Regulation 64 — Audit Regulations 2020

Audit Regulations 2020regulations-audit

# 64. Communication of matters of Governance to Audit
The statutory auditor, at the time of submission of his report under the Companies Act, 2013, shall also forward to the Accountant General (Audit) a copy of any communication containing matters of governance issued by him to the management of the company in compliance with the relevant accounting, auditing and assurance standards prescribed by Central Government/ICAI.
Regulations on Audit and Accounts 2020

What This Means

When the statutory auditor submits the audit report, they must also forward to the Accountant General (Audit) any communication they have sent to the company's management about governance matters. These governance communications are issued in compliance with auditing standards and may cover issues like internal control weaknesses, fraud risks, or significant accounting policies. This ensures the CAG's office has full visibility into governance concerns raised during the audit.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

1Governance-related communications to management must be shared with AG (Audit)
2These are issued alongside the main audit report under Companies Act
3Communications cover matters arising from auditing and assurance standards
4This gives CAG visibility into internal governance issues beyond the formal audit opinion
5Both Central Government and ICAI prescribed standards govern these communications

Practical Example

During the audit of Shipping Corporation of India, the statutory auditor sends a management letter highlighting weaknesses in the procurement process and potential conflict-of-interest in certain vendor contracts. Along with the formal audit report, a copy of this management letter is forwarded to the AG (Audit), Mumbai, so that CAG's supplementary audit team can examine whether these governance concerns are adequately addressed.

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 governance matters are typically communicated?▼

These include significant deficiencies in internal controls, identified fraud or suspected fraud, non-compliance with laws and regulations, related party transactions, going concern issues, significant accounting judgments, and any other matters the auditor considers important for governance oversight.

Is this communication mandatory even if there are no governance concerns?▼

Standards on Auditing generally require auditors to communicate certain matters to those charged with governance. If there are no significant governance concerns, the communication may be brief, but it should still be issued and shared with the AG (Audit) as a matter of compliance.

Can the company object to sharing its governance communications with CAG?▼

No. The regulation makes it mandatory for the statutory auditor to forward these communications to the AG (Audit). The company cannot prevent this sharing, as it is part of the regulatory framework for government company audits.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Regulation 64 — Audit Regulations 2020

Original Rule Text

What This Means

Key Points

Practical Example

Frequently Asked Questions

Related Rules