Auditor's Reporting of Fraud Floored at Rs 1 Crore or More - Companies (Audit and Auditors) Amendment Rules, 2015
C.S.R. (E). – In exercise of the powers conferred by sub-section (12) of section 14 read with sub-section (1) of section 469 of the Companies Act’ 2013 (18 of2013)’ the Central Government hereby makes the following rules further to amend the Companies (Audit and Auditors) Rules, 2014 namely:-
1. (1) These rules may be called the Companies (Audit and Auditors) Amendment Rules, 2015.
(2) They shall come into force on the date of their publication in the Official Gazette
2. In the Companies (Audit and Auditors)
Rules, 2014 (hereinafter referred to as the principal rules),- (i) For
rule 13, the following rule shall be substituted’ namely:-
“13. Reporting of frauds by auditor and other matters:
(1) lf an auditor of a company, in the course of the performance of his
duties as statutory auditor, has reason to believe that an offence of
fraud, which involves or is expected to involve individually an amount
of rupees one crore or above, is being or has been committed against the
company by its officers or employees, the auditor shall report the
matter to the Central Government.
(2) The auditor shall report the matter to the Central Government as under:-
(a) the auditor
shall report the matter to the Board or the Audit Committee, as the case
may be, immediately but not later than two days of his knowledge of the
fraud seeking their reply or observations within forty-five days;
(b) on receipt of
such reply or observations, the auditor shall forward his report and the
reply or observations of the Board or the Audit Committee along with
his comments (on such reply or observations of the Board or the Audit
Committee) to the Central Government within fifteen days from the date
of receipt of such reply or observations;
(c) 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 lo the Central Government along with a note
containing the details of his report that was earlier forwarded to the
Board or the Audit Committee for which he has not received any reply or
observations;
(d) 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;
(e) the report shall
be on the letter-head of the auditor containing postal address, email
address and contact telephone number or mobile number and be signed by
the auditor with his seal and shall indicate his Membership Number; and
(f) the report shall be in the form of a statement as specified in Form ADT-4
(3) In case of a fraud involving lesser
than the amount specified in sub-rule (1), the auditor shall report the
matter to Audit Committee constituted under section 177 or to the Board
immediately but not later than two days of his knowledge of the fraud
and he shall report the matter specifying the following:-
(a) Nature of Fraud with description;
(b) Approximate amount involved: and
(c) Parties involved.
(4) The following details of each of the
fraud reported to the Audit Committee or the Board under sub-rule (3)
during the year shall be disclosed in the Board’s Report:-
(a) Nature of Fraud with description;
(b) Approximate Amount involved;
(c) Parties involved, if remedial action not taken: and
(d) Remedial actions taken.
(5) The provision of this rule shall
also apply, mutatis mutandis, to a Cost Auditor and a Secretarial
Auditor during the performance of his duties under section 148 and
section 204 respectively.”;
(ii) In the principal rules, after rule 14 and before FORM NO. ADT-1, insert the word “Annexure”;
(iii) In the principal rules, in Forrn No. ADT-4,-
(A) in line 3, for
the word, figures and brackets “rule 13(4)” the word, figures, letter
and brackets “rule 13(2)(f)” shall be substituted; and
(B) in line 25, in
item No. (10), for the word, figures and brackets, rule 13(1),’, the
word, figures, letter and brackets “rule 13(2)(a),’shall be substituted.
[F. No. 1/33/2013-CL-V]
(Amardeep Singh Bhatia)
Joint Secretary to the Government of India
Joint Secretary to the Government of India
Government of India | Ministry of Corporate Affairs | Notification | New Delhi, dated the 14th December, 2015
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