The Chief Executive Officer of the Mediation Council of India, approaches a renowned Professional firm Anup Das LLP, in practice of audit and accounts for last fifty years, for annual statutory audit of the Council and t

Section 46 of Mediation Act, 2023: Accounts and audit (1) The Council shall maintain proper accounts and other relevant records and prepare an annual statement of accounts, including the balance sheet, in such form and manner as may be prescribed in consultation with the Comptroller and Auditor-General of India. (2) The accounts of the Council shall be audited by the Comptroller and Auditor-General of India and any expenditure incurred by him in connection with such audit shall be payable by the Council to the Comptroller and Auditor-General of India. (3) The Comptroller and Auditor-General of India and any person appointed by him in connection with the audit of the accounts of the Council shall have the same rights, privileges and authority in connection with such audit as the Comptroller and Auditor-General of India has in connection with the audit of the Government accounts, and, in particular, shall have the right to demand the production of books, accounts, connected vouchers and other documents and papers and to inspect the offices of the Council. (4) The accounts of the Council as certified by the Comptroller and Auditor-General of India or any other person appointed by him in this behalf together with the audit report thereon shall be forwarded annually to the Central Government and that Government shall cause the same to be laid before each House of Parliament. From the above provisions, Audit Authority: The accounts must be audited by the Comptroller and Auditor-General of India (CAG). Process: The CAG or their appointees hold full authority over the audit. The accounts of the Council as certified together with the audit report thereon shall be forwarded annually to the Central Government. While the statutory auditor is the CAG, Section 46 allows for the appointment of "any other person" by the CAG to conduct the audit. Consequently, Professional firms can perform this audit if authorized by the CAG, acting with the same authority, rather than being directly appointed by the Chief Executive Officer or Council. Therefore, the power to appoint an auditor does not vest independently in the Chief Executive Officer unless such appointment is consistent with the mechanism contemplated under Section 46. Hence, the contention of Secretary to the Government of India in the Department of Legal Affairs, Ministry of Law relating to the invalid appointment of professional firm is correct. However, Section 46 allows for the appointment of "any other person" by the CAG to conduct the audit. But, Direct appointment by Chief Executive Officer is not appropriate in the given situation.