MCA on Whistle-blowers' complaints against companies in their audit process

NEW DELHI: The Ministry of Corporate Affairs (MCA) has mandated auditors to consider whistle-blower complaints against companies in their audit process.

An official statement said that the Central government has notified the Companies (Auditor's Report) Order, 2020 (CARO, 2020) in line with its objective of strengthening the corporate governance framework under the Companies Act, 2013.

"CARO 2020 would necessitate enhanced due diligence and disclosures on the part of auditors of eligible companies and has been designed to bring in greater transparency in the financial state of affairs of such companies," it said. "The auditor is to consider whistle-blower complaints received during the year by the company in his audit."

The statement also said that the auditor, in its audit report, should disclose the details of proceedings against the company for holding 'Benami' property and whether the company has disclosed the details in its financial statements.

"The auditor has to take into consideration the issues, objections or concerns raised by the outgoing auditors before forming his opinion," it added. Further, the auditor is required to report about the company if it is a declared wilful defaulter by any bank, financial institution or other lender and is also required to report as to whether any fraud by the company or any fraud on the company has been noticed or reported during the year.

And if a fraud has been noticed, nature and the amount involved is to be indicated, the MCA statement said. (IANS)

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