Govt clears air on CAG audit provision in new Companies Act

Aug 01 2014, 01:24 IST
Comments 0
The Act also says the first auditor for such companies would need to be appointed by the CAG within 60 days from the date of registration of the company. The Act also says the first auditor for such companies would need to be appointed by the CAG within 60 days from the date of registration of the company.
SummaryThe corporate affairs ministry said on Thursday that provisions regarding appointment...

The corporate affairs ministry said on Thursday that provisions regarding appointment of auditors by CAG for 'deemed government companies' would remain unchanged under the new Companies Act regime.

The issue has been clarified in the wake of doubts being being raised by various stakeholders with regard to the applicability of the provisions related to appointment of auditors by the CAG to 'deemed government companies', that is firms owned or controlled by two or more government entities.

In a general circular issued on Thursday, the corporate affairs ministry said that ďthe issue has been examined and it is clarified that the new Act does not alter the position with regard to audit of such deemed government companies through CAGĒ and, therefore, such firms would be subjected to the concerned provisions.

As per the relating provision in the new Companies Act, in case of a government company or any other company directly or indirectly owned or controlled by the Central or state government, the C&AG will appoint an auditor within 180 days from the commencement of a financial year.

The Act also says the first auditor for such companies would need to be appointed by the CAG within 60 days from the date of registration of the company. In case the Comptroller and Auditor-General of India does not appoint such an auditor within the said period, the company's board would have to appoint such an auditor within the next 30 days.

In its circular, the ministry also said that the documents like articles of association and shareholder agreements, envisaging control, would need to be taken into account to decide whether an individual company would be covered under these provisions.

Ads by Google

More from Economy

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...