Compliances

Highlights of Companies (Audit and Auditors) Rules, 2014

As per Audit and auditors rule 2014, the Appointment of the statutory auditor has been defined under the revised rule.

What are Eligibility, qualification, and disqualification of auditors?

1. A qualified person is to be appointed as the auditor of the Company only if he is a Chartered Accountant and in practice with ICAI^[1].
2. A firm where a majority of the partners who are practicing in India are qualified for the appointment as above-mentioned then it may be appointed by firm name.
3. Where the firm together with a Limited Liability Partnership (LLP) is appointed as the auditor of a company, only partners who are qualified Chartered Accountants are authorized to act & sign on behalf of a firm.
4. A body corporate except LLP can be an officer or employee of the company. A person who is a partner or the one who is in employment, of an officer or employee of the Company. A person who is a relative or partner is holding any security of or in the interest in Company or its subsidiary or it is its holding or associate company or the subsidiary of such a holding company, further as long as the relative may hold security or interest in a company of face value, not above.1000 or such other sum as may be agreed.
5. It is indebted to a company or its subsidiary or its holding or its associate company or a subsidiary of such a holding company is in addition to such an amount as may be given.
6. He has given a guarantee or has provided any kind of security with regard to the debt of its holding or subsidiary & its associate Company of such an amount as may be prescribed.
7. A person or a firm who is whether directly or indirectly have a business relationship with a company or its subsidiary or with also its holding or the associate company or the subsidiary of such a holding company or associate company of such nature as may be agreed upon.
8. Where a person is appointed as an auditor of the company sustains any of disqualification mentioned subsequently of his appointment then he shall vacate his office as an auditor & such vacation will be deemed to be a casual vacancy.

Companies (Audit and Auditors) Rules, 2014

Companies (Audit and Auditors) Rules, 2014 have presented a unique concept for the rotation of auditors in the listed companies & in such class of companies as may be agreed on. In the implementation of the powers conferred on (C.G) Central Government, the Central Government in the Ministry of Corporate Affairs has prescribed in Rules, 2014 the concept of rotation of auditors will also apply to follow classes of companies not including1 person companies & small companies:

1. All the unlisted public companies which are having paid-up share capital of Rs.10 crore or more
2. Every private limited company who are having paid-up share capital of exceeding Rs.20 crore or more
3. All public and private limited companies having a paid-up share capital of minimum the threshold limit set out above but having public borrowings from financial institutions, banks or public deposits of Rs. 50 crore or more.

It should be noted that the limit of Rs.50 crore on public borrowings would apply to the aggregate borrowing from financial institutions, banks, and public deposits and not to borrowings of Rs.50,00,00,000 prescribed, individually from every of categories listed.