CA body U-turn on circular

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The ICAI, the apex body of chartered accountants, has withdrawn a circular on the rotation of auditors in companies following a directive of the ministry of corporate affairs. The ministry pointed out that, under the Companies Act, the issue of such notifications was in its domain.

“The corporate laws & corporate governance committee had issued the announcement regarding clarification on the applicability of rotation principles in a company under Section 139 of the Companies Act 2013 where the company ceases to fall under the ambit of rotation principles in subsequent years on January 29, 2019,” the Institute of Chartered Accountants of India (ICAI) noted.

ICAI president Prafull Premsukh Chhajed said, “There were lots of query on the rotation of auditors. So, we issued the clarification. However, the ministry said it would answer and give the clarification to the members. So, we withdrew the earlier clarification as it is always better if clarity on issues comes from the government.” Under the Act, certain class of companies are required to rotate their auditors and there is also a cooling off period to be followed by the auditors.

While asking the ICAI to withdraw the clarification it had issued, the corporate affairs ministry said in a letter to the apex body, “It is stated that the issuance of any clarification on different provisions of the Companies Act falls in the domain of this ministry and the ICAI is neither empowered nor competent to issue such a clarification and especially so without the prior consultation with this ministry.”

Noted chartered accountant Bimal Jain explained that there was no change in the provision of rotations. “What the ministry has said is that it has asked the ICAI to withdraw its clarification as the ministry would issue the necessary clarification,” Jain added.

An official said the ICAI announcement could have resulted in companies removing or re-appointing an auditor just on the basis of the non-applicability of the rotation norms.

Read More at: https://www.telegraphindia.com/business/ca-body-u-turn-on-circular/cid/1684717

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