M/s. LMN & Co. Chartered Accountants have been appointed as the statutory auditors of AB Ltd. for the financial year 2019-20. During the course of their audit, certain transactions were observed to be irregular and o

As per section 143 (12) of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2015, if an auditor of a company, in the course of the performance of his duties as statutory auditor, has reason to believe that an offence of fraud, which involves or is expected to involve individually an amount of ₹1 crore or above, is being or has been committed against the company by its officers or employees, the auditor shall report the matter to the Central Government within such time and in such manner as prescribed. Where the fraud is of an amount lesser than ₹1 crore, the auditor shall report the matter to Audit Committee constituted under section 177 of the Companies Act, 2013 or to the Board immediately, but not later than two days of the knowledge of the fraud, specifying the following: Nature of fraud with description; Approximate amount involved; and Parties involved. The following details of each of the fraud reported to the Audit Committee or the Board during the year shall be disclosed in the Board's Report: Nature of fraud with description; Approximate amount involved; Parties involved, if remedial action not taken; and Remedial actions taken. In the instant case, as the amount of fraud is less than ₹1 crore, M/s. LMN & Co. shall report the matter to the Audit Committee or the Board as stated above along with the disclosure in the Board's Report in the manner as may be prescribed.