Statutory Auditor’s Reporting Responsibilities in Respect of Depositing of Cess

ANNOUNCEMENT
Statutory Auditor's Reporting Responsibilities in Respect of Depositing of Cess
Pursuant to Clause 4(ix)(a) of the Companies (Auditor's Report) Order, 2003
and Section 227(3)(g) of the Companies Act, 1956
1. The Council of the Institute, at its 312
th
meeting held on December 25 - 27, 2011, noted that
paragraph 4(ix)(a) of the Companies (Auditor's Report) Order, 2003 required the statutory auditor to
report on the matter relating to regularity of the company in depositing undisputed statutory dues as
follows:
"Is the company regular in depositing undisputed statutory dues including Provident Fund, Investor
Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax,
Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate
authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the
financial year concerned for a period of more than six months from the date they became payable, shall
be indicated by the auditor.[Paragraph 4(ix)(a)]"
2. The Council also noted that paragraph 63(g) of the Statement on the Companies (Auditor's
Report) Order, 2003, issued by the Institute of Chartered Accountants of India states as follows:
It may be noted that at present, no Rules relating to the amount of cess for
rehabilitation or revival or protection of assets of sick industrial companies, payable
by a company under section 441A of the Act have been notified by the Central
Government.  Thus, it would not be possible for the auditor to comment on the
regularity or otherwise about the cess till the time relevant rules or regulations are
issued. However, till the time such Rules are prescribed, the auditor should
also state in his report under this clause that the Government has not
notified any Rules under section 441A of the Companies Act, 1956 and,
therefore, the auditor is unable to comment on this particular issue. (emphasis
added)
3. The Council noted that till date the Central Government had not notified the effective date of
section 441A of the Companies Act, 1956.  Consequently, no Rules thereunder had also been
prescribed by the Central Government. Accordingly, there was no question of reporting thereonunder the Companies (Auditor's Report) Order, 2003. The Council, therefore, decided that in view of
the aforementioned situation, the statuary auditor need not report in respect of cess payable under
section 441A of the Companies Act, 1956 as envisaged under paragraph 63(g) of the Statement on
the Companies (Auditor's Report) Order, 2003. The Council, therefore, decided to modify paragraph
63(g) of the said Statement as follows:
"It may be noted that at present, no Rules relating to the amount of cess for rehabilitation
or revival or protection of assets of sick industrial companies, payable by a company
under section 441A of the Act have been notified by the Central Government.  Thus, it
would not be possible for the auditor to comment on the regularity or otherwise about the
cess till the time relevant rules or regulations are issued. However, till the time such
Rules are prescribed, the auditor should also state in his report under this clause that the
Government has not notified any Rules under section 441A of the Companies Act, 1956 and,
therefore, the auditor is unable to comment on this particular issue. However, till the time
such Rules are prescribed, the auditor need not make any comment in respect of the Cess
under section 441A of the Companies Act, 1956 in his report under paragraph 4(ix)(a) of
CARO 2003."
4. The Council, incidentally, also noted that section 227(3)(g) of the Companies Act,1956 required
the statutory auditor's report to state, "Whether the cess payable under section 441A has been paid and
if not, the details of amount of cess not so paid." It was also noted that the operative date of even
section 227(3)(g) had not yet been notified by the Central Government.
5. Accordingly, as a corollary to the Council's views on auditor's reporting responsibilities on cess
under section 441A of the Companies Act,1956, pursuant to clause 4(ix)(a) of CARO,2003, the Council
was of the view that the statuary auditor's report need not contain any comment on section 227(3)(g)
of the Companies Act,1956.