CA Amresh Vashisht, Meerut

CA AMRESH VASHISHTThe comptroller and auditor general of India office have recently invited applications from the Chartered accountants Firms/ LLP for the year 2015-16. The online application format shall be available from 1st January 2016 to 15th February 2016; the firms/LLPs can apply/update the data showing the status of their firms as on 1st January 2016.The empanelled firms may get the audits for the year 31st March 2017. After filling/updating the data, It is required to generate an online acknowledgement letter for the year, followed by submitting the hard copies of the relevant documents in support along with a print out of the acknowledgement letter generated online. It is not necessary that all empanelled firms are allotted PSU audits as the allotments are provided on the basis of ranking/points i.e., merit of the firms.

RANKING POINTS

Appointments are generally made based on the ranking points of the firm. The top most ranking firms get the audit based on the geographical presence preferably from local limits. There is a set pattern and ranking points can be seen at your dedicated page at the site. The said information is followed by Empanelment Status, Audit Allotment Status, previous allotments and eligibility for major audit if eligible. There is a transparent mechanism in work and everything is displayed on site.

Experience (in Yrs) : [0.5pt for every year- Maximum 15 pts] :
Full time FCA Partners : [5pt each for first 5 partners and 2.5pt each for rest of the partners] :
FCA Partners above 25 yrs : [5pt each partner] :
Below 25 yrs and above 20 yrs : [4pt each partner] :
Below 20 yrs and above 15 yrs : [3pt each partner] :
Below 15 yrs and above 10 yrs : [2pt each partner] :
Below 10 yrs and above 5 yrs : [1pt each partner] :
Full time ACA Partners : [3pt each for first 5 partners (including FCA partners) and 1.5pt each for rest of the partners] :
ACA Partners above 25 yrs : [5pt each partner] :
Below 25 yrs and above 20 yrs : [4pt each partner] :
Below 20 yrs and above 15 yrs : [3pt each partner] :
Below 15 yrs and above 10 yrs : [2pt each partner] :
Below 10 yrs and above 5 yrs : [1pt each partner] :
Full Time CA Employees : [1pt for each CA Employee (Maximum 20 points)] :
CISA/ISA Qualified Partners : [2 pt for each partner – maximum 6 pts] :
CISA/ISA Qualified Employees : [1pt each Employee – maximum 3 pts] :
Total :

 POLICY OF EMPANELMENT OF CA FIRMS AND SELECTION OF AUDITORS OF PSUS
Chartered Accountant firms in India with at least one full time [1] FCA (Partner/Sole Proprietor) can apply for empanelment with this office for allotment of audit of Public Sector Undertakings. The criteria for empanelment and selection of statutory auditors have been arrived at after due consultation with the Institute of Chartered Accountants of India.

Selection of CA firms for appointment as statutory auditors of psus whose audit fees are up to rs 1.50 lakh

The selection is made by correlating the point score earned by each firm of Chartered Accountants towards empanelment with the size of the audit fee. The point score[2] is based upon the experience of the firm, number of partners and their association [3] with the firm, number of Chartered Accountant employees, as detailed below:

Experience of the firm 0.5 point for every calendar year -Maximum 15.

(Counted from the date of constitution of the firm with one full time FCA or date of joining of the firm by the existing partner having the longest association with the firm whichever is later.)

Full Time FCA Partners 5 points each for first 5 partners and 2.5 points each from 6th partner onwards.
Full Time ACA Partners 3 points each for first 5 partners (including FCA partners) and 1.5 points each from 6th partner onwards.
Points for long association with the same firm 5 points for each partner above 25 years.
4 points for each partner above 20 years.
3 points for each partner above 15 years.
2 points for each partner above 10 years.
1 point for each partner below 10 Years but above 5 Years.
Full Time CA Employees 1 point each for first 20 C.A Employees-Maximum 20 points
CISA/ISA Qualified Partners 2 points each for three partners. -maximum 6 points
CISA/ISA Qualified Employees 1 point each – Maximum 3 points for 3 employees.

Selection of CA firms for appointment as statutory auditors of psus where audit fee is above rs 1.50 lakh (major audits)

(a) Criteria for short-listing eligible firms of CAs for allotment of Major Audits are as under:

(i) The firm should have at least 6 CAs (out of which 5 should be full time partners and one could be a full time paid CA employee), which is indicative of capacity to handle big audits.

(ii) At least one partner should have an association of 10 years or more with the firm and at least 3 partners of the firm should have an association of 5 years or more with the firm and the remaining two should have an association of one year or more with the firm, to demonstrate stability over time.

(iii) The firm itself should have been in existence for 10 years or more, to prove that it is a well established firm.

(b) Allotment of major audits is based not only on the size of the firm considering the number of partners, and their association with the firm, number of Chartered Accountant employees, and the Zone in which the firms’ head office is located but also on the basis of factors such as sectoral experience, service tax paid by the firm on assurance services, capability of handling big audits, past performance, eligibility of the firm to conduct a particular audit, location of the firm’s branch offices etc.

[1] Full time partner does not include

A person who is

(a) a partner in other firms

(b) Employed full time/part time elsewhere, practicing in their own name or engaged in practice otherwise or engaged in other activity which would be deemed to be in practice under Section 2(2) of the Chartered Accountants Act, 1949.

(c) i) Partners whose total compensation@ from the firm is below the following limit:

Head office of the firms located in Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad:

ACA partner Rs. 1.80 lakh in a year (Rs. 15000/- per month)

FCA partner Rs. 3.00 lakh in a year (Rs. 25000/- per month)

Head office of the firms located other Places:

ACA partner Rs. 1.20 lakh in a year (Rs. 10000/- per month)

FCA partner Rs. 1.80 lakh in a year (Rs. 15000/- per month)

(c) ii) A partner whose total compensation@ from the firm is less than:

Firms having more than 14 partners 1%

Firms having 10 to 14 partners 3%

Firms having 5 to 9 partners 5%

Firms having less than 5 partners 8%

@Total compensation = Sum total of share of profit, remuneration and interest on capital.

[2] All members (sole proprietors/partners/ CA employees) will get points if they were exclusively associated with the firm throughout the calendar year immediately preceding the year of empanelment.

[3] In case of merger, the partners of the merging firms will be assigned points after one year of merger and points for partner’s association to be given after five years from the date of merger.

CONDITIONS FOR THE AUDITORS

1. The Auditors may please intimate their acceptance as auditors of the Company within 3 weeks of receipt of this appointment letter (i) to the Company (ii) to this Office (iii) to the concerned MsAB/PAsG/AsG entrusted with the Supplementary Audit of the Company. If, for any reason the Auditors are not in a position to accept the appointment, they may intimate all the above-mentioned offices immediately along with the reasons for their decision.

2. The appointment / re-appointment of auditors is subject to their performance in the previous years’ audit being adjudged as satisfactory by the DG/PAG/AG /MAB concerned.

3. The appointment/re-appointment of auditors is subject to the Auditors making the following declarations/undertakings:

(i) That the firm/LLP is not disqualified under section 141 of the Companies Act, 2013

(ii) That no unreasonable TA/DA, out of pocket expenses will be claimed from the company. In cases where audits are allotted to the Branch office of the CA Firm no TA/DA should be claimed by the CA firm from the company for the audit of the Company/Units located at the same station of the branch.

(iii) That during the year of audit, and for one year after (to be counted from the date of conclusion of the relevant Annual General Meeting of the Company) the Firm/LLP ceases to be Auditor, no assignment for internal audit or consultancy or other services i.e. accounting and book keeping services, design and implementation of any financial information system, actuarial services, investment advisory services, investment banking services, rendering of outsourced financial services, management services etc. to the company or its holding company or partly owned subsidiaries of the Company (irrespective of the shareholding) or joint ventures of the Company whether under production sharing contract or otherwise will be accepted directly or indirectly as per explanation given under section 144 of the Companies Act, 2013 by the firm/LLP. Non-audit assignments that involve performing management functions or making management decisions and audit of annual accounts of subsidiary companies (irrespective of the shareholding)/Joint Ventures/Associates are also prohibited during the year of audit and for one year after the firm/LLP ceases to be auditor. This condition would not apply to assignments for the tax audit under Income Tax Act, VAT audit required under various State Legislations, review of Quarterly/half yearly accounts as per SEBI guidelines and other statutory certificates related to the audit assignment.

(iv) That no partner/chartered accountant employee of the firm of auditors/LLPs has been held guilty of professional misconduct by the Institute of Chartered Accountants of India during last year (in case any partner of the firm/LLP has been held guilty of professional misconduct by the Institute of Chartered Accountant of India, please furnish details thereof).

(v) The audit would not be done by a person (i) who is neither a partner nor an employee of the CA firm/LLP to which the audit has been allotted; (ii) who was earlier associated with the audit of the said PSU as a partner/employee of the retiring auditor.

(vi) No partner of the Chartered Accountant firm/LLP would hold post of Director (except in the case of financial companies) or undertake audit or any other job/assignment of any Private organization/ Company which is in the same line of business or industry as that of the PSU.

3(a) The auditors may start the audit of the Company immediately on receipt of the accounts of the Company. However, they should certify the accounts for the year only after the audited accounts for the previous year has been laid before the AGM for their consideration. In case audited accounts of the previous years has been considered but finally not adopted by the shareholders, the auditor can certify the accounts of the succeeding year indicating the fact of the non-adoption of the previous years accounts in their report.

3(b) The time schedule for conducting the audit may be drawn up with scheduling of audit i.e indicating the period of audit of different departments/ units of the PSU and also the name of personnel & their qualification who will be deployed for audit of each unit. A copy of the time schedule so fixed may be sent to the concerned MAB/ AG so that they may also draw their time schedule for supplementary audit.

3(c) The Auditor must complete the audit of the units/branches allotted to them within the time schedule stipulated by the management so that the statutory time schedule for placing the accounts in the AGM could be adhered to.

4. Record of audit work done in the form of working papers should be retained with sufficient information so as to support the auditors’ significant conclusions and judgments.

5. The Auditors shall have to comply with the directions issued by this office under 143(5) of the Companies Act, 2013. The remuneration is inclusive of the fee on account of the additional work involved in this regard. Directions under section 143(5) is available at this office’s official website i.e. www.saiindia.gov.in (Chartered Accountants Corner)

6. Statutory auditors of the companies who have adopted SAP should deploy at least one partner/employee having ISA/CISA qualification to conduct the audit.

7. The Company/Auditors will have to comply with the other provisions of the Companies Act, 2013 as may be required, which are not specifically covered above.

GENERAL INSTRUCTIONS TO FILL APPLICATION FORM

♣ Chartered Accountant firms (firm) and Limited Liability Partnership firm (LLP) in the country with at least one full time FCA (Partner/Sole Proprietor) as on 1st January 2015 can apply for empanelment with the office of the CAG of India for allotment of audit of Public Sector Undertakings/Statutory Corporations for the year 2015-2016.

♣ The firms who intend to be empanelled with this office need to submit their application online from 1st January to 15th February 2015 on the website www.saiindia.gov.in. It is advised to submit the application well in advance to avoid last minute rush.

♣ The information to be given in the application should be the position as on
1st January 2015.
Firms that are already empanelled with the CAG’s office need only to modify the information that is already available in the application format for changes if any, reflecting the status of such firms as on 1st January 2015.

Firms that are seeking empanelment for the first time should provide information as on 1st January 2015.

The information filed online in the application can be edited/modified any number of times till last date of submission.

Please fill up e-mail ids and mobile numbers correctly as userid/password will be communicated through these modes.

All applicant firms will be given unique online acknowledgement number for the year 2015-16 and only firms that have generated the online acknowledgement number for the year 2015-16 will be considered for empanelment.

♣  The online data submitted by the CA firms should match with the updated data of the firm available with the Institute of Chartered Accountants of India showing the position as on 1st January 2015. It may however be noted that any changes in data occurring after the cut-off date of 15th February 2015 that lead to reduction in the rank of the applicant firm shall be taken into account.

♣  The firms who have submitted the online application form are required to furnish the following documents, which should reach this office by 15th March 2015.

(i) Online acknowledgement letter for the year 2015-16 generated at the time of filing online application.

(ii) Statement I: Undertaking signed by the sole proprietors/partners of the firm/LLP as per format.

(iii) Statement II: Signature of CA employees of the firm/LLP.

(iv) Copy of the Income Tax return of the firm along with computation for the assessment year 2014-15 including distribution of income to partners.

(v) Income tax return for the assessment year 2014-15 of those CA employees who have joined as partners in the firm after 1st April 2013.

(vi) Copy of the annual accounts of the firm for the financial year 2013-14 along with schedules indicating the distribution of income among the partners.

(vii) Copy of the Service tax return filed by the firm for the year 2013-2014. In case numbers of returns are more than two, summary sheet may also be attached.

(viii) In case of CISA qualified members, copy of the final CISA certificate granted by the “Information Systems Audit and Control Association” after successfully meeting all requirements.

(ix) Duly filled up check list of the documents as per format. (To be placed on the top).

(x) Self addressed acknowledgement form for receipt of documents as per format.

♣  The above documents should be addressed to:

Director General (Commercial)-I,

Office of the Comptroller & Auditor General of India,

10, Bahadur Shah Zafar Marg,

New Delhi-110124.

♣  On the top of the envelope containing the documents, the following should be stated:

“Application for empanelment as Auditors of Public Sector Undertakings”

♣  The documents should be properly tagged and page numbered. This office owns no responsibility for loss of any documents, which are not properly tagged or sent subsequently in piecemeal.

♣  Only applications complete in all respects will be considered for empanelment. Incomplete application/documents received after the prescribed last date will not be entertained. Discrepancy (ies),if any, will not be intimated.

♣  A provisional panel will be available on the website during last week of April 2015 indicating the position of empanelment of the firm. Representation, if any, for clerical mistake in the online data only will be accepted upto 5th May 2015. The representations will be considered on merit on case to case basis. No representation of any kind will be entertained after 5th May 2015.

♣  The CAG reserves the right to call for additional information.

The decision of the Office of the CAG of India in this respect will be final.

The information submitted by the applicant firms is subject to verification with the details to be provided by the Institute of Chartered Accountants of India and any other organization(s) as may be required. If any of the information so furnished is later found to be not correct or false or there has been suppression of material information, the firm would stand disqualified from empanelment/allotment of audit for 3 to 5 years and might also be liable for disciplinary action under the Chartered Accountants Act, 1949 and the regulations framed there-under.

♣  This office reserves the right to inspect the offices of the Chartered Accountant firms empanelled with this office to verify the correctness of the information furnished in the application for empanelment.

♣  This office reserves the right to take necessary action in case the firm refuses to take up the audit assignment without valid reason.

(About the Author– Author was Member of ICAI- Capacity Building Committee 2010-11 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email amresh_vashisht@yahoo.com or on phone Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2 having office at 1 1 5, Chappel Street, Meerut Cantt, UP, INDIA)

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