TMI BlogChapter X - The Companies (Audit and Auditors) Rules, 2014.X X X X Extracts X X X X X X X X Extracts X X X X ..... into force on the 1st day of April, 2014. 2. Definitions.- (1) In these rules, unless the context otherwise requires,- (a) Act means the Companies Act, 2013 (18 of 2013) ; (b) Annexure means the Annexure enclosed to these rules; (c) fees means fees specified in the Companies (Registration Offices and Fees) Rules, 2014. (d) Form or e-Form means a form set forth under these rules which shall be used for the matter to which it relates; (e) section means section of the Act. (2) The words and expressions used in these rules but not defined and defined in the Act or in the Companies (Specification of definitions details) Rules, 2014 shall have the meanings respectively assigned to them in the Act or in the said rules. 3. Manner and procedure of selection and appointment of auditors.- (1) In case of a company that is required to constitute an Audit Committee under section 177, the committee, and, in cases where such a committee is not required to be constituted, the Board, shall take into consideration the qualifications and experience of the individual or the firm proposed to be considered for appointment as auditor and whether such qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point another individual or firm as its auditor or auditors after following the procedure laid down in this behalf under the Act. 4. Conditions for appointment and notice to Registrar.- (1) The auditor appointed under rule 3 shall submit a certificate that - (a) the individual or the firm, as the case may be, is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder; (b) the proposed appointment is as per the term provided under the Act; (c) the proposed appointment is within the limits laid down by or under the authority of the Act; (d) the list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct. (2) The notice to Registrar about appointment of auditor under fourth proviso to sub-section (1) of section 139 shall be in Form ADT-1. 5. Class of Companies.- For the purposes of sub-section (2) of section 139 , the class of companies shall mean the following classes of companies excluding one person companies an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidual auditor has been functioning as auditor in the same company [in the first AGM held after the commencement of provisions of section 139(2) ] Maximum number of consecutive years for which he may be appointed in the same company (including transitional period) Aggregate period which the auditor would complete in the same company in view of column I and II I II III 5 years (or more than 5 years) 3 years 8 years or more 4 years 3 years 7 years 3 years 3 years 6 years 2 years 3 years 5 years 1 year 4 years 5 years Note: 1. Individual auditor shall include other individuals or firms whose name or trade mark or brand is used by such individual, if any. 2. Consecutive years shall mean all the preceding financial years for which the individual auditor has been the auditor until there has been a break by five years or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Board. (3) The company shall hold the general meeting within sixty days of receipt of approval of the Central Government for passing the special resolution. 8. Resignation of auditor.- For the purposes of sub-section (2) of section 140 , when an auditor has resigned from the company, he shall file a statement in Form ADT-3. 9. Liability to devolve on concerned partners only.- In case of criminal liability of any audit firm, the liability other than fine, shall devolve only on the concerned partner or partners, who acted in a fraudulent manner or abetted or, as the case may be, colluded in any fraud. 10. Disqualifications of auditor.- (1) For the purpose of proviso to sub-clause (i) of clause (d) of sub-section (3) of section 141 , a relative of an auditor may hold securities in the company of face value not exceeding rupees one lakh: Provided that the condition under this sub-rule shall, wherever relevant, be also applicable in the case of a company not having share capital or other securities: Provided further that in the event of acquiring any security or interest by a relative, above the threshold prescribed, the corrective action to maintain the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purposes of sub-section (8) of section 143 , the duties and powers of the company s auditor with reference to the audit of the branch and the branch auditor, if any, shall be as contained in sub-sections (1) to (4) of section 143. (2) The branch auditor shall submit his report to the company s auditor. (3) The provisions of sub-section (12) of section 143 read with rule 12 hereunder regarding reporting of fraud by the auditor shall also extend to such branch auditor to the extent it relates to the concerned branch. 13. Reporting of frauds by auditor.- (1) For the purpose of sub-section (12) of section 143 , in case the auditor has sufficient reason to believe that an offence involving fraud, is being or has been committed against the company by officers or employees of the company, he shall report the matter to the Central Government immediately but not later than sixty days of his knowledge and after following the procedure indicated herein below: (i) auditor shall forward his report to the Board or the Audit Committee, as the case may be, immediately after he comes to knowledge of the fraud, seeking their reply or observations within forty-five days; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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