Singh & Associates LLP, a firm of practicing chartered accountants, being statutory auditors of Decent Industries Ltd., a listed entity since last 4 years. The auditors have proposed for hefty increase in their audit

CS Professional · Governance, Risk Management, Compliances and Ethics · PYQS · December 2022
Singh & Associates LLP, a firm of practicing chartered accountants, being statutory auditors of Decent Industries Ltd., a listed entity since last 4 years. The auditors have proposed for hefty increase in their audit fees which the company is not in a position to accept. They expressed their inability to continue as statutory auditors and submitted their resignation to the company addressed to the BOD on 6 th August, 2021. The next board meeting of the company was scheduled to be held on 9 th August, 2021 to consider its quarterly results. The company secretary of the company informed the stock exchanges about said resignation without bringing to the knowledge of the audit committee as well as the Board. The chairman of the audit committee took a strong objection and pointed out a serious lapse on the part of the company. He suggested the ways to avoid such a lapse without any non-compliance. The company secretary placed the proposal before the Audit Committee & Board of Directors for appointment of New Auditors in casual vacancy arisen due to resignation of current Auditors (Outgoing). What steps could have been taken to avoid such a lapse ?

Answer & Explanation:

The next Board Meeting of the Company was scheduled to be held on 9 th August 2021 to consider its quarterly results i.e., after 3 days of receipt of the notice of resignation of Statutory Auditors. The Company Secretary could have taken the following steps in this matter: Immediately on receipt of the notice of resignation of statutory auditors inform to the Chairman of the Audit Committee and Chairman of the Board of Directors about the resignation of statutory auditors by way of an email and also that same will be intimated to Stock Exchange within 24 hours as required by SEBI (LODR) Regulations, 2015; As soon as possible and not later than 24 hours, intimate to Stock Exchange the detailed reasons for resignation of the Statutory Auditors in terms of Regulation 30 of SEBI (LODR) Regulations, 2015 read with Schedule III thereof; Place the information relating to resignation of statutory auditors before the Board in the meeting scheduled on 09 th August and apprise them regarding the further course of action to be taken in the matter the requirement for calling for an Audit Committee Meeting.

Topics: SEBI (LODR) Regulations, 2015

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