Summary
Highlights
The video introduces the topic of auditing government companies and other related companies, focusing on Chapters 7 and 8 of the Regulations for Audit and Accounts 2020. It highlights Section 19 of the DPC Act, which states that the CAG audits the accounts of government companies in accordance with the Companies Act 2013. Compliance with Indian Accounting Standards and Auditing Standards issued by the Central Government or ICAI is also emphasized.
When a new government company or other company is formed, the concerned ministry or department must inform the CAG in writing within one month. The company itself must also inform the CAG within the same period, providing details such as shareholding, management, and copies of its Articles of Association and Memorandum of Association. Similarly, if a government company is dissolved or ceases to be a government company, the CAG must be informed by the ministry/department and the company within one month.
As per Section 139(5) of the Companies Act 2013, statutory auditors for government companies are appointed by the CAG. The CAG appoints these auditors for one financial year through a selection process and can re-appoint them if their performance is satisfactory. The maximum total period of appointment for a statutory auditor is three financial years. The CAG can terminate an auditor's appointment prematurely for reasonable and sufficient grounds, after giving them an opportunity to provide an explanation.
If serious irregularities are found against a statutory auditor, the CAG appoints a committee to investigate. If the committee recommends, the CAG can debar the auditor from further appointments, again after giving them a chance to explain. In such cases, the CAG may also refer the matter to the Institute of Chartered Accountants of India (ICAI) for further action against the auditor.
Statutory auditors are responsible for forming and expressing an opinion on the annual accounts of government companies, while the company's management is responsible for preparing these accounts. The CAG has the power to issue directions, guidance, and instructions to statutory auditors on how to conduct audits. The CAG can also conduct supplementary audits and comments on the statutory auditor's report within 60 days of receiving it. Statutory auditors must submit their report to the CAG through the AG Audit office.
Statutory auditors are required to attend meetings if called by the CAG or Audit office. They must reply to comments on their report from the AG Audit office within three days and attend audit committee meetings. Auditors must maintain records of their work for five years and submit extracts of their working papers to the AG Audit office. Their report is submitted to the CAG via the AG Audit office.
The results of the audit of government companies can be included in the CAG's audit report. According to Section 19A of the DPC Act, the CAG's audit report concerning government companies is submitted to the concerned government (Central, State, or UT). This government then presents the report to the Parliament, State Legislature, or UT Legislature, depending on the jurisdiction.