Regulation 69 — Audit Regulations 2020

Audit Regulations 2020regulations-audit

69. Comments of the Comptroller and Auditor General under Companies Act, 2013
The significant and material observations made in supplementary audit shall be issued as comments of the Comptroller and Auditor General under the Companies Act, 2013 after due consideration of the views, if any, of the statutory auditor and the management of the company.
Regulations on Audit and Accounts 2020 45

What This Means

After the supplementary audit, only significant and material observations are issued as formal CAG comments under the Companies Act, 2013. Before issuing these comments, the CAG considers the views of both the statutory auditor and the company's management. This ensures fairness and that only substantiated, material findings are formally reported.

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

Key Points

1Only significant and material observations become formal CAG comments
2Views of the statutory auditor are considered before issuing comments
3Views of the company management are also considered
4Comments are issued under the authority of the Companies Act, 2013
5This process ensures due consideration and fairness before formal reporting

Practical Example

During supplementary audit of Steel Authority of India Ltd, the AG (Audit) team finds three issues: a minor classification error of Rs 10 lakh, a significant understatement of provisions of Rs 500 crore, and a procedural lapse in related party disclosures. The minor classification error is dropped as immaterial. For the other two, the statutory auditor's and SAIL management's responses are obtained. After considering their views, CAG issues comments on both significant observations.

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

Frequently Asked Questions

What constitutes 'significant and material' observations?▼

Materiality is judged based on the size of the company, the nature of the observation, and its impact on the true and fair view of the financial statements. Both quantitative thresholds and qualitative factors (like fraud or regulatory non-compliance) are considered.

Can the company challenge CAG comments after they are issued?▼

The regulation provides for management views to be considered before issuance. After issuance, CAG comments are placed before Parliament/legislature. The company can present its position before the Committee on Public Undertakings (COPU) or Public Accounts Committee (PAC) during examination.

Are all supplementary audit findings converted to CAG comments?▼

No. Only significant and material findings become formal CAG comments. Minor or immaterial observations may be communicated informally or through management letters without being elevated to formal CAG comments.

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

Regulation 69 — Audit Regulations 2020

Original Rule Text

What This Means

Key Points

Practical Example

Frequently Asked Questions

Related Rules