Auditor rotation won’t be imposed on all firms

Auditor or audit firm rotation will not be imposed on all companies, Corporate Affairs Minister Sachin Pilot said here today.

This is even as the new Company Law mandates auditor or audit firm rotation.

The threshold for auditor or audit firm rotation will be decided in full consultation with industry, Pilot told a

Confederation of Indian Industry (CII) event here.

The Centre is in the process of firming up the rules for Company Law implementation.

It has issued draft rules for most of the chapters in the new law.

Pilot also said the Corporate Affairs Ministry was open to the idea of deciding on a specific date from which the auditor rotation norm could apply.

This could be music to the ears of the audit fraternity who see the draft rules as ushering in retrospective application of auditor rotation norms.

Pilot made it clear that auditor or audit firm rotation is not being done to make life difficult for companies. It is also not for increasing the compliance cost of companies.

There have been instances of ‘cosy relationships’ between auditors and promoters and this issue is sought to be tackled through auditor rotation, Pilot said.

Rahul Bajaj, former CII President and Chairman of Bajaj Auto, felt that investment holding companies would be disadvantaged if auditor rotation were to be mandated for them.

He saw no merit in mandating auditor rotation for a private company where there was no creditor, bank borrowings or any other dealing with the public.