The Institute of Chartered Accountants of India on Friday withdrew its recent clarification related to applicability of rotation of auditors after the Ministry of Corporate Affairs had issued a letter earlier in the day.
The MCA had told the Institute to "immediately withdraw" the announcement and intimate the ministry the reasons for issuing it without "any authority". The ICAI had on January 29 issued an announcement on applicability of rotation of auditors under the Companies Act, 2013.
Under the Section 139(2) of the Act, certain categories of companies must not appoint or reappoint an individual as auditor for more than one term of five consecutive years; and an audit firm as auditor for more than two terms of five consecutive years.
"The Corporate Laws & Corporate Governance Committee had issued the announcement regarding clarification on the applicability of Rotation principles on a company as per Section 139 of the Companies Act 2013 where the company ceases to fall under the ambit of Rotation principles in subsequent years on 29th January, 2019," the ICAI, in its communication, mentioned.
The aforesaid announcement is withdrawn and it shall not be taken in to effect, it said.
In its directive, the MCA had stated that the issuance of any clarification on different provisions of the Companies Act falls in its domain and not the ICAI. Further, it added the Institute is neither empowered nor competent to issue such announcement.
The MCA had told the Institute to "immediately withdraw" the announcement and intimate the ministry the reasons for issuing it without "any authority". The ICAI had on January 29 issued an announcement on applicability of rotation of auditors under the Companies Act, 2013.
Under the Section 139(2) of the Act, certain categories of companies must not appoint or reappoint an individual as auditor for more than one term of five consecutive years; and an audit firm as auditor for more than two terms of five consecutive years.
"The Corporate Laws & Corporate Governance Committee had issued the announcement regarding clarification on the applicability of Rotation principles on a company as per Section 139 of the Companies Act 2013 where the company ceases to fall under the ambit of Rotation principles in subsequent years on 29th January, 2019," the ICAI, in its communication, mentioned.
The aforesaid announcement is withdrawn and it shall not be taken in to effect, it said.
In its directive, the MCA had stated that the issuance of any clarification on different provisions of the Companies Act falls in its domain and not the ICAI. Further, it added the Institute is neither empowered nor competent to issue such announcement.