Regulation 59 — Audit Regulations 2020
Original Rule Text
59. Debar from further appointment in case of serious irregularities
In case serious irregularities are noticed in the discharge of professional duties by the statutory auditor, the Comptroller and Auditor General may, if considered necessary, on the recommendation of a committee appointed by him and after giving due opportunity to the statutory auditor to represent, debar him from further appointment as auditor of a Government company or any other company as covered in Section 139(5) and 139(7) of the Companies Act, 2013 for such period as may be considered fit. Comptroller and Auditor General may also, if deemed fit, refer the case, to the ICAI for taking further disciplinary action against the statutory auditor.
What This Means
If a statutory auditor is found to have committed serious irregularities in professional duties, the CAG can debar that auditor from being appointed as auditor of any government company in the future. This debarment is for a period the CAG considers appropriate and follows a recommendation from a specially appointed committee. The CAG may also refer the case to ICAI for further disciplinary action. The auditor must be given a fair opportunity to represent their case before any debarment.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Debarment applies when serious irregularities are found in the auditor's professional duties
- 2A committee appointed by CAG must recommend the debarment
- 3The auditor gets due opportunity to represent their case before debarment
- 4Debarment period is at CAG's discretion
- 5CAG may additionally refer the case to ICAI for disciplinary action
Practical Example
A statutory auditor of a state government PSU is found to have certified financial statements without verifying inventory worth Rs 200 crore, which was later found to be non-existent. The CAG constitutes a committee to examine the matter, hears the auditor's defence, and debars the firm from government company audits for 5 years. The case is also referred to ICAI, which may suspend or cancel the firm's membership.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What kind of 'serious irregularities' can lead to debarment?▼
Can a debarred auditor appeal the CAG's decision?▼
Does debarment by CAG automatically affect the auditor's other private audit work?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.