Government move to limit number of audits 'not well justified': ICAI
April, 21st 2014
Describing the move to cap the number of audits as "not well justified", the apex body of chartered accountants ICAI has asked the Corporate Affairs Ministry to exempt private limited and small companies from the ambit of such a restriction.
The Institute of Chartered Accountants of India (ICAI) has said such a restriction would cause enormous difficulties to auditors and corporates.
Under the new Companies Act, 2013, whose most provisions came into force from April 1, an auditor can now audit not more than 20 companies at any given time.
In a communication to Corporate Affairs Minister Sachin Pilot, ICAI has requested the government to exclude private limited, small and one person companies from the purview of audit cap rule.
"We believe that the above restrictions are unintended, causing enormous difficulties and undue hardship to corporates and auditors.
"The rationale for inclusion of the restriction in number of audit to private limited companies also is not well justified and was not discussed with the profession or exposed to the public," it said in a communication dated April 15.
Earlier this month, ICAI president K Raghu had said that limit on audits was likely to create practical difficulties for the profession.
According to the latest communication, the new provision in the law extending the ceiling on number of audits to private limited companies is contrary to those that were in Companies Act, 1956.
"Considering the increase in the number of private limited companies, we sincerely believe that the provision contained in the Companies Act, 2013 as enumerated above relating to cap of number of audits of 20 will create genuine difficulties to the corporates and auditors," it noted.