A newly appointed auditor of a listed company came across the evidence of under-invoicing of exports, round tripping of funds through tax heavens and fraudulent siphoning of funds amounting to ten million USD. Explain th

Meaning of Fraud: According to Section 447 of Companies Act, 2013, fraud, in relation to the affairs of a company, inter alia, includes any act, omission, concealment of any fact or abuse of position committed by any person with intent to deceive, to gain undue advantage from of injure the interests of the company or its stakeholders or its creditors or any other person whether or not there is any wrongful gain or wrongful loss. Following is the course of action to be taken by auditor: According to Section 143(12) read with Rule 13 of Companies (Audit and Auditors) Rules, 2014, if the statutory auditor has reason to believe that an offence of fraud which involves or is expected to involve an amount of rupees One crore or more, is being or has been committed against the company by its officers or its employees, the auditor shall report the matter to the Central Government. The auditor shall report the matter to the audit committee immediately but not later than two days of his knowledge of the fraud seeking the reply from the Board of Directors or the audit committee seeking their reply within 45 days. On receipt of such reply or observations, the auditor shall forward his report and the reply or observations of the Board or the Audit Committee along with his comments (on such reply or observations of the Board or the Audit Committee) to the Central Government within fifteen days from the date of receipt of such reply or observations. In case the auditor fails to get any reply or observations from the Board or the Audit Committee within 45 days, he shall forward his report to the Central Government along with a note containing the details of his report that was earlier forwarded to the Board or the Audit Committee for which he has not received any reply or observations. The report of auditor shall be in Form ADT-4 of the Companies (Audit and Auditors) Rules, 2014. In the instant case, as the company is a listed company, which is mandated under section 177 of the Companies Act to constitute an audit committee and the amount of fraud is about rupees 80 crore, the auditor should report the matter to the Central Government in time, whether or not a reply is received from the company.