The document outlines various auditing and accounting aspects of companies according to the Companies Act, including: 1) Auditors are appointed for a period of 5 years, except in specific cases like auditors appointed by CAG. Appointment must be ratified annually at the AGM. Auditors cannot be appointed for more than one 5-year term (individuals) or two 5-year terms (firms). 2) Companies must comply with auditor rotation within 3 years. Auditors can only be removed by special resolution with government approval before completing their term. Auditors are appointed based on audit committee recommendations. 3) Penalties are specified for companies, officers, and auditors if provisions are contraven

1. Auditing and Accounting Aspects

2. Appointment of Auditors will be for the period of five
years, except in following cases-
• Auditors appointed by Comptroller and Auditor General
of India
• First Auditor
• Auditors appointed by the Board of directors in the case of
casual vacancy
Appointment of auditors shall be ratified at each AGM

3. No listed company shall appoint or reappoint
• In case of Individuals, Auditors for the period more than
one term of five consecutive years
• In case of firm, Auditors for the period more than two
terms of five consecutive years
Members of company may resolve that in the firm
appointed by it, auditing partner and his team shall be
rotated at such intervals

4. Existing company shall comply with the rotational policy
within the 3 years from date of commencement of the act
If Auditor has not completed tenure of five years, auditor
can be removed from his office only by special resolution
and prior approval of the central government
Auditors shall be appointed after taking in account the
recommendation of audit committee

5. Limited liability partnership firm can be appointed as
auditor of the company
A person who is convicted by a court of an offence
involving fraud can not be appointed as an auditor of the
company for a period of 10 years from the date of such
conviction
Auditor shall not render directly or indirectly other
services like accounting and book keeping services,
internal audit, any other financial advisory or
management advisory

6. Auditor of a holding company shall also have right to
access to the records of all its subsidiary companies
Every auditor shall comply with auditing standards
If an auditor of company has reason to believe that an
offence involving fraud is being committed against the
company, he shall immediately report to the Central
government
Auditor shall compulsorily attend all general meetings
unless otherwise exempted by the company

7. If any provision stated above is contravened,
• Penalty to the company-
Fine from Rs 25000 upto Rs 5 lakhs
• Penalty to the officer of company-
Imprisonment upto 1 year or
Fine from Rs 10000 upto Rs 1 lakhs or both

8. • Penalty to the auditors-
Fine from Rs 1 lakhs upto Rs 25 lakhs and
Imprisonment upto 1 year
Refund the remuneration paid by the company
Pay damages to the company, statutory bodies, authorities
or any other person for loss arising due to incorrect or
misleading statements

9. If National Company Law Tribunal either suo motu or on
application to it by the central government or any other
person, satisfies that the auditor, whether directly or
indirectly, acted in fraudulent manner,
• The tribunal may direct to change the auditors
• The auditor shall not be eligible to appoint as auditor of
any company for the period of five years
• Imprisonment of minimum 3 months upto 10 years
• Fine of amount not less than amount of fraud upto 3 times
of amount of the fraud

10. Mandatory Internal Audit
• Internal Audit is mandatory for the prescribed companies
• Internal Auditor can be a chartered accountant or a cost
accountant or such other professionals
• Central government reserves right to make rules to
prescribe manner and intervals for internal audit.

11. Constitution of National Financial Reporting Authority
NFRA will have following powers
• To investigate misconduct by any member or firm of
chartered accountants
• Powers as vested with civil courts
• To debar member or firm of chartered accountant

12. Companies having subsidiary company shall prepare
consolidated financial statements including associate
company, joint ventures and any body corporate
Financial year shall end on 31st
March of every year
Secretarial audit is mandatory for every listed company

13. Following companies shall constitute CSR committee
• Net worth of rupees five hundred crore or more, or
• Turnover of rupees one thousand crore or more, or
• Net profit of rupees five crore or more
CSR committee shall formulate the CSR policy
Company shall spend at least 2% of average net profit of
last 3 years

14. At least one-third independent director is mandatory for
listed companies
At least one woman director is mandatory for prescribed
company
Appointment of key managerial personnel
One person company