Lok Sabha Question No. 2434 (UNSTARRED), answered on 2021-12-13
Subject: Registered Auditors
Ministry: CORPORATE AFFAIRS
Asked by: Manoj Rajoria

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 2434

ANSWERED ON MONDAY, THE 13 TH  DECEMBER, 2021/

AGRAHAYANA 22, 1943 (SAKA)

## REGISTERED AUDITORS QUESTION

†2434. DR. MANOJ RAJORIA:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a)  the  details  of  the  number  of  auditors  currently  registered/working  in  the country, State-wise;
- (b) the step taken by the Government to ensure the fair and transparent work by the auditors; and
- (c) the number of auditors against whom disciplinary action has been initiated for their involvement in corrupt practices during the last five year?

## ANSWER

Minister  of  State  (Independent  Charge)  of  the  Ministry  of  Statistics  and  Programme Implementation; Minister of State (Independent Charge) of the Ministry of Planning and Minister of State in the Ministry of Corporate Affairs.

(Rao Inderjit Singh)

- (a): The details of the number of auditors currently registered/working in the country, State-wise are attached as an Annexure.
- (b): Section  141  of  the  Companies  Act  (the  Act)  provides  detailed  eligibility, qualifications and disqualifications of the Auditors. Under Section 142 of the Act, the remuneration payable to an auditor is fixed  in  a  general  meeting  or  in  a  manner  as determined in a general meeting. Under Section 143 of the Act, powers and duties of auditors have been provided which, inter-alia, include the right of access at all times to the books of accounts and vouchers of the company. The auditors are also required to comply with the auditing standards and in certain classes of companies, the auditor report should also contain a statement in accordance with Companies Auditor Report Order (CARO) Rules, 2015/2020.  Under Section 144 of the Act, the auditor is debarred for rendering certain non-audit services directly or indirectly to the company, its holding company  or  its  subsidiary  company.    In  addition,  the  Act  also  has  provisions  for mandatory rotation of auditors and there is also an overall limit on the number of audits that auditor can undertake for certain classes of companies. The auditor is also duty bound to report fraud committed in the company to the Central Government in case the amount of such fraud is Rs. 1 crore or more. In other cases, the reporting is required to be done to the audit committee or the board of the concerned company as the case may be.  In companies where Audit Committee is to be constituted, the appointment of an auditor is required to be approved by such Committee.

Further,  National  Financial  Reporting  Authority  (NFRA)  was  constituted  on  1st October, 2018 by the Ministry of Corporate Affairs under sub-section (1) of Section 132 of  the  Companies  Act,  2013.  The  objective  of  NFRA  is  to  set  up  a  separate  and independent  regulatory  body  to  assist  in  the  framing  and  enforcement  of  standards relating to accounting and auditing and for improving investor and public confidence in the financial reporting of an entity.

The Central Government by the virtue of powers vested under Section 28A of the Chartered Accountants Act, 1949 has constituted a Quality Review Board consisting of a Chairperson and ten other members  to make recommendations to the Council of the Institute (ICAI)  with regard to the quality of services provided by the members of the Institute;  review  the  quality  of  services  provided  by  the  members  of  the  Institute including audit services; and guide the members to improve the quality of services and adherence to the various statutory and other regulatory requirements.

(c)  As  per  information  provided  by  ICAI,  2434  cases  have  been  initiated  against Chartered Accountants by the Disciplinary Directorate during the last five years (upto 30 th  November, 2021).  Further, as per information provided by NFRA, it has issued 16 show  cause  notices  to  the  Chartered  Accountants  and  auditors  for  charges  of professional  misconduct  and  disciplinary  action  /orders  in  respect  of  professional misconduct committed by three Chartered Accountants in respect of Statutory Audit of a company.

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