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Audit of Government Companies

Appointment of Auditor

In accordance with the provisions of Section 139 of the Companies Act, 2013 (earlier section 619 of the Companies Act, 1956), in the case of a Government company, the Comptroller and Auditor-General of India (C&AG of India) shall, in respect of a financial year, appoint an auditor duly qualified to be appointed as an auditor of companies, within 180 days from the commencement of the financial year, who shall hold office till the conclusion of the annual general meeting.

First Auditor appointment
  • The first auditor of a Government company shall be appointed by the C&AG of India within 60 days from the date of registration of the company;
  • in case C&AG of India does not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next 30days; and
  • in case of failure of the Board to appoint such auditor within the next 30 days, Board shall inform the members of the company who shall appoint such auditor within the 60 days at an extraordinary general meeting(EGM), who shall hold office till the conclusion of the first annual general meeting.
Casual Vacancy 
Any casual vacancy in the office of an auditor of a Government company shall be filled by C&AG of India within 30 days. In case the C&AG of India does not fill the vacancy within the said period, the Board of Directors shall fill the vacancy within next 30 days.

Submission of Audit Report to the C&AG [Section 143 (5)]

The auditor aforesaid shall submit a copy of the audit report to the Comptroller and Auditor-General of India which, among other things, include the directions, if any, issued by the Comptroller and Auditor-General of India, the action taken thereon and its impact on the accounts and financial statement of the company.
Power of the C&AG
The C&AG of India, within 60 days from the date of receipt of the audit report as mentioned above, shall have a right to,—

(a) conduct a supplementary audit of the financial statement of the company by such person or persons as he may authorise in this behalf; and for the purposes of such audit, require information or additional information to be furnished to any person or persons, so authorised, on such matters, by such person or persons, and in such form, as the
C&AG of India may direct; and
 

(b) comment upon or supplement such audit report:
Provided that any comments given by the C&AG of India upon, or supplement to, the audit report shall be sent by the company to every person entitled to copies of audited financial statements under section 136(1) and also be placed before the annual general meeting of the company at the same time and in the same manner as the audit report.

Test Audit by C&AG of India

The C&AG of India may, if he considers necessary, by an order, cause test audit of a Government company to be conducted of the accounts of such company and the provisions of section 19A of the Comptroller and
Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971, shall apply to the report of such test audit.


Important Note
  1. "Government company" would also include in its ambit any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments.
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