The apex body of chartered accountants, ICAI, on Friday withdrew an announcement regarding applicability of rotation of auditors at companies, following a directive from the corporate affairs ministry.
The apex body of chartered accountants, ICAI, on Friday withdrew an announcement regarding applicability of rotation of auditors at companies, following a directive from the corporate affairs ministry. In a rare instance, the ministry told the Institute of Chartered Accountants of India (ICAI) to “immediately withdraw” the announcement and also provide reasons for making such an announcement, according to a letter.
On January 29, the ICAI issued a clarification on applicability of rotation of auditors under the Companies Act, 2013.
Under the Act, implemented by the ministry, certain class of companies are required to rotate their auditors and there is also a cooling off period to be followed by auditors.
In a communication on Friday, the ICAI said the announcement regarding clarification on applicability of rotation of auditors issued on January 29 has been withdrawn. “The Corporate Laws & Corporate Governance Committee had issued the announcement regarding clarification on the applicability of rotation principles on a company as per Section 139 of the Companies Act 2013 where the company ceases to fall under the ambit of rotation principles in subsequent years on January 29, 2019,” it noted.
The move came after a letter from the ministry asked the ICAI to withdraw the announcement.
It is stated the issuance of any clarification on different provisions of the Companies Act falls in the domain of this ministry and the ICAI is neither empowered nor competent to issue such a clarification and especially so without prior consultation with this ministry. The ministry also asked the ICAI to intimate the “reasons for issuing such an announcement without any authority and without the specific approval of this ministry”.