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In a notification released on the 31st of March, 2014 the Ministry of Corporate Affairs released a notification with regards to the Appointment of Auditors and Auditing Procedures along with reporting of fraud in companies. This set of rules has been conveniently named The Companies(Audit and Auditors) Rules. A statutory audit has now become a part and parcel in governance as well as smooth operations of an organization.
The companies act and set of rules derived from them have brought about a tremendous revolution in conducting the audit of a company.
There are two specifications of who can be classified as a legitimate auditor for a company/organization and they are as follows:
The rules under the act specify a unique concept of rotation of auditors. This means no auditor/audit firm can have two continuous tenures. The revolving door policy of Auditors accomplishes the following tasks.
Many companies are often reluctant to change their auditors. This policy helps eradicate that trend
The following classes of companies have to comply with the rules appoint a new auditor after every tenure.
On the 7th of May, The Ministry Made A second amendment to the rules introducing minor changes to the law.
In a notification released on the 7th of May, 2018 the MCA made sweeping amendments to streamline the audit process and simplify auditor requirements for companies. Following are the amendments made to the rule
You can refer the official notification released by the Ministry of Corporate Affairs.
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