TMI BlogStatutory Auditors’ Responsibilities in relation to Fraud in a CompanyX X X X Extracts X X X X X X X X Extracts X X X X ..... (CA 2013) read with the relevant Rules and the applicable Standards on Auditing (SAs). 2 The CA 2013, the Companies (Auditor s Report) Order (CARO) and the Standards on Auditing (SAs) place mandatory reporting obligations on auditors to report fraud and/or suspected fraud to the Central Government and the Board/Audit Committee. 2.1 Section 143 (12) of CA 2013 and related Rules places certain reporting obligations on the auditor, in relation to frauds: 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 of fraud involving such amount or amounts as may be prescribed, is being or has been committed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 447 of CA 2013 is wide and states that, fraud in relation to affairs of a company or anybody corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss (emphasis supplied). 2.4 SA 240 [Standard on Auditing 240, The Auditor s Responsibilities Relating to Fraud in an Audit of Financial Statements (SA 240) ]-The Auditor s Responsibilities Relating to Fraud in an Audit of Financial Statements- elaborately dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he enquiry/proceedings under section 140(5) or even prior to that, there shall not be any termination of the proceedings under section 140(5) as observed and held by the High Court. At the cost of repetition, it is observed that in a given case, an auditor, who in fact has, directly or indirectly, acted in a fraudulent manner, to avoid any further consequence under the second proviso to section 140(5), resigns to avoid any consequence under the second proviso to section 140(5), it cannot be permitted. 14 Acting in a fraudulent manner, directly or indirectly, by an auditor is a very serious misconduct and therefore the necessary consequence of indulging into such fraudulent act shall follow. 4 In view of the foregoing, the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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