officer of a company who
has been designated as such by it
bull 2(19) ldquoChief Financial Officerrdquo means a person appointed as a Chief
Financial Officer of a company
bull 2(66) ldquoprescribedrdquo means prescribed by rules made under this Act
983108983109983110983113983118983113983124983113983119983118983123 983127983112983113983107983112 983112983105983126983109 983106983109983109983118 983108983113983123983107983119983118983124983113983118983125983109983108
District Court
Industrial Company
Industrial Undertaking
Information memorandum
Issued generally
State Level Institution
Option in Securities
Operating Agency
Public Holiday
Share with Differential Rights
Sick Industrial Company
983108983109983110983113983118983113983124983113983119983118983123 983127983112983113983107983112 983112983105983126983109 983106983109983109983118 983108983113983123983107983119983118983124983113983118983125983109983108
District Court
Industrial Company
Industrial Undertaking
Information memorandum
Issued generally
State Level Institution
Option in Securities
Operating Agency
Public Holiday
Share with Differential Rights
Sick Industrial Company
ldquofinancial statementrdquo in relation to a company includesmdash
i a balance sheet as at the end of the financial year
ii a profit and loss account or in the case of a company carrying on any activity not
for profit an income and expenditure account for the financial year
iii cash flow statement for the financial year
iv a statement of changes in equity if applicable and
v any explanatory note annexed to or forming part of any document referred to in
sub-clause (i) to sub-clause (iv)
One Person Company Small Company Dormant Company ndash may not include Cash
Flow Statement
Financial Statement ndash 2(40)
Meaning ldquoFinancial yearrdquo in relation to any company or body corporate
means the period ending on the 31st day of March every year
Breathing time within a period of two years from such
commencement align its financial year as per the provisions of this
clause
Exception Incorporated on or after 1st January of a year then the period
ending on the 31st day of March if the following year
Financial Year ndash 2(41)
Relative ndash 2(77)
lsquolsquorelativersquorsquo with reference to any person means any one who is related
to another if mdash
i they are members of a Hindu Undivided Family
ii they are husband and wife or
iii one person is related to the other in such manner as may
be prescribed
List of Relatives as prescribed ndash only 8 only 8 only 8 only 8bull The Companies (Specification of definitions details) Rules 2014
bull Rule 4
bull A person shall be deemed to be the relative of another if he or she is related to another in the
following manner namely-
1 983110983137983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983110983137983156983144983141983154)
983090 983117983151983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983117983151983156983144983141983154)
983091 983123983151983150 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983123983151983150)
983092 983123983151983150991257983155 983127983145983142983141
983093 983108983137983157983143983144983156983141983154
983094 983108983137983157983143983144983156983141983154991257983155 983112983157983155983138983137983150983140
983095 983106983154983151983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983106983154983151983156983144983141983154)
983096 983123983145983155983156983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983123983145983155983156983141983154)
What happened to Step-Daughter Is she not a relative
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5
Expert - Section 2(38)
bull Definition - ldquoexpertrdquo includes an engineer a valuer a
chartered accountant a company secretary a cost accountant
and any other person who has the power or authority to issue a
certificate in pursuance of any law for the time being in force
Professional Indemnity Insurance ndash need of the hour
bull 247(4) ndash Serious liabilitybull refund the remuneration received by him to the company and
bull pay for damages to the company or to any other person for lossarising out of incorrect or misleading statements of particulars made
in his report
All companies having subsidiary(s) need to prepare consolidated
accounts
ldquoSubsidiaryrdquo includes associate and joint ventures
Rule 5 amp 6 ndash The Companies (Accounts) Rules 2014
Form AOC-1 The Statement containing salient features of the
FS of subsidiaries associate companies Joint ventures
Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)
1956 Position
Consolidated is not mandated for any company
Only listing agreement requires consolidation for listed companies
having subsidiaries (clause 32 of Listing agreement and AS 21)
Chapter IX ndash Accounts of Companies
Section Particulars
128 Books of Account etc to be kept by company
129 Financial Statement
130 Re-opening of accounts on courtrsquos or tribunalrsquos orders
131 Voluntary revision of financial statements or Boardrsquos Report
132 Constitution of National Financial Reporting Authority
133 Central Government to prescribe accounting standards
134 Financial statement Boardrsquos Report etc
135 Corporate Social Responsibility
136 Right of member to copies of audited financial statement
137 Copy of financial statement to be filed with registrar
138 Internal Audit
ldquobook and paperrdquoand ldquobook or paperrdquo include
Books of account
Deeds
Vouchers
Writings
Documents
Minutes and registers maintained on paper or in electronic form
book and paper and book or paper- 2(12)
ldquobooks of accountrdquo includes records maintained in respect of mdash
1 a ll sums of money received and expended by a company and matters inrelation to which the receipts and expenditure take place
2 all sales and purchases of goods and services by the company
3 the assets and liabilities of the company and
4 the items of cost as may be prescribed under section 148 in the case of acompany which belongs to any class of companies specified under that
section
Refer us 209(1) of The Companies Act 1956
Books of Account - 2(13)
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6
Transitional provisions with respect to
Accounting Standards
bull The Companies (Accounts) Rules 2014
bull Rule 7
bull ICAI ndash AS continues as on date Standards as specified under companies
act 1956 shall be deemed to be the accounting standards until accounting
standards are specified by central government us 133
bull NACAS as of now NFRA later Till NFRA is constituted us 132 the central
government may prescribe the accounting standard or any addendum as
recommended by ICAI in consultation with and after examination of
recommendations made by NACAS constituted us 210A of companies Act
1956
NACAS National Advisory Committee on Accounting Standards
E-Mode ndash Rule 3
bull The Companies (Accounts) Rules 2014
bull Books of Accounts ndash Accessible (in India) Complete unaltered
bull C I A ndash Principles of Information Security but C is missing ndash only IampA is
addressed in rule
bull Rule 3(6) The company shall intimate to the registrar on an annual
basis at the time of filing of financial statement
a Name of the service provider
b The internet protocol address of service provider
c The location of the service provider (wherever applicable)
d Where the books of account and other books and papers are maintained on cloud
such address (physical) as provided by the service provider
E-Mode
bull Financial Statements ndash Section 136 ndash (Right of members to copies of audited
financial statements)
bull 21 days Notice to be sent
bull Along with a copy of the financial statements including consolidated
financial statements if any auditorrsquos report and every other documentrequired by law to be annexed or attached to the financial statements
bull To be Hosted in Website ndash Listed Company (as per Act)
E-Mode
bull The Companies (Accounts) Rules 2014
bull Rule 11 May be sent in e-mode ndash
bull All listed companies and all public companies having Net-worth gt 1 Cr amp
Turnover gt 10 Cr ndash the financial statements may be sent ndash
a By electronic mode to such members whose shareholding is in de-mat form and
whose email ids are registered with depository for communication purposes
b Where shareholding is held otherwise than by dematerialized format to such
members who have positively consented in writing for receiving by electronic mode
and
c By dispatch of physical copies through any recognized mode of delivery as specified
us 20
Boardrsquos Report shall also contain
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
i the financial summary or highlights
ii the change in the nature of business if any
i ii th e details of directors or key managerial personnel who were appointed or have
resigned during the year
iv the names of companies which have become or ceased to be its Subsidiaries joint
ventures or associate companies during the year
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
(v) the details relating to deposits covered under Chapter V of the Act-
(a) accepted during the year
(b) remained unpaid or unclaimed as at the end of the year
(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so
number of such cases an d the total amount involved-
ndash (i) at the beginning of the year
ndash (ii) maximum during the year
ndash (iii) at the end of the year
(vi) the details of deposits which are not in compliance with the requirements of Chapter V of
the Act
(vii) the details of significant and material orders passed by the r egulators or courts or tribunals
impacting the going concern status and companyrsquos operations in future
(viii) the details in respect of adequacy of internal financial controls with reference to the
Financial Statements
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7
All companies including private companies who are meeting
eligibility criteria (NW ge 500 cr Turnover ge 1000 cr NP ge 5 cr)
are required to constitute a CSR committee consisting of at
least 3 directors out of which 1 must be ID and spend at least
2 of average NP on CSR activities
Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135
1956 Position
No requirement to spend on CSR activties
CSR ndash Sec 135 amp CSR Rules
bull Net Profit ndash PBT
bull Tax treatment of CSR in accordance with proposed notification (beingstatutory expenditure ndash should be tax deductible) -
bull Professional Opportunity ndash Company Setup Trust Section 8 company Society
bull Other Trusts ndash minimum 3 year track record ndash CEO of IICA ndash DirectorGeneral Mr Bhaskar Chatterjee ndash Accreditation to NGOs ndash Govt Ratingfor NPOs ndash Partnering with ldquo Tata institute of social sciencesrdquo
bull CSR Index ndash BSE amp IICA ndash To Develop
bull Min 8000 eligible companies
bull Min Rs 12000 crores pay-off
138 - Internal Audit
bull Welcome move ndash Professional opportunity ndash Mandatory IA for listed amp Public
companies
bull CA CMA Board nominated professional
bull Rule is silent ndash Board AC to formulate - Scope Functioning periodicity
amp methodology in consultation with IA
bull Internal Auditor may or may not be
an employee of the company
bull CA means a CA whether engaged in
practice or not
Rule 13
The Companies (Accounts) Rules 2014 (all limits in preceding FY)
983110983151983148983148983151983159983145983150983143 983139983151983149983152983137983150983145983141983155 983156983151 983137983152983152983151983145983150983156 983113983150983156983141983154983150983137983148 983105983157983140983145983156983151983154 983149983137983150983140983137983156983151983154983145983148983161
983159983145983156983144983145983150 983094 983149983151983150983156983144983155 983151983142 983139983151983149983149983141983150983139983141983149983141983150983156 983151983142 983155983141983139983156983145983151983150
o Listed company
o Unlisted public company
bull Paid-up capital ge 50 crores
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores
bull Os Deposits ge 25 crores
o Private Company
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores (from banks or PFIs)
Rule 13(1) To appoint an internal auditor or a firm of internal auditors
NFRA
National Financial Reporting Authority
bull To be constituted by a notification of the Central Government
bull It shall consist of a Chairman (to be appointed by CG) and other members not
exceeding 15 in number
bull Chairperson and members shall make a declaration to the Central Government
regarding no conflict of interest or lack of independence in respect of his or
their appointment
bull Chairperson and members who are in full-time employment with NFRA 983155983144983137983148983148 983150983151983156
983138983141 983137983155983155983151983139983145983137983156983141983140 983159983145983156983144 983137983150983161 983137983157983140983145983156 983142983145983154983149 (including related consultancy firms) during the
course of their appointment and two years after ceasing to hold such
appointment
Constitution of NFRA
bull Yet to constitute by notification ndash Still in Draft Rules stage
bull Role of NFRA 132(2)
1 make recommendations to the Central Government on the formulation and laying
down of accounting and auditing policies and standards for adoption by
companies or class of companies or their auditors as the case may be
2 monitor and enforce the compliance with accounting standards and auditing
standards in such manner as may be prescribed
3 oversee the quality of service of the professions associated with ensuring
compliance with such standards and suggest measures required for
improvement in quality of service and such other related matters as may be
prescribed and
4 perform such other functions relating to clauses (a) (b) and (c) as may be
prescribed
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8
Powers of NFRA
bull Powers of NFRA 132(4)
ndash have the power to investigate either suo motu or on a
reference made to it by the Central Government
ndash imposing penalty (5 Lakh 10 Lakhs)
ndash debarring the member or the firm from engaging himself or
itself from practice
Composition of
QRB
983124983144983141 983139983157983154983154983141983150983156 983139983151983149983152983151983155983145983156983145983151983150 983151983142 983156983144983141 983106983151983137983154983140 983139983151983150983155983145983155983156983155 983151983142 983156983144983141 983142983151983148983148983151983159983145983150983143983098983085
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983141983150983156983154983137983148 983111983151983158983141983154983150983149983141983150983156
1 983117983154 983117 983107 983114983151983155983144983145 983113983122983123 (983122983141983156983140) 983110983151983154983149983141983154 983107983144983137983145983154983149983137983150 983107983141983150983156983154983137983148 983106983151983137983154983140 983151983142 983108983145983154983141983139983156 983124983137983160983141983155 983117983145983150983145983155983156983154983161 983151983142 983110983145983150983137983150983139983141 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983119983113983108983105991251 983107983144983137983145983154983152983141983154983155983151983150 (983159983141983142 2162012)
2 983117983154 983120 983117983157983154983137983148983145 983117983151983144983137983150983137 983122983137983151 983112983161983140983141983154983137983138983137983140983085 983117983141983149983138983141983154 (983159983141983142 132014)3 983117983154 983117983137983150983151983146 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251983117983141983149983138983141983154 (983159983141983142
1492011)4 983117983154 983126 983123 983123983157983150983140983137983154983141983155983137983150 983107983144983145983141983142 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983123983141983139983157983154983145983156983145983141983155 983137983150983140 983109983160983139983144983137983150983143983141 983106983151983137983154983140 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251983117983141983149983138983141983154 (983159983141983142 5112012)5 983117983154 983111983137983157983156983137983149 983111983157983144983137 983108983145983154983141983139983156983151983154 983111983141983150983141983154983137983148 (983107983151983149983149983141983154983139983145983137983148983085983113) 983119983142983142983145983139983141 983151983142 983156983144983141 983107983151983149983152983156983154983151983148983148983141983154 amp 983105983157983140983145983156983151983154 983111983141983150983141983154983137983148 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154
(983159983141983142 1262012)
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983151983157983150983139983145983148 983151983142 983156983144983141 983113983107983105983113 1 983107983105 983115 983122983137983143983144983157 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983106983137983150983143983137983148983157983154983157 991251 983117983141983149983138983141983154 (983159983141983142 132014)2 983107983105 983117983137983150983151983146 983110983137983140983150983145983155 983126983145983139983141983085983120983154983141983155983145983140983141983150983156 983113983107983105983113 983113983150983140983151983154983141 991251 983117983141983149983138983141983154 (983159983141983142 132014)3 983107983105 983123983157983138983151983140983144 983115 983105983143983154983137983159983137983148 983113983149983149983141983140983145983137983156983141 983120983137983155983156 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983115983151983148983147983137983156983137 991251 983117983141983149983138983141983154 (983159983141983142 132014)4 983107983105 983122983137983146983147983157983149983137983154 983123 983105983140983157983147983145983137 983117983157983149983138983137983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)5 983107983105 983107983144983137983154983137983150983146983151983156 983123983145983150983143983144 983118983137983150983140983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)
983123983152983141983139983145983137983148 983113983150983158983145983156983141983141983155 1 983117983154 983122 983115 983120983137983150983140983137 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983122983141983155983141983154983158983141 983106983137983150983147 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831412 983117983154 983120983154983145983156983144983158983145 983112983137983148983140983141983137 983120983137983155983156 983107983151983157983150983139983145983148 983117983141983149983138983141983154 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831413 983117983154 983124 983115983137983154983156983144983145983147983141983161983137983150 983123983141983139983154983141983156983137983154983161 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831414 983117983154983155 983122983141983150983157983147983137 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 983145983150983158983145983156983141983141
983123983141983139983154983141983137983156983154983161 983156983151 983156983144983141 9831069831519831379831549831401 983117983154 983117983151983144983145983156 983106983137983145983146983137983148
Financial Review and Reporting Board
Chairman CA Nilesh Vikamsey
Peer Review Board
Chairman CA Naveen N D Guptha
Revision of FS or BR ndash 131
bull ldquoIf it appears FS do not comply with section 129rdquo
bull Revision of any of the 3 preceding FY
bull Approval of tribunal with notice to IT department
bull Tribunal will issue notice amp hear auditor (Audit Working Papers ndashnecessary)
bull Carry out audit procedures necessary to changed circumstances ndashremuneration please ndash [us 142 to be fixed in GM]
bull AS 5 ndash Prior Period Items AS 4 ndash Events Occurring after BS date AS 7 ndash Construction Contracts AS 22 ndash Accounting for Taxes on Income
bull Only one revision allowed unlike gt 1 revision a llowed under IT act
Chapter X ndash Audit amp Auditors
Section Particulars
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
Appointment of Auditors
bull India believes audit rotation is a positive step
bull Rule 6 ndash The Companies (Audit and Auditors) Rules 2014
bull 3 year time frame for implementation ndash Maximum number of
consecutive years for which he may be appointed in the same
company (including the Transitional Period) 3 to 4 years for Individual
auditor 3 to 9 years in case of audit firm
bull Firm Rotation ndash Mandatory
bull Partner Rotation ndash Optional Voluntary ndash Members may resolve to
provide for ndash Section 139(3)
7212019 Companies act Audit and accountspdf
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9
Applicability of Rotation
bull Section 139(2)
bull Rule 5 The companies (Audit and Auditors) Rules 2014
bull Class of Companies excludes OPC and Small Companies
bull Includes
bull All unlisted public companies having paid up capital of 10 croresor more
bull All private limited companies having paid up capital of 20 croresor more
bull Public borrowings from FI banks public deposits of 50 croresof more
bull 143(12) - Notwithstanding anything contained in this section if an
auditor of a company in the course of the performance of his duties
as auditor has 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 immediately report the matter
to the Central Government within such time and in such manner as
may be prescribed
Fraud Reporting ndash Section 143(12)
Rule 13 ndash Report to CG
bull The companies (Audit and Auditors) Rules 2014
bull Fraud is being or has been committed against the company by officers
or employees of the company
bull Report the matter to the CG within 60 days following a procedure
bull Forward his report to board AC (immediately) ndash seeking their reply
within 45 days
bull On receipt of reply forward his report and the reply or observations of
board AC along with his comments to CG within 15 days
bull No reply from Board AC ndash even then forward to CG
Rule 13 ndash Report to CG
bull To whom
bull The Secretary Ministry of Corporate Affairs in a sealed cover by
Registered Post with ack due or Speed Post followed by an e-mail in
confirmation of the same
bull The report shall be on letter head of the auditor containing address e-
mail address and contact number and be signed by the auditor with his
seal and shall indicate his MNo
bull Form ADT-4
bull Your Attention Please This shall apply mutatis-mutandis to cost
accountant in practice and secretarial auditor
Auditors to attend General Meeting
bull 231 (Old) ndash Entitled to attend ndash optional attendance
bull 146 ndash attend either by himself or through his authorised
representative who shall also be qualified to be an auditor
any general meeting and shall have right to be heard at such meeting
on any part of the business which concerns him as the auditor ndash
Mandatory attendance
143 - Powers amp duties of Auditors and
Auditing Standards
bull 143(1)(f) - Share Capital SAMPA ndash Cash COTC where it is stated in thebooks and documents of the company that any shares have been allotted for cashwhether cash has actually been received in respect of such allotment and
if no cash has actually been so received whether the position as stated in the
account books and the balance sheet is correct regular and not
misleading
bull 143(3) ndashThe Auditorrsquos report shall also state (a) to (j) ndash SA 700 705 706 may gofor revision
bull 143(4) ndash Where any of the matters required to be included in the audit report underthis section is answered in the negative or with a qualification the report shall
state the reasons therefor
bull 143(9) - Every auditor shall comply with the auditing standards ndash 58 so
far pronounced by ICAI from SA 200 to SA 4410 ndash SA SQC SIA
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10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
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11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
7212019 Companies act Audit and accountspdf
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4
bull 2(18) ldquoChief Executive Officerrdquo means an officer of a company who
has been designated as such by it
bull 2(19) ldquoChief Financial Officerrdquo means a person appointed as a Chief
Financial Officer of a company
bull 2(66) ldquoprescribedrdquo means prescribed by rules made under this Act
983108983109983110983113983118983113983124983113983119983118983123 983127983112983113983107983112 983112983105983126983109 983106983109983109983118 983108983113983123983107983119983118983124983113983118983125983109983108
District Court
Industrial Company
Industrial Undertaking
Information memorandum
Issued generally
State Level Institution
Option in Securities
Operating Agency
Public Holiday
Share with Differential Rights
Sick Industrial Company
983108983109983110983113983118983113983124983113983119983118983123 983127983112983113983107983112 983112983105983126983109 983106983109983109983118 983108983113983123983107983119983118983124983113983118983125983109983108
District Court
Industrial Company
Industrial Undertaking
Information memorandum
Issued generally
State Level Institution
Option in Securities
Operating Agency
Public Holiday
Share with Differential Rights
Sick Industrial Company
ldquofinancial statementrdquo in relation to a company includesmdash
i a balance sheet as at the end of the financial year
ii a profit and loss account or in the case of a company carrying on any activity not
for profit an income and expenditure account for the financial year
iii cash flow statement for the financial year
iv a statement of changes in equity if applicable and
v any explanatory note annexed to or forming part of any document referred to in
sub-clause (i) to sub-clause (iv)
One Person Company Small Company Dormant Company ndash may not include Cash
Flow Statement
Financial Statement ndash 2(40)
Meaning ldquoFinancial yearrdquo in relation to any company or body corporate
means the period ending on the 31st day of March every year
Breathing time within a period of two years from such
commencement align its financial year as per the provisions of this
clause
Exception Incorporated on or after 1st January of a year then the period
ending on the 31st day of March if the following year
Financial Year ndash 2(41)
Relative ndash 2(77)
lsquolsquorelativersquorsquo with reference to any person means any one who is related
to another if mdash
i they are members of a Hindu Undivided Family
ii they are husband and wife or
iii one person is related to the other in such manner as may
be prescribed
List of Relatives as prescribed ndash only 8 only 8 only 8 only 8bull The Companies (Specification of definitions details) Rules 2014
bull Rule 4
bull A person shall be deemed to be the relative of another if he or she is related to another in the
following manner namely-
1 983110983137983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983110983137983156983144983141983154)
983090 983117983151983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983117983151983156983144983141983154)
983091 983123983151983150 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983123983151983150)
983092 983123983151983150991257983155 983127983145983142983141
983093 983108983137983157983143983144983156983141983154
983094 983108983137983157983143983144983156983141983154991257983155 983112983157983155983138983137983150983140
983095 983106983154983151983156983144983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983106983154983151983156983144983141983154)
983096 983123983145983155983156983141983154 (983145983150983139983148983157983140983145983150983143 983123983156983141983152983085983123983145983155983156983141983154)
What happened to Step-Daughter Is she not a relative
7212019 Companies act Audit and accountspdf
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29-05-2014
5
Expert - Section 2(38)
bull Definition - ldquoexpertrdquo includes an engineer a valuer a
chartered accountant a company secretary a cost accountant
and any other person who has the power or authority to issue a
certificate in pursuance of any law for the time being in force
Professional Indemnity Insurance ndash need of the hour
bull 247(4) ndash Serious liabilitybull refund the remuneration received by him to the company and
bull pay for damages to the company or to any other person for lossarising out of incorrect or misleading statements of particulars made
in his report
All companies having subsidiary(s) need to prepare consolidated
accounts
ldquoSubsidiaryrdquo includes associate and joint ventures
Rule 5 amp 6 ndash The Companies (Accounts) Rules 2014
Form AOC-1 The Statement containing salient features of the
FS of subsidiaries associate companies Joint ventures
Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)
1956 Position
Consolidated is not mandated for any company
Only listing agreement requires consolidation for listed companies
having subsidiaries (clause 32 of Listing agreement and AS 21)
Chapter IX ndash Accounts of Companies
Section Particulars
128 Books of Account etc to be kept by company
129 Financial Statement
130 Re-opening of accounts on courtrsquos or tribunalrsquos orders
131 Voluntary revision of financial statements or Boardrsquos Report
132 Constitution of National Financial Reporting Authority
133 Central Government to prescribe accounting standards
134 Financial statement Boardrsquos Report etc
135 Corporate Social Responsibility
136 Right of member to copies of audited financial statement
137 Copy of financial statement to be filed with registrar
138 Internal Audit
ldquobook and paperrdquoand ldquobook or paperrdquo include
Books of account
Deeds
Vouchers
Writings
Documents
Minutes and registers maintained on paper or in electronic form
book and paper and book or paper- 2(12)
ldquobooks of accountrdquo includes records maintained in respect of mdash
1 a ll sums of money received and expended by a company and matters inrelation to which the receipts and expenditure take place
2 all sales and purchases of goods and services by the company
3 the assets and liabilities of the company and
4 the items of cost as may be prescribed under section 148 in the case of acompany which belongs to any class of companies specified under that
section
Refer us 209(1) of The Companies Act 1956
Books of Account - 2(13)
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6
Transitional provisions with respect to
Accounting Standards
bull The Companies (Accounts) Rules 2014
bull Rule 7
bull ICAI ndash AS continues as on date Standards as specified under companies
act 1956 shall be deemed to be the accounting standards until accounting
standards are specified by central government us 133
bull NACAS as of now NFRA later Till NFRA is constituted us 132 the central
government may prescribe the accounting standard or any addendum as
recommended by ICAI in consultation with and after examination of
recommendations made by NACAS constituted us 210A of companies Act
1956
NACAS National Advisory Committee on Accounting Standards
E-Mode ndash Rule 3
bull The Companies (Accounts) Rules 2014
bull Books of Accounts ndash Accessible (in India) Complete unaltered
bull C I A ndash Principles of Information Security but C is missing ndash only IampA is
addressed in rule
bull Rule 3(6) The company shall intimate to the registrar on an annual
basis at the time of filing of financial statement
a Name of the service provider
b The internet protocol address of service provider
c The location of the service provider (wherever applicable)
d Where the books of account and other books and papers are maintained on cloud
such address (physical) as provided by the service provider
E-Mode
bull Financial Statements ndash Section 136 ndash (Right of members to copies of audited
financial statements)
bull 21 days Notice to be sent
bull Along with a copy of the financial statements including consolidated
financial statements if any auditorrsquos report and every other documentrequired by law to be annexed or attached to the financial statements
bull To be Hosted in Website ndash Listed Company (as per Act)
E-Mode
bull The Companies (Accounts) Rules 2014
bull Rule 11 May be sent in e-mode ndash
bull All listed companies and all public companies having Net-worth gt 1 Cr amp
Turnover gt 10 Cr ndash the financial statements may be sent ndash
a By electronic mode to such members whose shareholding is in de-mat form and
whose email ids are registered with depository for communication purposes
b Where shareholding is held otherwise than by dematerialized format to such
members who have positively consented in writing for receiving by electronic mode
and
c By dispatch of physical copies through any recognized mode of delivery as specified
us 20
Boardrsquos Report shall also contain
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
i the financial summary or highlights
ii the change in the nature of business if any
i ii th e details of directors or key managerial personnel who were appointed or have
resigned during the year
iv the names of companies which have become or ceased to be its Subsidiaries joint
ventures or associate companies during the year
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
(v) the details relating to deposits covered under Chapter V of the Act-
(a) accepted during the year
(b) remained unpaid or unclaimed as at the end of the year
(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so
number of such cases an d the total amount involved-
ndash (i) at the beginning of the year
ndash (ii) maximum during the year
ndash (iii) at the end of the year
(vi) the details of deposits which are not in compliance with the requirements of Chapter V of
the Act
(vii) the details of significant and material orders passed by the r egulators or courts or tribunals
impacting the going concern status and companyrsquos operations in future
(viii) the details in respect of adequacy of internal financial controls with reference to the
Financial Statements
7212019 Companies act Audit and accountspdf
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7
All companies including private companies who are meeting
eligibility criteria (NW ge 500 cr Turnover ge 1000 cr NP ge 5 cr)
are required to constitute a CSR committee consisting of at
least 3 directors out of which 1 must be ID and spend at least
2 of average NP on CSR activities
Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135
1956 Position
No requirement to spend on CSR activties
CSR ndash Sec 135 amp CSR Rules
bull Net Profit ndash PBT
bull Tax treatment of CSR in accordance with proposed notification (beingstatutory expenditure ndash should be tax deductible) -
bull Professional Opportunity ndash Company Setup Trust Section 8 company Society
bull Other Trusts ndash minimum 3 year track record ndash CEO of IICA ndash DirectorGeneral Mr Bhaskar Chatterjee ndash Accreditation to NGOs ndash Govt Ratingfor NPOs ndash Partnering with ldquo Tata institute of social sciencesrdquo
bull CSR Index ndash BSE amp IICA ndash To Develop
bull Min 8000 eligible companies
bull Min Rs 12000 crores pay-off
138 - Internal Audit
bull Welcome move ndash Professional opportunity ndash Mandatory IA for listed amp Public
companies
bull CA CMA Board nominated professional
bull Rule is silent ndash Board AC to formulate - Scope Functioning periodicity
amp methodology in consultation with IA
bull Internal Auditor may or may not be
an employee of the company
bull CA means a CA whether engaged in
practice or not
Rule 13
The Companies (Accounts) Rules 2014 (all limits in preceding FY)
983110983151983148983148983151983159983145983150983143 983139983151983149983152983137983150983145983141983155 983156983151 983137983152983152983151983145983150983156 983113983150983156983141983154983150983137983148 983105983157983140983145983156983151983154 983149983137983150983140983137983156983151983154983145983148983161
983159983145983156983144983145983150 983094 983149983151983150983156983144983155 983151983142 983139983151983149983149983141983150983139983141983149983141983150983156 983151983142 983155983141983139983156983145983151983150
o Listed company
o Unlisted public company
bull Paid-up capital ge 50 crores
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores
bull Os Deposits ge 25 crores
o Private Company
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores (from banks or PFIs)
Rule 13(1) To appoint an internal auditor or a firm of internal auditors
NFRA
National Financial Reporting Authority
bull To be constituted by a notification of the Central Government
bull It shall consist of a Chairman (to be appointed by CG) and other members not
exceeding 15 in number
bull Chairperson and members shall make a declaration to the Central Government
regarding no conflict of interest or lack of independence in respect of his or
their appointment
bull Chairperson and members who are in full-time employment with NFRA 983155983144983137983148983148 983150983151983156
983138983141 983137983155983155983151983139983145983137983156983141983140 983159983145983156983144 983137983150983161 983137983157983140983145983156 983142983145983154983149 (including related consultancy firms) during the
course of their appointment and two years after ceasing to hold such
appointment
Constitution of NFRA
bull Yet to constitute by notification ndash Still in Draft Rules stage
bull Role of NFRA 132(2)
1 make recommendations to the Central Government on the formulation and laying
down of accounting and auditing policies and standards for adoption by
companies or class of companies or their auditors as the case may be
2 monitor and enforce the compliance with accounting standards and auditing
standards in such manner as may be prescribed
3 oversee the quality of service of the professions associated with ensuring
compliance with such standards and suggest measures required for
improvement in quality of service and such other related matters as may be
prescribed and
4 perform such other functions relating to clauses (a) (b) and (c) as may be
prescribed
7212019 Companies act Audit and accountspdf
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8
Powers of NFRA
bull Powers of NFRA 132(4)
ndash have the power to investigate either suo motu or on a
reference made to it by the Central Government
ndash imposing penalty (5 Lakh 10 Lakhs)
ndash debarring the member or the firm from engaging himself or
itself from practice
Composition of
QRB
983124983144983141 983139983157983154983154983141983150983156 983139983151983149983152983151983155983145983156983145983151983150 983151983142 983156983144983141 983106983151983137983154983140 983139983151983150983155983145983155983156983155 983151983142 983156983144983141 983142983151983148983148983151983159983145983150983143983098983085
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983141983150983156983154983137983148 983111983151983158983141983154983150983149983141983150983156
1 983117983154 983117 983107 983114983151983155983144983145 983113983122983123 (983122983141983156983140) 983110983151983154983149983141983154 983107983144983137983145983154983149983137983150 983107983141983150983156983154983137983148 983106983151983137983154983140 983151983142 983108983145983154983141983139983156 983124983137983160983141983155 983117983145983150983145983155983156983154983161 983151983142 983110983145983150983137983150983139983141 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983119983113983108983105991251 983107983144983137983145983154983152983141983154983155983151983150 (983159983141983142 2162012)
2 983117983154 983120 983117983157983154983137983148983145 983117983151983144983137983150983137 983122983137983151 983112983161983140983141983154983137983138983137983140983085 983117983141983149983138983141983154 (983159983141983142 132014)3 983117983154 983117983137983150983151983146 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251983117983141983149983138983141983154 (983159983141983142
1492011)4 983117983154 983126 983123 983123983157983150983140983137983154983141983155983137983150 983107983144983145983141983142 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983123983141983139983157983154983145983156983145983141983155 983137983150983140 983109983160983139983144983137983150983143983141 983106983151983137983154983140 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251983117983141983149983138983141983154 (983159983141983142 5112012)5 983117983154 983111983137983157983156983137983149 983111983157983144983137 983108983145983154983141983139983156983151983154 983111983141983150983141983154983137983148 (983107983151983149983149983141983154983139983145983137983148983085983113) 983119983142983142983145983139983141 983151983142 983156983144983141 983107983151983149983152983156983154983151983148983148983141983154 amp 983105983157983140983145983156983151983154 983111983141983150983141983154983137983148 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154
(983159983141983142 1262012)
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983151983157983150983139983145983148 983151983142 983156983144983141 983113983107983105983113 1 983107983105 983115 983122983137983143983144983157 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983106983137983150983143983137983148983157983154983157 991251 983117983141983149983138983141983154 (983159983141983142 132014)2 983107983105 983117983137983150983151983146 983110983137983140983150983145983155 983126983145983139983141983085983120983154983141983155983145983140983141983150983156 983113983107983105983113 983113983150983140983151983154983141 991251 983117983141983149983138983141983154 (983159983141983142 132014)3 983107983105 983123983157983138983151983140983144 983115 983105983143983154983137983159983137983148 983113983149983149983141983140983145983137983156983141 983120983137983155983156 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983115983151983148983147983137983156983137 991251 983117983141983149983138983141983154 (983159983141983142 132014)4 983107983105 983122983137983146983147983157983149983137983154 983123 983105983140983157983147983145983137 983117983157983149983138983137983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)5 983107983105 983107983144983137983154983137983150983146983151983156 983123983145983150983143983144 983118983137983150983140983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)
983123983152983141983139983145983137983148 983113983150983158983145983156983141983141983155 1 983117983154 983122 983115 983120983137983150983140983137 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983122983141983155983141983154983158983141 983106983137983150983147 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831412 983117983154 983120983154983145983156983144983158983145 983112983137983148983140983141983137 983120983137983155983156 983107983151983157983150983139983145983148 983117983141983149983138983141983154 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831413 983117983154 983124 983115983137983154983156983144983145983147983141983161983137983150 983123983141983139983154983141983156983137983154983161 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831414 983117983154983155 983122983141983150983157983147983137 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 983145983150983158983145983156983141983141
983123983141983139983154983141983137983156983154983161 983156983151 983156983144983141 9831069831519831379831549831401 983117983154 983117983151983144983145983156 983106983137983145983146983137983148
Financial Review and Reporting Board
Chairman CA Nilesh Vikamsey
Peer Review Board
Chairman CA Naveen N D Guptha
Revision of FS or BR ndash 131
bull ldquoIf it appears FS do not comply with section 129rdquo
bull Revision of any of the 3 preceding FY
bull Approval of tribunal with notice to IT department
bull Tribunal will issue notice amp hear auditor (Audit Working Papers ndashnecessary)
bull Carry out audit procedures necessary to changed circumstances ndashremuneration please ndash [us 142 to be fixed in GM]
bull AS 5 ndash Prior Period Items AS 4 ndash Events Occurring after BS date AS 7 ndash Construction Contracts AS 22 ndash Accounting for Taxes on Income
bull Only one revision allowed unlike gt 1 revision a llowed under IT act
Chapter X ndash Audit amp Auditors
Section Particulars
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
Appointment of Auditors
bull India believes audit rotation is a positive step
bull Rule 6 ndash The Companies (Audit and Auditors) Rules 2014
bull 3 year time frame for implementation ndash Maximum number of
consecutive years for which he may be appointed in the same
company (including the Transitional Period) 3 to 4 years for Individual
auditor 3 to 9 years in case of audit firm
bull Firm Rotation ndash Mandatory
bull Partner Rotation ndash Optional Voluntary ndash Members may resolve to
provide for ndash Section 139(3)
7212019 Companies act Audit and accountspdf
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9
Applicability of Rotation
bull Section 139(2)
bull Rule 5 The companies (Audit and Auditors) Rules 2014
bull Class of Companies excludes OPC and Small Companies
bull Includes
bull All unlisted public companies having paid up capital of 10 croresor more
bull All private limited companies having paid up capital of 20 croresor more
bull Public borrowings from FI banks public deposits of 50 croresof more
bull 143(12) - Notwithstanding anything contained in this section if an
auditor of a company in the course of the performance of his duties
as auditor has 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 immediately report the matter
to the Central Government within such time and in such manner as
may be prescribed
Fraud Reporting ndash Section 143(12)
Rule 13 ndash Report to CG
bull The companies (Audit and Auditors) Rules 2014
bull Fraud is being or has been committed against the company by officers
or employees of the company
bull Report the matter to the CG within 60 days following a procedure
bull Forward his report to board AC (immediately) ndash seeking their reply
within 45 days
bull On receipt of reply forward his report and the reply or observations of
board AC along with his comments to CG within 15 days
bull No reply from Board AC ndash even then forward to CG
Rule 13 ndash Report to CG
bull To whom
bull The Secretary Ministry of Corporate Affairs in a sealed cover by
Registered Post with ack due or Speed Post followed by an e-mail in
confirmation of the same
bull The report shall be on letter head of the auditor containing address e-
mail address and contact number and be signed by the auditor with his
seal and shall indicate his MNo
bull Form ADT-4
bull Your Attention Please This shall apply mutatis-mutandis to cost
accountant in practice and secretarial auditor
Auditors to attend General Meeting
bull 231 (Old) ndash Entitled to attend ndash optional attendance
bull 146 ndash attend either by himself or through his authorised
representative who shall also be qualified to be an auditor
any general meeting and shall have right to be heard at such meeting
on any part of the business which concerns him as the auditor ndash
Mandatory attendance
143 - Powers amp duties of Auditors and
Auditing Standards
bull 143(1)(f) - Share Capital SAMPA ndash Cash COTC where it is stated in thebooks and documents of the company that any shares have been allotted for cashwhether cash has actually been received in respect of such allotment and
if no cash has actually been so received whether the position as stated in the
account books and the balance sheet is correct regular and not
misleading
bull 143(3) ndashThe Auditorrsquos report shall also state (a) to (j) ndash SA 700 705 706 may gofor revision
bull 143(4) ndash Where any of the matters required to be included in the audit report underthis section is answered in the negative or with a qualification the report shall
state the reasons therefor
bull 143(9) - Every auditor shall comply with the auditing standards ndash 58 so
far pronounced by ICAI from SA 200 to SA 4410 ndash SA SQC SIA
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10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
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11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
7212019 Companies act Audit and accountspdf
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5
Expert - Section 2(38)
bull Definition - ldquoexpertrdquo includes an engineer a valuer a
chartered accountant a company secretary a cost accountant
and any other person who has the power or authority to issue a
certificate in pursuance of any law for the time being in force
Professional Indemnity Insurance ndash need of the hour
bull 247(4) ndash Serious liabilitybull refund the remuneration received by him to the company and
bull pay for damages to the company or to any other person for lossarising out of incorrect or misleading statements of particulars made
in his report
All companies having subsidiary(s) need to prepare consolidated
accounts
ldquoSubsidiaryrdquo includes associate and joint ventures
Rule 5 amp 6 ndash The Companies (Accounts) Rules 2014
Form AOC-1 The Statement containing salient features of the
FS of subsidiaries associate companies Joint ventures
Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)Consolidation of Accounts 129(3)
1956 Position
Consolidated is not mandated for any company
Only listing agreement requires consolidation for listed companies
having subsidiaries (clause 32 of Listing agreement and AS 21)
Chapter IX ndash Accounts of Companies
Section Particulars
128 Books of Account etc to be kept by company
129 Financial Statement
130 Re-opening of accounts on courtrsquos or tribunalrsquos orders
131 Voluntary revision of financial statements or Boardrsquos Report
132 Constitution of National Financial Reporting Authority
133 Central Government to prescribe accounting standards
134 Financial statement Boardrsquos Report etc
135 Corporate Social Responsibility
136 Right of member to copies of audited financial statement
137 Copy of financial statement to be filed with registrar
138 Internal Audit
ldquobook and paperrdquoand ldquobook or paperrdquo include
Books of account
Deeds
Vouchers
Writings
Documents
Minutes and registers maintained on paper or in electronic form
book and paper and book or paper- 2(12)
ldquobooks of accountrdquo includes records maintained in respect of mdash
1 a ll sums of money received and expended by a company and matters inrelation to which the receipts and expenditure take place
2 all sales and purchases of goods and services by the company
3 the assets and liabilities of the company and
4 the items of cost as may be prescribed under section 148 in the case of acompany which belongs to any class of companies specified under that
section
Refer us 209(1) of The Companies Act 1956
Books of Account - 2(13)
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6
Transitional provisions with respect to
Accounting Standards
bull The Companies (Accounts) Rules 2014
bull Rule 7
bull ICAI ndash AS continues as on date Standards as specified under companies
act 1956 shall be deemed to be the accounting standards until accounting
standards are specified by central government us 133
bull NACAS as of now NFRA later Till NFRA is constituted us 132 the central
government may prescribe the accounting standard or any addendum as
recommended by ICAI in consultation with and after examination of
recommendations made by NACAS constituted us 210A of companies Act
1956
NACAS National Advisory Committee on Accounting Standards
E-Mode ndash Rule 3
bull The Companies (Accounts) Rules 2014
bull Books of Accounts ndash Accessible (in India) Complete unaltered
bull C I A ndash Principles of Information Security but C is missing ndash only IampA is
addressed in rule
bull Rule 3(6) The company shall intimate to the registrar on an annual
basis at the time of filing of financial statement
a Name of the service provider
b The internet protocol address of service provider
c The location of the service provider (wherever applicable)
d Where the books of account and other books and papers are maintained on cloud
such address (physical) as provided by the service provider
E-Mode
bull Financial Statements ndash Section 136 ndash (Right of members to copies of audited
financial statements)
bull 21 days Notice to be sent
bull Along with a copy of the financial statements including consolidated
financial statements if any auditorrsquos report and every other documentrequired by law to be annexed or attached to the financial statements
bull To be Hosted in Website ndash Listed Company (as per Act)
E-Mode
bull The Companies (Accounts) Rules 2014
bull Rule 11 May be sent in e-mode ndash
bull All listed companies and all public companies having Net-worth gt 1 Cr amp
Turnover gt 10 Cr ndash the financial statements may be sent ndash
a By electronic mode to such members whose shareholding is in de-mat form and
whose email ids are registered with depository for communication purposes
b Where shareholding is held otherwise than by dematerialized format to such
members who have positively consented in writing for receiving by electronic mode
and
c By dispatch of physical copies through any recognized mode of delivery as specified
us 20
Boardrsquos Report shall also contain
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
i the financial summary or highlights
ii the change in the nature of business if any
i ii th e details of directors or key managerial personnel who were appointed or have
resigned during the year
iv the names of companies which have become or ceased to be its Subsidiaries joint
ventures or associate companies during the year
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
(v) the details relating to deposits covered under Chapter V of the Act-
(a) accepted during the year
(b) remained unpaid or unclaimed as at the end of the year
(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so
number of such cases an d the total amount involved-
ndash (i) at the beginning of the year
ndash (ii) maximum during the year
ndash (iii) at the end of the year
(vi) the details of deposits which are not in compliance with the requirements of Chapter V of
the Act
(vii) the details of significant and material orders passed by the r egulators or courts or tribunals
impacting the going concern status and companyrsquos operations in future
(viii) the details in respect of adequacy of internal financial controls with reference to the
Financial Statements
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7
All companies including private companies who are meeting
eligibility criteria (NW ge 500 cr Turnover ge 1000 cr NP ge 5 cr)
are required to constitute a CSR committee consisting of at
least 3 directors out of which 1 must be ID and spend at least
2 of average NP on CSR activities
Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135
1956 Position
No requirement to spend on CSR activties
CSR ndash Sec 135 amp CSR Rules
bull Net Profit ndash PBT
bull Tax treatment of CSR in accordance with proposed notification (beingstatutory expenditure ndash should be tax deductible) -
bull Professional Opportunity ndash Company Setup Trust Section 8 company Society
bull Other Trusts ndash minimum 3 year track record ndash CEO of IICA ndash DirectorGeneral Mr Bhaskar Chatterjee ndash Accreditation to NGOs ndash Govt Ratingfor NPOs ndash Partnering with ldquo Tata institute of social sciencesrdquo
bull CSR Index ndash BSE amp IICA ndash To Develop
bull Min 8000 eligible companies
bull Min Rs 12000 crores pay-off
138 - Internal Audit
bull Welcome move ndash Professional opportunity ndash Mandatory IA for listed amp Public
companies
bull CA CMA Board nominated professional
bull Rule is silent ndash Board AC to formulate - Scope Functioning periodicity
amp methodology in consultation with IA
bull Internal Auditor may or may not be
an employee of the company
bull CA means a CA whether engaged in
practice or not
Rule 13
The Companies (Accounts) Rules 2014 (all limits in preceding FY)
983110983151983148983148983151983159983145983150983143 983139983151983149983152983137983150983145983141983155 983156983151 983137983152983152983151983145983150983156 983113983150983156983141983154983150983137983148 983105983157983140983145983156983151983154 983149983137983150983140983137983156983151983154983145983148983161
983159983145983156983144983145983150 983094 983149983151983150983156983144983155 983151983142 983139983151983149983149983141983150983139983141983149983141983150983156 983151983142 983155983141983139983156983145983151983150
o Listed company
o Unlisted public company
bull Paid-up capital ge 50 crores
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores
bull Os Deposits ge 25 crores
o Private Company
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores (from banks or PFIs)
Rule 13(1) To appoint an internal auditor or a firm of internal auditors
NFRA
National Financial Reporting Authority
bull To be constituted by a notification of the Central Government
bull It shall consist of a Chairman (to be appointed by CG) and other members not
exceeding 15 in number
bull Chairperson and members shall make a declaration to the Central Government
regarding no conflict of interest or lack of independence in respect of his or
their appointment
bull Chairperson and members who are in full-time employment with NFRA 983155983144983137983148983148 983150983151983156
983138983141 983137983155983155983151983139983145983137983156983141983140 983159983145983156983144 983137983150983161 983137983157983140983145983156 983142983145983154983149 (including related consultancy firms) during the
course of their appointment and two years after ceasing to hold such
appointment
Constitution of NFRA
bull Yet to constitute by notification ndash Still in Draft Rules stage
bull Role of NFRA 132(2)
1 make recommendations to the Central Government on the formulation and laying
down of accounting and auditing policies and standards for adoption by
companies or class of companies or their auditors as the case may be
2 monitor and enforce the compliance with accounting standards and auditing
standards in such manner as may be prescribed
3 oversee the quality of service of the professions associated with ensuring
compliance with such standards and suggest measures required for
improvement in quality of service and such other related matters as may be
prescribed and
4 perform such other functions relating to clauses (a) (b) and (c) as may be
prescribed
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8
Powers of NFRA
bull Powers of NFRA 132(4)
ndash have the power to investigate either suo motu or on a
reference made to it by the Central Government
ndash imposing penalty (5 Lakh 10 Lakhs)
ndash debarring the member or the firm from engaging himself or
itself from practice
Composition of
QRB
983124983144983141 983139983157983154983154983141983150983156 983139983151983149983152983151983155983145983156983145983151983150 983151983142 983156983144983141 983106983151983137983154983140 983139983151983150983155983145983155983156983155 983151983142 983156983144983141 983142983151983148983148983151983159983145983150983143983098983085
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983141983150983156983154983137983148 983111983151983158983141983154983150983149983141983150983156
1 983117983154 983117 983107 983114983151983155983144983145 983113983122983123 (983122983141983156983140) 983110983151983154983149983141983154 983107983144983137983145983154983149983137983150 983107983141983150983156983154983137983148 983106983151983137983154983140 983151983142 983108983145983154983141983139983156 983124983137983160983141983155 983117983145983150983145983155983156983154983161 983151983142 983110983145983150983137983150983139983141 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983119983113983108983105991251 983107983144983137983145983154983152983141983154983155983151983150 (983159983141983142 2162012)
2 983117983154 983120 983117983157983154983137983148983145 983117983151983144983137983150983137 983122983137983151 983112983161983140983141983154983137983138983137983140983085 983117983141983149983138983141983154 (983159983141983142 132014)3 983117983154 983117983137983150983151983146 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251983117983141983149983138983141983154 (983159983141983142
1492011)4 983117983154 983126 983123 983123983157983150983140983137983154983141983155983137983150 983107983144983145983141983142 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983123983141983139983157983154983145983156983145983141983155 983137983150983140 983109983160983139983144983137983150983143983141 983106983151983137983154983140 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251983117983141983149983138983141983154 (983159983141983142 5112012)5 983117983154 983111983137983157983156983137983149 983111983157983144983137 983108983145983154983141983139983156983151983154 983111983141983150983141983154983137983148 (983107983151983149983149983141983154983139983145983137983148983085983113) 983119983142983142983145983139983141 983151983142 983156983144983141 983107983151983149983152983156983154983151983148983148983141983154 amp 983105983157983140983145983156983151983154 983111983141983150983141983154983137983148 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154
(983159983141983142 1262012)
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983151983157983150983139983145983148 983151983142 983156983144983141 983113983107983105983113 1 983107983105 983115 983122983137983143983144983157 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983106983137983150983143983137983148983157983154983157 991251 983117983141983149983138983141983154 (983159983141983142 132014)2 983107983105 983117983137983150983151983146 983110983137983140983150983145983155 983126983145983139983141983085983120983154983141983155983145983140983141983150983156 983113983107983105983113 983113983150983140983151983154983141 991251 983117983141983149983138983141983154 (983159983141983142 132014)3 983107983105 983123983157983138983151983140983144 983115 983105983143983154983137983159983137983148 983113983149983149983141983140983145983137983156983141 983120983137983155983156 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983115983151983148983147983137983156983137 991251 983117983141983149983138983141983154 (983159983141983142 132014)4 983107983105 983122983137983146983147983157983149983137983154 983123 983105983140983157983147983145983137 983117983157983149983138983137983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)5 983107983105 983107983144983137983154983137983150983146983151983156 983123983145983150983143983144 983118983137983150983140983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)
983123983152983141983139983145983137983148 983113983150983158983145983156983141983141983155 1 983117983154 983122 983115 983120983137983150983140983137 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983122983141983155983141983154983158983141 983106983137983150983147 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831412 983117983154 983120983154983145983156983144983158983145 983112983137983148983140983141983137 983120983137983155983156 983107983151983157983150983139983145983148 983117983141983149983138983141983154 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831413 983117983154 983124 983115983137983154983156983144983145983147983141983161983137983150 983123983141983139983154983141983156983137983154983161 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831414 983117983154983155 983122983141983150983157983147983137 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 983145983150983158983145983156983141983141
983123983141983139983154983141983137983156983154983161 983156983151 983156983144983141 9831069831519831379831549831401 983117983154 983117983151983144983145983156 983106983137983145983146983137983148
Financial Review and Reporting Board
Chairman CA Nilesh Vikamsey
Peer Review Board
Chairman CA Naveen N D Guptha
Revision of FS or BR ndash 131
bull ldquoIf it appears FS do not comply with section 129rdquo
bull Revision of any of the 3 preceding FY
bull Approval of tribunal with notice to IT department
bull Tribunal will issue notice amp hear auditor (Audit Working Papers ndashnecessary)
bull Carry out audit procedures necessary to changed circumstances ndashremuneration please ndash [us 142 to be fixed in GM]
bull AS 5 ndash Prior Period Items AS 4 ndash Events Occurring after BS date AS 7 ndash Construction Contracts AS 22 ndash Accounting for Taxes on Income
bull Only one revision allowed unlike gt 1 revision a llowed under IT act
Chapter X ndash Audit amp Auditors
Section Particulars
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
Appointment of Auditors
bull India believes audit rotation is a positive step
bull Rule 6 ndash The Companies (Audit and Auditors) Rules 2014
bull 3 year time frame for implementation ndash Maximum number of
consecutive years for which he may be appointed in the same
company (including the Transitional Period) 3 to 4 years for Individual
auditor 3 to 9 years in case of audit firm
bull Firm Rotation ndash Mandatory
bull Partner Rotation ndash Optional Voluntary ndash Members may resolve to
provide for ndash Section 139(3)
7212019 Companies act Audit and accountspdf
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9
Applicability of Rotation
bull Section 139(2)
bull Rule 5 The companies (Audit and Auditors) Rules 2014
bull Class of Companies excludes OPC and Small Companies
bull Includes
bull All unlisted public companies having paid up capital of 10 croresor more
bull All private limited companies having paid up capital of 20 croresor more
bull Public borrowings from FI banks public deposits of 50 croresof more
bull 143(12) - Notwithstanding anything contained in this section if an
auditor of a company in the course of the performance of his duties
as auditor has 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 immediately report the matter
to the Central Government within such time and in such manner as
may be prescribed
Fraud Reporting ndash Section 143(12)
Rule 13 ndash Report to CG
bull The companies (Audit and Auditors) Rules 2014
bull Fraud is being or has been committed against the company by officers
or employees of the company
bull Report the matter to the CG within 60 days following a procedure
bull Forward his report to board AC (immediately) ndash seeking their reply
within 45 days
bull On receipt of reply forward his report and the reply or observations of
board AC along with his comments to CG within 15 days
bull No reply from Board AC ndash even then forward to CG
Rule 13 ndash Report to CG
bull To whom
bull The Secretary Ministry of Corporate Affairs in a sealed cover by
Registered Post with ack due or Speed Post followed by an e-mail in
confirmation of the same
bull The report shall be on letter head of the auditor containing address e-
mail address and contact number and be signed by the auditor with his
seal and shall indicate his MNo
bull Form ADT-4
bull Your Attention Please This shall apply mutatis-mutandis to cost
accountant in practice and secretarial auditor
Auditors to attend General Meeting
bull 231 (Old) ndash Entitled to attend ndash optional attendance
bull 146 ndash attend either by himself or through his authorised
representative who shall also be qualified to be an auditor
any general meeting and shall have right to be heard at such meeting
on any part of the business which concerns him as the auditor ndash
Mandatory attendance
143 - Powers amp duties of Auditors and
Auditing Standards
bull 143(1)(f) - Share Capital SAMPA ndash Cash COTC where it is stated in thebooks and documents of the company that any shares have been allotted for cashwhether cash has actually been received in respect of such allotment and
if no cash has actually been so received whether the position as stated in the
account books and the balance sheet is correct regular and not
misleading
bull 143(3) ndashThe Auditorrsquos report shall also state (a) to (j) ndash SA 700 705 706 may gofor revision
bull 143(4) ndash Where any of the matters required to be included in the audit report underthis section is answered in the negative or with a qualification the report shall
state the reasons therefor
bull 143(9) - Every auditor shall comply with the auditing standards ndash 58 so
far pronounced by ICAI from SA 200 to SA 4410 ndash SA SQC SIA
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10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
7212019 Companies act Audit and accountspdf
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29-05-2014
11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
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6
Transitional provisions with respect to
Accounting Standards
bull The Companies (Accounts) Rules 2014
bull Rule 7
bull ICAI ndash AS continues as on date Standards as specified under companies
act 1956 shall be deemed to be the accounting standards until accounting
standards are specified by central government us 133
bull NACAS as of now NFRA later Till NFRA is constituted us 132 the central
government may prescribe the accounting standard or any addendum as
recommended by ICAI in consultation with and after examination of
recommendations made by NACAS constituted us 210A of companies Act
1956
NACAS National Advisory Committee on Accounting Standards
E-Mode ndash Rule 3
bull The Companies (Accounts) Rules 2014
bull Books of Accounts ndash Accessible (in India) Complete unaltered
bull C I A ndash Principles of Information Security but C is missing ndash only IampA is
addressed in rule
bull Rule 3(6) The company shall intimate to the registrar on an annual
basis at the time of filing of financial statement
a Name of the service provider
b The internet protocol address of service provider
c The location of the service provider (wherever applicable)
d Where the books of account and other books and papers are maintained on cloud
such address (physical) as provided by the service provider
E-Mode
bull Financial Statements ndash Section 136 ndash (Right of members to copies of audited
financial statements)
bull 21 days Notice to be sent
bull Along with a copy of the financial statements including consolidated
financial statements if any auditorrsquos report and every other documentrequired by law to be annexed or attached to the financial statements
bull To be Hosted in Website ndash Listed Company (as per Act)
E-Mode
bull The Companies (Accounts) Rules 2014
bull Rule 11 May be sent in e-mode ndash
bull All listed companies and all public companies having Net-worth gt 1 Cr amp
Turnover gt 10 Cr ndash the financial statements may be sent ndash
a By electronic mode to such members whose shareholding is in de-mat form and
whose email ids are registered with depository for communication purposes
b Where shareholding is held otherwise than by dematerialized format to such
members who have positively consented in writing for receiving by electronic mode
and
c By dispatch of physical copies through any recognized mode of delivery as specified
us 20
Boardrsquos Report shall also contain
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
i the financial summary or highlights
ii the change in the nature of business if any
i ii th e details of directors or key managerial personnel who were appointed or have
resigned during the year
iv the names of companies which have become or ceased to be its Subsidiaries joint
ventures or associate companies during the year
bull The Companies (Accounts) Rules 2014
bull Rule 8 (5) Boardrsquos Report shall also contain
(v) the details relating to deposits covered under Chapter V of the Act-
(a) accepted during the year
(b) remained unpaid or unclaimed as at the end of the year
(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so
number of such cases an d the total amount involved-
ndash (i) at the beginning of the year
ndash (ii) maximum during the year
ndash (iii) at the end of the year
(vi) the details of deposits which are not in compliance with the requirements of Chapter V of
the Act
(vii) the details of significant and material orders passed by the r egulators or courts or tribunals
impacting the going concern status and companyrsquos operations in future
(viii) the details in respect of adequacy of internal financial controls with reference to the
Financial Statements
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7
All companies including private companies who are meeting
eligibility criteria (NW ge 500 cr Turnover ge 1000 cr NP ge 5 cr)
are required to constitute a CSR committee consisting of at
least 3 directors out of which 1 must be ID and spend at least
2 of average NP on CSR activities
Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135
1956 Position
No requirement to spend on CSR activties
CSR ndash Sec 135 amp CSR Rules
bull Net Profit ndash PBT
bull Tax treatment of CSR in accordance with proposed notification (beingstatutory expenditure ndash should be tax deductible) -
bull Professional Opportunity ndash Company Setup Trust Section 8 company Society
bull Other Trusts ndash minimum 3 year track record ndash CEO of IICA ndash DirectorGeneral Mr Bhaskar Chatterjee ndash Accreditation to NGOs ndash Govt Ratingfor NPOs ndash Partnering with ldquo Tata institute of social sciencesrdquo
bull CSR Index ndash BSE amp IICA ndash To Develop
bull Min 8000 eligible companies
bull Min Rs 12000 crores pay-off
138 - Internal Audit
bull Welcome move ndash Professional opportunity ndash Mandatory IA for listed amp Public
companies
bull CA CMA Board nominated professional
bull Rule is silent ndash Board AC to formulate - Scope Functioning periodicity
amp methodology in consultation with IA
bull Internal Auditor may or may not be
an employee of the company
bull CA means a CA whether engaged in
practice or not
Rule 13
The Companies (Accounts) Rules 2014 (all limits in preceding FY)
983110983151983148983148983151983159983145983150983143 983139983151983149983152983137983150983145983141983155 983156983151 983137983152983152983151983145983150983156 983113983150983156983141983154983150983137983148 983105983157983140983145983156983151983154 983149983137983150983140983137983156983151983154983145983148983161
983159983145983156983144983145983150 983094 983149983151983150983156983144983155 983151983142 983139983151983149983149983141983150983139983141983149983141983150983156 983151983142 983155983141983139983156983145983151983150
o Listed company
o Unlisted public company
bull Paid-up capital ge 50 crores
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores
bull Os Deposits ge 25 crores
o Private Company
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores (from banks or PFIs)
Rule 13(1) To appoint an internal auditor or a firm of internal auditors
NFRA
National Financial Reporting Authority
bull To be constituted by a notification of the Central Government
bull It shall consist of a Chairman (to be appointed by CG) and other members not
exceeding 15 in number
bull Chairperson and members shall make a declaration to the Central Government
regarding no conflict of interest or lack of independence in respect of his or
their appointment
bull Chairperson and members who are in full-time employment with NFRA 983155983144983137983148983148 983150983151983156
983138983141 983137983155983155983151983139983145983137983156983141983140 983159983145983156983144 983137983150983161 983137983157983140983145983156 983142983145983154983149 (including related consultancy firms) during the
course of their appointment and two years after ceasing to hold such
appointment
Constitution of NFRA
bull Yet to constitute by notification ndash Still in Draft Rules stage
bull Role of NFRA 132(2)
1 make recommendations to the Central Government on the formulation and laying
down of accounting and auditing policies and standards for adoption by
companies or class of companies or their auditors as the case may be
2 monitor and enforce the compliance with accounting standards and auditing
standards in such manner as may be prescribed
3 oversee the quality of service of the professions associated with ensuring
compliance with such standards and suggest measures required for
improvement in quality of service and such other related matters as may be
prescribed and
4 perform such other functions relating to clauses (a) (b) and (c) as may be
prescribed
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8
Powers of NFRA
bull Powers of NFRA 132(4)
ndash have the power to investigate either suo motu or on a
reference made to it by the Central Government
ndash imposing penalty (5 Lakh 10 Lakhs)
ndash debarring the member or the firm from engaging himself or
itself from practice
Composition of
QRB
983124983144983141 983139983157983154983154983141983150983156 983139983151983149983152983151983155983145983156983145983151983150 983151983142 983156983144983141 983106983151983137983154983140 983139983151983150983155983145983155983156983155 983151983142 983156983144983141 983142983151983148983148983151983159983145983150983143983098983085
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983141983150983156983154983137983148 983111983151983158983141983154983150983149983141983150983156
1 983117983154 983117 983107 983114983151983155983144983145 983113983122983123 (983122983141983156983140) 983110983151983154983149983141983154 983107983144983137983145983154983149983137983150 983107983141983150983156983154983137983148 983106983151983137983154983140 983151983142 983108983145983154983141983139983156 983124983137983160983141983155 983117983145983150983145983155983156983154983161 983151983142 983110983145983150983137983150983139983141 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983119983113983108983105991251 983107983144983137983145983154983152983141983154983155983151983150 (983159983141983142 2162012)
2 983117983154 983120 983117983157983154983137983148983145 983117983151983144983137983150983137 983122983137983151 983112983161983140983141983154983137983138983137983140983085 983117983141983149983138983141983154 (983159983141983142 132014)3 983117983154 983117983137983150983151983146 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251983117983141983149983138983141983154 (983159983141983142
1492011)4 983117983154 983126 983123 983123983157983150983140983137983154983141983155983137983150 983107983144983145983141983142 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983123983141983139983157983154983145983156983145983141983155 983137983150983140 983109983160983139983144983137983150983143983141 983106983151983137983154983140 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251983117983141983149983138983141983154 (983159983141983142 5112012)5 983117983154 983111983137983157983156983137983149 983111983157983144983137 983108983145983154983141983139983156983151983154 983111983141983150983141983154983137983148 (983107983151983149983149983141983154983139983145983137983148983085983113) 983119983142983142983145983139983141 983151983142 983156983144983141 983107983151983149983152983156983154983151983148983148983141983154 amp 983105983157983140983145983156983151983154 983111983141983150983141983154983137983148 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154
(983159983141983142 1262012)
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983151983157983150983139983145983148 983151983142 983156983144983141 983113983107983105983113 1 983107983105 983115 983122983137983143983144983157 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983106983137983150983143983137983148983157983154983157 991251 983117983141983149983138983141983154 (983159983141983142 132014)2 983107983105 983117983137983150983151983146 983110983137983140983150983145983155 983126983145983139983141983085983120983154983141983155983145983140983141983150983156 983113983107983105983113 983113983150983140983151983154983141 991251 983117983141983149983138983141983154 (983159983141983142 132014)3 983107983105 983123983157983138983151983140983144 983115 983105983143983154983137983159983137983148 983113983149983149983141983140983145983137983156983141 983120983137983155983156 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983115983151983148983147983137983156983137 991251 983117983141983149983138983141983154 (983159983141983142 132014)4 983107983105 983122983137983146983147983157983149983137983154 983123 983105983140983157983147983145983137 983117983157983149983138983137983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)5 983107983105 983107983144983137983154983137983150983146983151983156 983123983145983150983143983144 983118983137983150983140983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)
983123983152983141983139983145983137983148 983113983150983158983145983156983141983141983155 1 983117983154 983122 983115 983120983137983150983140983137 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983122983141983155983141983154983158983141 983106983137983150983147 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831412 983117983154 983120983154983145983156983144983158983145 983112983137983148983140983141983137 983120983137983155983156 983107983151983157983150983139983145983148 983117983141983149983138983141983154 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831413 983117983154 983124 983115983137983154983156983144983145983147983141983161983137983150 983123983141983139983154983141983156983137983154983161 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831414 983117983154983155 983122983141983150983157983147983137 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 983145983150983158983145983156983141983141
983123983141983139983154983141983137983156983154983161 983156983151 983156983144983141 9831069831519831379831549831401 983117983154 983117983151983144983145983156 983106983137983145983146983137983148
Financial Review and Reporting Board
Chairman CA Nilesh Vikamsey
Peer Review Board
Chairman CA Naveen N D Guptha
Revision of FS or BR ndash 131
bull ldquoIf it appears FS do not comply with section 129rdquo
bull Revision of any of the 3 preceding FY
bull Approval of tribunal with notice to IT department
bull Tribunal will issue notice amp hear auditor (Audit Working Papers ndashnecessary)
bull Carry out audit procedures necessary to changed circumstances ndashremuneration please ndash [us 142 to be fixed in GM]
bull AS 5 ndash Prior Period Items AS 4 ndash Events Occurring after BS date AS 7 ndash Construction Contracts AS 22 ndash Accounting for Taxes on Income
bull Only one revision allowed unlike gt 1 revision a llowed under IT act
Chapter X ndash Audit amp Auditors
Section Particulars
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
Appointment of Auditors
bull India believes audit rotation is a positive step
bull Rule 6 ndash The Companies (Audit and Auditors) Rules 2014
bull 3 year time frame for implementation ndash Maximum number of
consecutive years for which he may be appointed in the same
company (including the Transitional Period) 3 to 4 years for Individual
auditor 3 to 9 years in case of audit firm
bull Firm Rotation ndash Mandatory
bull Partner Rotation ndash Optional Voluntary ndash Members may resolve to
provide for ndash Section 139(3)
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9
Applicability of Rotation
bull Section 139(2)
bull Rule 5 The companies (Audit and Auditors) Rules 2014
bull Class of Companies excludes OPC and Small Companies
bull Includes
bull All unlisted public companies having paid up capital of 10 croresor more
bull All private limited companies having paid up capital of 20 croresor more
bull Public borrowings from FI banks public deposits of 50 croresof more
bull 143(12) - Notwithstanding anything contained in this section if an
auditor of a company in the course of the performance of his duties
as auditor has 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 immediately report the matter
to the Central Government within such time and in such manner as
may be prescribed
Fraud Reporting ndash Section 143(12)
Rule 13 ndash Report to CG
bull The companies (Audit and Auditors) Rules 2014
bull Fraud is being or has been committed against the company by officers
or employees of the company
bull Report the matter to the CG within 60 days following a procedure
bull Forward his report to board AC (immediately) ndash seeking their reply
within 45 days
bull On receipt of reply forward his report and the reply or observations of
board AC along with his comments to CG within 15 days
bull No reply from Board AC ndash even then forward to CG
Rule 13 ndash Report to CG
bull To whom
bull The Secretary Ministry of Corporate Affairs in a sealed cover by
Registered Post with ack due or Speed Post followed by an e-mail in
confirmation of the same
bull The report shall be on letter head of the auditor containing address e-
mail address and contact number and be signed by the auditor with his
seal and shall indicate his MNo
bull Form ADT-4
bull Your Attention Please This shall apply mutatis-mutandis to cost
accountant in practice and secretarial auditor
Auditors to attend General Meeting
bull 231 (Old) ndash Entitled to attend ndash optional attendance
bull 146 ndash attend either by himself or through his authorised
representative who shall also be qualified to be an auditor
any general meeting and shall have right to be heard at such meeting
on any part of the business which concerns him as the auditor ndash
Mandatory attendance
143 - Powers amp duties of Auditors and
Auditing Standards
bull 143(1)(f) - Share Capital SAMPA ndash Cash COTC where it is stated in thebooks and documents of the company that any shares have been allotted for cashwhether cash has actually been received in respect of such allotment and
if no cash has actually been so received whether the position as stated in the
account books and the balance sheet is correct regular and not
misleading
bull 143(3) ndashThe Auditorrsquos report shall also state (a) to (j) ndash SA 700 705 706 may gofor revision
bull 143(4) ndash Where any of the matters required to be included in the audit report underthis section is answered in the negative or with a qualification the report shall
state the reasons therefor
bull 143(9) - Every auditor shall comply with the auditing standards ndash 58 so
far pronounced by ICAI from SA 200 to SA 4410 ndash SA SQC SIA
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10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
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11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
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7
All companies including private companies who are meeting
eligibility criteria (NW ge 500 cr Turnover ge 1000 cr NP ge 5 cr)
are required to constitute a CSR committee consisting of at
least 3 directors out of which 1 must be ID and spend at least
2 of average NP on CSR activities
Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135Corporate Social Responsibility 135
1956 Position
No requirement to spend on CSR activties
CSR ndash Sec 135 amp CSR Rules
bull Net Profit ndash PBT
bull Tax treatment of CSR in accordance with proposed notification (beingstatutory expenditure ndash should be tax deductible) -
bull Professional Opportunity ndash Company Setup Trust Section 8 company Society
bull Other Trusts ndash minimum 3 year track record ndash CEO of IICA ndash DirectorGeneral Mr Bhaskar Chatterjee ndash Accreditation to NGOs ndash Govt Ratingfor NPOs ndash Partnering with ldquo Tata institute of social sciencesrdquo
bull CSR Index ndash BSE amp IICA ndash To Develop
bull Min 8000 eligible companies
bull Min Rs 12000 crores pay-off
138 - Internal Audit
bull Welcome move ndash Professional opportunity ndash Mandatory IA for listed amp Public
companies
bull CA CMA Board nominated professional
bull Rule is silent ndash Board AC to formulate - Scope Functioning periodicity
amp methodology in consultation with IA
bull Internal Auditor may or may not be
an employee of the company
bull CA means a CA whether engaged in
practice or not
Rule 13
The Companies (Accounts) Rules 2014 (all limits in preceding FY)
983110983151983148983148983151983159983145983150983143 983139983151983149983152983137983150983145983141983155 983156983151 983137983152983152983151983145983150983156 983113983150983156983141983154983150983137983148 983105983157983140983145983156983151983154 983149983137983150983140983137983156983151983154983145983148983161
983159983145983156983144983145983150 983094 983149983151983150983156983144983155 983151983142 983139983151983149983149983141983150983139983141983149983141983150983156 983151983142 983155983141983139983156983145983151983150
o Listed company
o Unlisted public company
bull Paid-up capital ge 50 crores
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores
bull Os Deposits ge 25 crores
o Private Company
bull Turnover ge 200 crores
bull Os Loans or borrowings ge 100 crores (from banks or PFIs)
Rule 13(1) To appoint an internal auditor or a firm of internal auditors
NFRA
National Financial Reporting Authority
bull To be constituted by a notification of the Central Government
bull It shall consist of a Chairman (to be appointed by CG) and other members not
exceeding 15 in number
bull Chairperson and members shall make a declaration to the Central Government
regarding no conflict of interest or lack of independence in respect of his or
their appointment
bull Chairperson and members who are in full-time employment with NFRA 983155983144983137983148983148 983150983151983156
983138983141 983137983155983155983151983139983145983137983156983141983140 983159983145983156983144 983137983150983161 983137983157983140983145983156 983142983145983154983149 (including related consultancy firms) during the
course of their appointment and two years after ceasing to hold such
appointment
Constitution of NFRA
bull Yet to constitute by notification ndash Still in Draft Rules stage
bull Role of NFRA 132(2)
1 make recommendations to the Central Government on the formulation and laying
down of accounting and auditing policies and standards for adoption by
companies or class of companies or their auditors as the case may be
2 monitor and enforce the compliance with accounting standards and auditing
standards in such manner as may be prescribed
3 oversee the quality of service of the professions associated with ensuring
compliance with such standards and suggest measures required for
improvement in quality of service and such other related matters as may be
prescribed and
4 perform such other functions relating to clauses (a) (b) and (c) as may be
prescribed
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8
Powers of NFRA
bull Powers of NFRA 132(4)
ndash have the power to investigate either suo motu or on a
reference made to it by the Central Government
ndash imposing penalty (5 Lakh 10 Lakhs)
ndash debarring the member or the firm from engaging himself or
itself from practice
Composition of
QRB
983124983144983141 983139983157983154983154983141983150983156 983139983151983149983152983151983155983145983156983145983151983150 983151983142 983156983144983141 983106983151983137983154983140 983139983151983150983155983145983155983156983155 983151983142 983156983144983141 983142983151983148983148983151983159983145983150983143983098983085
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983141983150983156983154983137983148 983111983151983158983141983154983150983149983141983150983156
1 983117983154 983117 983107 983114983151983155983144983145 983113983122983123 (983122983141983156983140) 983110983151983154983149983141983154 983107983144983137983145983154983149983137983150 983107983141983150983156983154983137983148 983106983151983137983154983140 983151983142 983108983145983154983141983139983156 983124983137983160983141983155 983117983145983150983145983155983156983154983161 983151983142 983110983145983150983137983150983139983141 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983119983113983108983105991251 983107983144983137983145983154983152983141983154983155983151983150 (983159983141983142 2162012)
2 983117983154 983120 983117983157983154983137983148983145 983117983151983144983137983150983137 983122983137983151 983112983161983140983141983154983137983138983137983140983085 983117983141983149983138983141983154 (983159983141983142 132014)3 983117983154 983117983137983150983151983146 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251983117983141983149983138983141983154 (983159983141983142
1492011)4 983117983154 983126 983123 983123983157983150983140983137983154983141983155983137983150 983107983144983145983141983142 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983123983141983139983157983154983145983156983145983141983155 983137983150983140 983109983160983139983144983137983150983143983141 983106983151983137983154983140 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251983117983141983149983138983141983154 (983159983141983142 5112012)5 983117983154 983111983137983157983156983137983149 983111983157983144983137 983108983145983154983141983139983156983151983154 983111983141983150983141983154983137983148 (983107983151983149983149983141983154983139983145983137983148983085983113) 983119983142983142983145983139983141 983151983142 983156983144983141 983107983151983149983152983156983154983151983148983148983141983154 amp 983105983157983140983145983156983151983154 983111983141983150983141983154983137983148 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154
(983159983141983142 1262012)
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983151983157983150983139983145983148 983151983142 983156983144983141 983113983107983105983113 1 983107983105 983115 983122983137983143983144983157 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983106983137983150983143983137983148983157983154983157 991251 983117983141983149983138983141983154 (983159983141983142 132014)2 983107983105 983117983137983150983151983146 983110983137983140983150983145983155 983126983145983139983141983085983120983154983141983155983145983140983141983150983156 983113983107983105983113 983113983150983140983151983154983141 991251 983117983141983149983138983141983154 (983159983141983142 132014)3 983107983105 983123983157983138983151983140983144 983115 983105983143983154983137983159983137983148 983113983149983149983141983140983145983137983156983141 983120983137983155983156 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983115983151983148983147983137983156983137 991251 983117983141983149983138983141983154 (983159983141983142 132014)4 983107983105 983122983137983146983147983157983149983137983154 983123 983105983140983157983147983145983137 983117983157983149983138983137983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)5 983107983105 983107983144983137983154983137983150983146983151983156 983123983145983150983143983144 983118983137983150983140983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)
983123983152983141983139983145983137983148 983113983150983158983145983156983141983141983155 1 983117983154 983122 983115 983120983137983150983140983137 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983122983141983155983141983154983158983141 983106983137983150983147 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831412 983117983154 983120983154983145983156983144983158983145 983112983137983148983140983141983137 983120983137983155983156 983107983151983157983150983139983145983148 983117983141983149983138983141983154 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831413 983117983154 983124 983115983137983154983156983144983145983147983141983161983137983150 983123983141983139983154983141983156983137983154983161 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831414 983117983154983155 983122983141983150983157983147983137 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 983145983150983158983145983156983141983141
983123983141983139983154983141983137983156983154983161 983156983151 983156983144983141 9831069831519831379831549831401 983117983154 983117983151983144983145983156 983106983137983145983146983137983148
Financial Review and Reporting Board
Chairman CA Nilesh Vikamsey
Peer Review Board
Chairman CA Naveen N D Guptha
Revision of FS or BR ndash 131
bull ldquoIf it appears FS do not comply with section 129rdquo
bull Revision of any of the 3 preceding FY
bull Approval of tribunal with notice to IT department
bull Tribunal will issue notice amp hear auditor (Audit Working Papers ndashnecessary)
bull Carry out audit procedures necessary to changed circumstances ndashremuneration please ndash [us 142 to be fixed in GM]
bull AS 5 ndash Prior Period Items AS 4 ndash Events Occurring after BS date AS 7 ndash Construction Contracts AS 22 ndash Accounting for Taxes on Income
bull Only one revision allowed unlike gt 1 revision a llowed under IT act
Chapter X ndash Audit amp Auditors
Section Particulars
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
Appointment of Auditors
bull India believes audit rotation is a positive step
bull Rule 6 ndash The Companies (Audit and Auditors) Rules 2014
bull 3 year time frame for implementation ndash Maximum number of
consecutive years for which he may be appointed in the same
company (including the Transitional Period) 3 to 4 years for Individual
auditor 3 to 9 years in case of audit firm
bull Firm Rotation ndash Mandatory
bull Partner Rotation ndash Optional Voluntary ndash Members may resolve to
provide for ndash Section 139(3)
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9
Applicability of Rotation
bull Section 139(2)
bull Rule 5 The companies (Audit and Auditors) Rules 2014
bull Class of Companies excludes OPC and Small Companies
bull Includes
bull All unlisted public companies having paid up capital of 10 croresor more
bull All private limited companies having paid up capital of 20 croresor more
bull Public borrowings from FI banks public deposits of 50 croresof more
bull 143(12) - Notwithstanding anything contained in this section if an
auditor of a company in the course of the performance of his duties
as auditor has 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 immediately report the matter
to the Central Government within such time and in such manner as
may be prescribed
Fraud Reporting ndash Section 143(12)
Rule 13 ndash Report to CG
bull The companies (Audit and Auditors) Rules 2014
bull Fraud is being or has been committed against the company by officers
or employees of the company
bull Report the matter to the CG within 60 days following a procedure
bull Forward his report to board AC (immediately) ndash seeking their reply
within 45 days
bull On receipt of reply forward his report and the reply or observations of
board AC along with his comments to CG within 15 days
bull No reply from Board AC ndash even then forward to CG
Rule 13 ndash Report to CG
bull To whom
bull The Secretary Ministry of Corporate Affairs in a sealed cover by
Registered Post with ack due or Speed Post followed by an e-mail in
confirmation of the same
bull The report shall be on letter head of the auditor containing address e-
mail address and contact number and be signed by the auditor with his
seal and shall indicate his MNo
bull Form ADT-4
bull Your Attention Please This shall apply mutatis-mutandis to cost
accountant in practice and secretarial auditor
Auditors to attend General Meeting
bull 231 (Old) ndash Entitled to attend ndash optional attendance
bull 146 ndash attend either by himself or through his authorised
representative who shall also be qualified to be an auditor
any general meeting and shall have right to be heard at such meeting
on any part of the business which concerns him as the auditor ndash
Mandatory attendance
143 - Powers amp duties of Auditors and
Auditing Standards
bull 143(1)(f) - Share Capital SAMPA ndash Cash COTC where it is stated in thebooks and documents of the company that any shares have been allotted for cashwhether cash has actually been received in respect of such allotment and
if no cash has actually been so received whether the position as stated in the
account books and the balance sheet is correct regular and not
misleading
bull 143(3) ndashThe Auditorrsquos report shall also state (a) to (j) ndash SA 700 705 706 may gofor revision
bull 143(4) ndash Where any of the matters required to be included in the audit report underthis section is answered in the negative or with a qualification the report shall
state the reasons therefor
bull 143(9) - Every auditor shall comply with the auditing standards ndash 58 so
far pronounced by ICAI from SA 200 to SA 4410 ndash SA SQC SIA
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10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
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11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 811
29-05-2014
8
Powers of NFRA
bull Powers of NFRA 132(4)
ndash have the power to investigate either suo motu or on a
reference made to it by the Central Government
ndash imposing penalty (5 Lakh 10 Lakhs)
ndash debarring the member or the firm from engaging himself or
itself from practice
Composition of
QRB
983124983144983141 983139983157983154983154983141983150983156 983139983151983149983152983151983155983145983156983145983151983150 983151983142 983156983144983141 983106983151983137983154983140 983139983151983150983155983145983155983156983155 983151983142 983156983144983141 983142983151983148983148983151983159983145983150983143983098983085
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983141983150983156983154983137983148 983111983151983158983141983154983150983149983141983150983156
1 983117983154 983117 983107 983114983151983155983144983145 983113983122983123 (983122983141983156983140) 983110983151983154983149983141983154 983107983144983137983145983154983149983137983150 983107983141983150983156983154983137983148 983106983151983137983154983140 983151983142 983108983145983154983141983139983156 983124983137983160983141983155 983117983145983150983145983155983156983154983161 983151983142 983110983145983150983137983150983139983141 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983119983113983108983105991251 983107983144983137983145983154983152983141983154983155983151983150 (983159983141983142 2162012)
2 983117983154 983120 983117983157983154983137983148983145 983117983151983144983137983150983137 983122983137983151 983112983161983140983141983154983137983138983137983140983085 983117983141983149983138983141983154 (983159983141983142 132014)3 983117983154 983117983137983150983151983146 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983111983151983158983141983154983150983149983141983150983156 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251983117983141983149983138983141983154 (983159983141983142
1492011)4 983117983154 983126 983123 983123983157983150983140983137983154983141983155983137983150 983107983144983145983141983142 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983123983141983139983157983154983145983156983145983141983155 983137983150983140 983109983160983139983144983137983150983143983141 983106983151983137983154983140 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251983117983141983149983138983141983154 (983159983141983142 5112012)5 983117983154 983111983137983157983156983137983149 983111983157983144983137 983108983145983154983141983139983156983151983154 983111983141983150983141983154983137983148 (983107983151983149983149983141983154983139983145983137983148983085983113) 983119983142983142983145983139983141 983151983142 983156983144983141 983107983151983149983152983156983154983151983148983148983141983154 amp 983105983157983140983145983156983151983154 983111983141983150983141983154983137983148 983151983142 983113983150983140983145983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154
(983159983141983142 1262012)
983118983151983149983145983150983141983141983155 983151983142 983156983144983141 983107983151983157983150983139983145983148 983151983142 983156983144983141 983113983107983105983113 1 983107983105 983115 983122983137983143983144983157 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983106983137983150983143983137983148983157983154983157 991251 983117983141983149983138983141983154 (983159983141983142 132014)2 983107983105 983117983137983150983151983146 983110983137983140983150983145983155 983126983145983139983141983085983120983154983141983155983145983140983141983150983156 983113983107983105983113 983113983150983140983151983154983141 991251 983117983141983149983138983141983154 (983159983141983142 132014)3 983107983105 983123983157983138983151983140983144 983115 983105983143983154983137983159983137983148 983113983149983149983141983140983145983137983156983141 983120983137983155983156 983120983154983141983155983145983140983141983150983156 983113983107983105983113 983115983151983148983147983137983156983137 991251 983117983141983149983138983141983154 (983159983141983142 132014)4 983107983105 983122983137983146983147983157983149983137983154 983123 983105983140983157983147983145983137 983117983157983149983138983137983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)5 983107983105 983107983144983137983154983137983150983146983151983156 983123983145983150983143983144 983118983137983150983140983137 983118983141983159 983108983141983148983144983145 991251 983117983141983149983138983141983154 (983159983141983142 132014)
983123983152983141983139983145983137983148 983113983150983158983145983156983141983141983155 1 983117983154 983122 983115 983120983137983150983140983137 983111983141983150983141983154983137983148 983117983137983150983137983143983141983154 983122983141983155983141983154983158983141 983106983137983150983147 983151983142 983113983150983140983145983137 983117983157983149983138983137983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831412 983117983154 983120983154983145983156983144983158983145 983112983137983148983140983141983137 983120983137983155983156 983107983151983157983150983139983145983148 983117983141983149983138983141983154 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831413 983117983154 983124 983115983137983154983156983144983145983147983141983161983137983150 983123983141983139983154983141983156983137983154983161 983113983107983105983113 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 9831459831509831589831459831569831419831414 983117983154983155 983122983141983150983157983147983137 983115983157983149983137983154 983113983105983123 983114983151983145983150983156 983123983141983139983154983141983156983137983154983161 983117983145983150983145983155983156983154983161 983151983142 983107983151983154983152983151983154983137983156983141 983105983142983142983137983145983154983155 983118983141983159 983108983141983148983144983145 991251 983123983152983141983139983145983137983148 983145983150983158983145983156983141983141
983123983141983139983154983141983137983156983154983161 983156983151 983156983144983141 9831069831519831379831549831401 983117983154 983117983151983144983145983156 983106983137983145983146983137983148
Financial Review and Reporting Board
Chairman CA Nilesh Vikamsey
Peer Review Board
Chairman CA Naveen N D Guptha
Revision of FS or BR ndash 131
bull ldquoIf it appears FS do not comply with section 129rdquo
bull Revision of any of the 3 preceding FY
bull Approval of tribunal with notice to IT department
bull Tribunal will issue notice amp hear auditor (Audit Working Papers ndashnecessary)
bull Carry out audit procedures necessary to changed circumstances ndashremuneration please ndash [us 142 to be fixed in GM]
bull AS 5 ndash Prior Period Items AS 4 ndash Events Occurring after BS date AS 7 ndash Construction Contracts AS 22 ndash Accounting for Taxes on Income
bull Only one revision allowed unlike gt 1 revision a llowed under IT act
Chapter X ndash Audit amp Auditors
Section Particulars
139 Appointment of auditors
140 Removal resignation of auditor and giving of special notice
141 Eligibility qualifications and disqualifications of auditors
142 Remuneration of auditors
143 Powers and duties of auditors and auditing standards
144 Auditors not to render certain services
145 Auditors to sign audit reports etc
146 Auditors to attend general meeting
147 Punishment for contravention
148 CG to specify audit of items of cost in respect of certain companies
Appointment of Auditors
bull India believes audit rotation is a positive step
bull Rule 6 ndash The Companies (Audit and Auditors) Rules 2014
bull 3 year time frame for implementation ndash Maximum number of
consecutive years for which he may be appointed in the same
company (including the Transitional Period) 3 to 4 years for Individual
auditor 3 to 9 years in case of audit firm
bull Firm Rotation ndash Mandatory
bull Partner Rotation ndash Optional Voluntary ndash Members may resolve to
provide for ndash Section 139(3)
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 911
29-05-2014
9
Applicability of Rotation
bull Section 139(2)
bull Rule 5 The companies (Audit and Auditors) Rules 2014
bull Class of Companies excludes OPC and Small Companies
bull Includes
bull All unlisted public companies having paid up capital of 10 croresor more
bull All private limited companies having paid up capital of 20 croresor more
bull Public borrowings from FI banks public deposits of 50 croresof more
bull 143(12) - Notwithstanding anything contained in this section if an
auditor of a company in the course of the performance of his duties
as auditor has 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 immediately report the matter
to the Central Government within such time and in such manner as
may be prescribed
Fraud Reporting ndash Section 143(12)
Rule 13 ndash Report to CG
bull The companies (Audit and Auditors) Rules 2014
bull Fraud is being or has been committed against the company by officers
or employees of the company
bull Report the matter to the CG within 60 days following a procedure
bull Forward his report to board AC (immediately) ndash seeking their reply
within 45 days
bull On receipt of reply forward his report and the reply or observations of
board AC along with his comments to CG within 15 days
bull No reply from Board AC ndash even then forward to CG
Rule 13 ndash Report to CG
bull To whom
bull The Secretary Ministry of Corporate Affairs in a sealed cover by
Registered Post with ack due or Speed Post followed by an e-mail in
confirmation of the same
bull The report shall be on letter head of the auditor containing address e-
mail address and contact number and be signed by the auditor with his
seal and shall indicate his MNo
bull Form ADT-4
bull Your Attention Please This shall apply mutatis-mutandis to cost
accountant in practice and secretarial auditor
Auditors to attend General Meeting
bull 231 (Old) ndash Entitled to attend ndash optional attendance
bull 146 ndash attend either by himself or through his authorised
representative who shall also be qualified to be an auditor
any general meeting and shall have right to be heard at such meeting
on any part of the business which concerns him as the auditor ndash
Mandatory attendance
143 - Powers amp duties of Auditors and
Auditing Standards
bull 143(1)(f) - Share Capital SAMPA ndash Cash COTC where it is stated in thebooks and documents of the company that any shares have been allotted for cashwhether cash has actually been received in respect of such allotment and
if no cash has actually been so received whether the position as stated in the
account books and the balance sheet is correct regular and not
misleading
bull 143(3) ndashThe Auditorrsquos report shall also state (a) to (j) ndash SA 700 705 706 may gofor revision
bull 143(4) ndash Where any of the matters required to be included in the audit report underthis section is answered in the negative or with a qualification the report shall
state the reasons therefor
bull 143(9) - Every auditor shall comply with the auditing standards ndash 58 so
far pronounced by ICAI from SA 200 to SA 4410 ndash SA SQC SIA
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 1011
29-05-2014
10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 1111
29-05-2014
11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 911
29-05-2014
9
Applicability of Rotation
bull Section 139(2)
bull Rule 5 The companies (Audit and Auditors) Rules 2014
bull Class of Companies excludes OPC and Small Companies
bull Includes
bull All unlisted public companies having paid up capital of 10 croresor more
bull All private limited companies having paid up capital of 20 croresor more
bull Public borrowings from FI banks public deposits of 50 croresof more
bull 143(12) - Notwithstanding anything contained in this section if an
auditor of a company in the course of the performance of his duties
as auditor has 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 immediately report the matter
to the Central Government within such time and in such manner as
may be prescribed
Fraud Reporting ndash Section 143(12)
Rule 13 ndash Report to CG
bull The companies (Audit and Auditors) Rules 2014
bull Fraud is being or has been committed against the company by officers
or employees of the company
bull Report the matter to the CG within 60 days following a procedure
bull Forward his report to board AC (immediately) ndash seeking their reply
within 45 days
bull On receipt of reply forward his report and the reply or observations of
board AC along with his comments to CG within 15 days
bull No reply from Board AC ndash even then forward to CG
Rule 13 ndash Report to CG
bull To whom
bull The Secretary Ministry of Corporate Affairs in a sealed cover by
Registered Post with ack due or Speed Post followed by an e-mail in
confirmation of the same
bull The report shall be on letter head of the auditor containing address e-
mail address and contact number and be signed by the auditor with his
seal and shall indicate his MNo
bull Form ADT-4
bull Your Attention Please This shall apply mutatis-mutandis to cost
accountant in practice and secretarial auditor
Auditors to attend General Meeting
bull 231 (Old) ndash Entitled to attend ndash optional attendance
bull 146 ndash attend either by himself or through his authorised
representative who shall also be qualified to be an auditor
any general meeting and shall have right to be heard at such meeting
on any part of the business which concerns him as the auditor ndash
Mandatory attendance
143 - Powers amp duties of Auditors and
Auditing Standards
bull 143(1)(f) - Share Capital SAMPA ndash Cash COTC where it is stated in thebooks and documents of the company that any shares have been allotted for cashwhether cash has actually been received in respect of such allotment and
if no cash has actually been so received whether the position as stated in the
account books and the balance sheet is correct regular and not
misleading
bull 143(3) ndashThe Auditorrsquos report shall also state (a) to (j) ndash SA 700 705 706 may gofor revision
bull 143(4) ndash Where any of the matters required to be included in the audit report underthis section is answered in the negative or with a qualification the report shall
state the reasons therefor
bull 143(9) - Every auditor shall comply with the auditing standards ndash 58 so
far pronounced by ICAI from SA 200 to SA 4410 ndash SA SQC SIA
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 1011
29-05-2014
10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 1111
29-05-2014
11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
7212019 Companies act Audit and accountspdf
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29-05-2014
10
Powers amp duties of Auditors and Auditing
Standards
bull 143 (14) -The provisions of this section shall mutatismutandis apply tomdash
ndash (a) the cost accountant in practice conducting cost audit
under section 148 or
ndash (b) the company secretary in practice conducting secretarial
audit under section 204
141 - Eligibility Qualifications amp
Disqualifications of Auditors
bull Disqualification ndash disappointment
bull Qualification ndash Innovation termination
bull Business Relationship ndash 141(3)(e)
bull Convicted by court ndash 141(3)(h)
bull 20 Companies Limit ndash as per 141(3)(g)
bull 1 Lakh ndash Lakshman Rekha
bull Any other form of entity engaged in 144 services
Eligibility Qualifications amp
Disqualifications of Auditors
ICAI Council Guidelines ndash 2008
For the above purpose the ldquospecified number of audit assignmentsrdquo means ndash
(a) in the case of a Chartered Accountant in practice or a proprietary firm of
Chartered Accountant thirty audit assignments whether in respect of
private Companies or other Companies
(b) in the case of Chartered Accountants in practice thirty audit assignments
per partner in the firm whether in respect of private Companies or other
Companies
Provided that out of such ldquospecified number of audit assignments the
number of audit assignments of public Companies each of which has a paid-up
share capital of rupees twenty-five lakhs or more shall not exceed ten
Appointment of Auditors
bull Appointment Re-appointment are known used terms
bull Retirement Rotation Ratification 5 year break or cooling period ndash
is new eligibility criteria
bull Common Partners same network of audit firms trade mark or Brand
bull Recently US house of representatives approved a Bill that prohibited
the US regulator from mandating audit rotation
bull 147(3) ndash Serious liability
bull refund the remuneration received by him to the company and
bull pay for damages to the company statutory bodies or authorities or to anyother persons for loss arising out of incorrect or misleading statements ofparticulars made in his audit report ndash [Caution Bankers will be First]
bull 147(1) ndash Contravention liable for prosecution ndash 1 year (officer)
bull 147(2) ndash Contravention liable for Fine (25K ndash 5L) ndash prosecution 1111
year amp Fine (1L ndash 25L) (Auditor) ndash see Proviso to 147(2)
bull To provide for insurance cost in the books of accounts of professional firms ndash the
best insurance is Professional Integrity
bull 147 use the word Auditor (includes CMACS) ndash yes ndash refer 143(14)
bull Council Guidelines No1-CA(7)022008 dated 8th August 2008 -
GUIDELINES FOR THE MEMBERS OF ICAI
bull New provision
bull 144 ndash Restriction ndash One side | Independence ndash Other Side
983109983160983152983148983137983150983137983156983145983151983150983098 983124 he term ldquodirectly or indirectlyrdquo shall include rendering of services by the auditormdash
1 in case of auditor being an individual either himself or through his relative or any other person
connected or associated with such individual or through any other entity whatsoever in
which such individual has significant influence or control or whose name or trade mark orbrand is used by such individual
2 in case of auditor being a firm either itself or through any of its partners or through its parent
subsidiary or associate entity or through any other entity whatsoever in which the firm or
any partner of the firm has significant influence or control or whose name or trade mark orbrand is used by the firm or any of its partners
Auditor not to render certain
services
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 1111
29-05-2014
11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269
7212019 Companies act Audit and accountspdf
httpslidepdfcomreaderfullcompanies-act-audit-and-accountspdf 1111
29-05-2014
11
a) accounting and book keeping services
b) internal audit
c) design and implementation of any financial information system
d) actuarial services
e) investment advisory services
f) investment banking services
g) rendering of outsourced financial services
h) management services and
i) any other kind of services as may be prescribed
Statutory Warning Say no to these services ndash Section 144
983107983144983137983152983156983141983154 983113983128 983085 983105983152983152983151983145983150983156983149983141983150983156 983137983155 983123983156983137983156983157983156983151983154983161 983137983157983140983145983156983151983154
983080983141983160983156983154983137983139983156 983142983154983151983149 983113983107983105983113 983107983151983157983150983139983145983148 983111983157983145983140983141983148983145983150983141983155 983085 983090983088983088983096983081
bull A member of the Institute in practice shall not accept the appointment as statutory
auditor of Public Sector Undertaking(s) Government Company(ies)Listed
Company(ies) and other Public Company(ies) having turnover of Rs 50 crores
or more in a year where he accepts any other work(s) or assignment(s) or
service(s) in regard to the same Undertaking(s) Company(ies) on a remuneration which in
total exceeds the fee payable for carrying out the statutory audit of the same
Undertakingcompany
bull In regard to taking up other work(s) or service(s) or assignment(s) of the
undertakingcompany referred to above it shall be open to such associate concern or
corporate body to render such work(s) or service(s) or assignment(s) so long as
aggregate remuneration for such other work(s) or service(s) or assignment(s)
payable to the statutory auditors together with fees payable to its associate
concern(s) or corporate body(ies) dodoes not exceed the aggregate of fee
payable for carrying out the statutory audit
983107983105983086 983111983119983120983105983116 983115983122983113983123983112983118983105 983122983105983114983125 | FCA AICWA ACS PGDOR PGDFM DISA (ICA) MPhil
Tax Partner Ms K Gopal Rao amp Co Chartered Accountants Chennai
Member ndash Southern India Regional Council of The Institute of Chartered Accountants of India
Email gkricaiorg | Mobile 98400 63269