Lok Sabha Question No. 53 (STARRED), answered on 2018-07-20
Subject: Opting out of Assignments by Auditors
Ministry: CORPORATE AFFAIRS
Asked by: ASHOK SHANKARRAO CHAVAN, KUNWAR HARIBANSH SINGH

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## MINISTRY OF CORPORATE AFFAIRS

## GOVERNMENT OF INDIA LOK SABHA

STARRED QUESTION NO. 53 ANSWERED ON FRIDAY, THE 20th JULY, 2018 [ASHADHA 29, 1940 (SAKA)]

## OPTING OUT OF ASSIGNMENTS BY AUDITORS

## QUESTION

## *53.  SHRI ASHOK SHANKARRAO CHAVAN: KUNWAR HARIBANSH SINGH:

Will the Minister of CORPORATE AFFAIRS कारपोरेट कार्य मं त्री

be pleased to state:

- (a) whether since January, 2018, close to three dozen auditors have opted  out  of  their  assignments  in  listed  companies  and  if  so,  the details thereof along with the names of the companies;
- (b) whether the Government has asked the companies the reasons for their departure and if so, the details thereof and the response of the companies thereto;
- (c)  whether  any  lapse/fraud  in  these  companies  has  come  to  the notice of the Government;
- (d) if so, the details thereof and the steps taken/being taken by the Government in this regard; and
- (e) the measures taken by the Government to strengthen the overall corporate governance standard in listed companies?

## ANSWER

THE MINISTER OF CORPORATE AFFAIRS       (SHRI PIYUSH GOYAL)

(a) to (e)  A statement is laid on the Table of the House.

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STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (e) OF THE STARRED  QUESTION  NO.53  FOR  ANSWER  IN  LOK  SABHA  ON 20.07.2018:

- (a)  &  (b):  Yes,  Madam.  Since  1.1.2018  to  17.7.2018,  auditors  have resigned  in  204  listed  companies  as  per  filings  on  MCA-21.  The details of the companies (region-wise) are annexed as Annexure-I. On resignation, the auditor has to file a return in e-form ADT-3 with the  concerned  Registrar  of  Companies  (ROC)  and  the  auditor  is required to furnish the reasons for his resignation in the said e-form ADT-3.  The  said  form  is  checked  before  taking  on  record.    The matter is taken up with the company/auditor if the reasons mentioned therein require such further inquiry.
- (c)& (d): No, Madam.
- (e):  The  Government  has  taken  following  measures  under  the provisions  of  the  Companies  Act,  2013  to  strengthen  the  overall Corporate Governance Standard:
- (i) Requirements  of  compliance  with  accounting  and  auditing standards on companies/their auditors under Section 129(1)/143(10) of the Act;
- (ii) Requirement  of  internal  audit  for  bigger  companies  under Section 138 of the Act;
- (iii)    Stringent  and  more  accountable  role  for  auditors  (including their  rotation  and  restriction  on  maximum  number  of  audit companies) under Section 139 and 141(3)(g) of the Act;
- (iv)   National  Company  Law  Tribunal  (the  Tribunal)  empowered  to direct  a  company  to  change  company's  auditors  in  case  the Tribunal  is  satisfied  that  the  auditor  acted  in  a  fraudulent manner under Section 140(5) of the Act;
- (v) More stringent provisions for independence and integrity of the auditor and for substantial penalty provided in case of defaults by auditor under Section 141/147 of the Act;
- (vi)   Auditor  not  to  perform  specified  non  audit  services  to  the audited company under Section 144 of the Act;
- (vii)  Auditors  (including  cost  auditor  and  secretarial  auditor)  to report  fraud  noticed  by  them  to  Central  Government  under Section 143(12) of the Act;
- (viii) Further chapter V of the Chartered Accountants Act, 1949, and First& Second Schedules thereof provide for legal framework for  the  disciplinary  action  for  misconduct  on  the  part  of Chartered Accountants.
- (ix)  National  Financial  Reporting  Authority  (NFRA)  to  oversee  the quality  of  service  of  the  professions  and  take  action  against misconduct in certain cases under Section 132 of the Act.
- (x)   The Board of Director of every listed company shall constitute an Audit Committee consisting of minimum of three Directors with  independent  Directors  forming  a  majority.  The  Audit Committee has to perform various duties including recommendation for appointment of Auditors, reviewing Auditor  independence  and  performance  under  Section  177  of the Act.

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## ROC-WISE ADT-3 OF LISTED COMPANIES FILED W.E.F 01.01.2018 TO 17.07.2018:

| REGISTRAR OF COMPANIES (ROC)   |   NO. OF LISTED COMPANIES |
|--------------------------------|---------------------------|
| Ahmedabad                      |                        30 |
| Bangalore                      |                         2 |
| Chandigarh                     |                         8 |
| Chennai                        |                         6 |
| Chhattisgarh                   |                         2 |
| Coimbatore                     |                         4 |
| Delhi                          |                        35 |
| Goa                            |                         2 |
| Gwalior                        |                         3 |
| Hyderabad                      |                         9 |
| Jaipur                         |                        10 |
| Kolkata                        |                        35 |
| Mumbai                         |                        53 |
| Pune                           |                         3 |
| Shillong                       |                         2 |
| Grand Total                    |                       204 |

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