The Hindu Business Line : Disqualification of directors: Format of auditor's certificate amended

The Council has now added the words "on the said date" in the first paragraph of the certificate (format of which was provided by ICAI under a guidance note) to make it clear to the readers that the "auditor's certificate is based on the situation existing only on the date of financial statement".

New Delhi , Feb. 16

THE auditing community seems to be playing it safe when it comes to the question of issuing a certificate on the disqualification of directors under certain provisions of the Companies Act.

The Institute of Chartered Accountants of India (ICAI) has amended the format of the auditor's certificate that is required to be issued on account of the rules that have been framed (by the Government) for disqualification of directors under Section 274(1)(g) of the Companies Act, 1956.

The Council has now added the words "on the said date" in the first paragraph of the Certificate (format of which was provided by ICAI under a guidance note) to make it clear to the readers that the "auditor's certificate is based on the situation existing only on the date of financial statement".

This would imply that the auditors signing such a certificate would not take responsibility for events occurring after the date of the financial statement.

The rules framed on director disqualification require the statutory auditor of the appointing company as well as the disqualifying company (under Section 227(3)(f)) to report to the shareholders of the company as to whether any director is disqualified from being appointed as director under Section 274(1)(g).

The statutory auditor is required to furnish a certificate each year as to whether on the basis of the examination of the books and records of the company any director of the company is disqualified for appointment as a director or not.

Further, responsibility has also been cast on the statutory auditors of the "disqualifying company" to report to the members of the company whether any directors have been disqualified during the year from being re-appointed as director, or being appointed as director in another company under Section 274(1)(g).

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