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TMI BlogChapter X - The Companies (Audit and Auditors) Rules, 2014.X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) In these rules, unless the context otherwise requires,- (a) "Act" means the Companies Act, 2013 (18 of 2013); (b) "Annexure" means the Annexure enclosed to these rules; (c) "fees" means fees specified in the Companies (Registration Offices and Fees) Rules, 2014. (d) "Form" or "e-Form" means a form set forth under these rules which shall be used for the matter to which it relates; (e) "section" means section of the Act. (2) The words and expressions used in these rules but not defined and defined in the Act or in the Companies (Specification of definitions details) Rules, 2014 shall have the meanings respectively assigned to them in the Act or in the said rules. 3. Manner and procedure of selection and appointment of auditors.- (1) In case of a company that is required to constitute an Audit Committee under section 177, the committee, and, in cases where such a committee is not required to be constituted, the Board, shall take into consideration the qualifications and experience of the individual or the firm proposed to be considered for appointment as auditor and whether such qualifications and experience are commensurate with the size and requirements of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this behalf under the Act. 4. Conditions for appointment and notice to Registrar.- (1) The auditor appointed under rule 3 shall submit a certificate that - (a) the individual or the firm, as the case may be, is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder; (b) the proposed appointment is as per the term provided under the Act; (c) the proposed appointment is within the limits laid down by or under the authority of the Act; (d) the list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct. (2) The notice to Registrar about appointment of auditor under fourth proviso to sub-section (1) of section 139 shall be in Form ADT-1. 5. Class of Companies.- For the purposes of sub-section (2) of section 139, the class of companies shall mean the following classes of companies excluding one person companies and small companies:- (a) all unlisted public companies having paid up share capital of rupees ten crore or more; (b) all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsecutive years for which he may be appointed in the same company (including transitional period) Aggregate period which the auditor would complete in the same company in view of column I and II I II III 5 years (or more than 5 years) 3 years 8 years or more 4 years 3 years 7 years 3 years 3 years 6 years 2 years 3 years 5 years 1 year 4 years 5 years Note: 1. Individual auditor shall include other individuals or firms whose name or trade mark or brand is used by such individual, if any. 2. Consecutive years shall mean all the preceding financial years for which the individual auditor has been the auditor until there has been a break by five years or more. Illustration explaining rotation in case of audit firm Illustration 2:- Number of consecutive years for which an audit firm has been functioning as auditor in the same company [in the first AGM held after the commencement of provisions of section 139(2)] Maximum number of consecutive years for which the firm may be appointed in the same company (including transitional period) Aggregate period which the firm would complete in the same company in view of column I and II I II III 10 years (or more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to maintain the limits as specified above shall be taken by the auditor within sixty days of such acquisition or interest. (2) For the purpose of sub-clause (ii) of clause (d) of sub-section (3) of section 141, a person who or whose relative or partner is indebted to the company or its subsidiary or its holding or associate company or a subsidiary of such holding company, in excess of rupees five lakh shall not be eligible for appointment. (3) For the purpose of sub-clause (iii) of clause (d) of sub-section (3) of section 141, a person who or whose relative or partner has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of one lakh rupees shall not be eligible for appointment. (4) For the purpose of clause (e) of sub-section (3) of section 141, the term "business relationship" shall be construed as any transaction entered into for a commercial purpose, except - (i) commercial transactions which are in the nature of professional services permitted to be rendered by an auditor or audit firm under the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply or observations the auditor shall forward his report and the reply or observations of the Board or the Audit Committee alongwith his comments (on such reply or observations of the Board or the Audit Committee) to the Central Government within fifteen days of receipt of such reply or observations; (iii) in case the auditor fails to get any reply or observations from the Board or the Audit Committee within the stipulated period of forty-five days, he shall forward his report to the Central Government alongwith a note containing the details of his report that was earlier forwarded to the Board or the Audit Committee for which he failed to receive any reply or observations within the stipulated time. (2) The report shall be sent to the Secretary, Ministry of Corporate Affairs in a sealed cover by Registered Post with Acknowledgement Due or by Speed post followed by an e-mail in confirmation of the same. (3) The report shall be on the letter-head of the auditor containing postal address, e-mail address and contact number and be signed by the auditor with his seal and shall indicate his Membership Number. (4) The report shall be in the form of a statement as specified in Form ..... X X X X Extracts X X X X X X X X Extracts X X X X
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