NEW DELHI, JUNE 29, 2012: THE long awaited report of the Standing
Committee on Finance ("Committee") relating to Companies Bill, 2011
("Bill") has been presented to the Hon'ble Speaker of Lok Sabha on 26
June, 2012. The Committee has been headed by the former Finance Minister
Mr. Yashwant Sinha.
The Committee has recommended that the
provisions of the existing Act where shareholders appoint auditors at
every Annual General Meeting ("AGM") be continued in the interest of
accountability to shareholders. It is further recommended that the
proposal in the Bill for appointment of auditors for straight five years
may be modified to the extent that the process is subject to
ratification at every AGM.
Further, the Committee has recommended
the rotation of audit partners instead of rotation of the audit firms.
The Committee has suggested that this could be achieved by allowing
members of the company to pass a resolution requiring the partner in an
audit firm to be rotated at such interval as may be resolved by Members.
These recommendations, if accepted, can have a substantial impact on
the ongoing monopoly of the top audit firms and likely to ensure more
transparency in their manner of functioning. The Committee has also
suggested joint audits in case of very large entities.