The government is actively considering fixing a minimum threshold of the quantum of frauds/potential fraud at companies that will need to be mandatorily reported by the auditors concerned.
The ministry of corporate affairs has sought suggestions from the Institute of Chartered Accountants of India (ICAI), the apex body of auditors, Parliament was informed on Tuesday. Under the Companies Act, 2013, auditors have the responsibility of reporting frauds at entities being audited by them. The rules will now specify the thresholds for the same. ?ICAI has been asked to give its comments on the feasibility of having some criteria to determine the thresholds of the quantum of a fraud/suspected fraud for mandatory reporting to the government by the auditors,” Nirmala Sitharaman, the minister of state for corporate affairs, said in a written reply to the Rajya Sabha. She was responding to a query on whether the norms relating to communication of auditor?s report to government in cases of irregularities, embezzlement was under review.
About various concerns of the stakeholders with certain provisions of the new companies law, Sitharaman said that the ministry had ?issued suitable circulars, statutory orders and amendments in the rules to provide transitional time, remove doubts or practical difficulties?. She said amendments in Companies Act 2013 ?will be considered? if such measures ?prove inadequate?. Asked if independent directors will be held responsible for decisions taken by the company?s board, she said: ?Section 149(12) of the Act already grants protection to independent directors from prosecution in matters without their knowledge, consent, connivance or where they had acted diligently.?