Companies
Act 2013
Opportunities for Professionals
CA. S. Santhanakrishnan,
Chairman, Corporate Laws &
Corporate Governance
Committee, ICAI
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Change
“Some
changes look
negative on the surface but
you will soon realize that
space is being created in
your life for something new to
emerge.”
Eckhart
Tolle
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Story of asuras and devas
 With
lot of restrictions on the Statutory
Auditors, the Companies Act 2013
prescription for the profession is akin to the
directive in the story of Asuras and Devas
 They were told, that they can eat amrut,
but, without folding their elbow joints…
 Asuras were only trying..
 Devas feed each other in a circle!!!
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There is also a Tamil saying..
Oorar
pillaya ooti
valatha, than pillai
thaane valarum…
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Opportunities
On the whole, this Act has opened up more
opportunities for professionals, though Statutory
Auditors have been brought under a lot of
restrictions!!
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Audit Rotation
 Rotation
has been mandated for large
entities
 This throws open opportunities to more
audit firms....
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Other changes which are going to
open up avenues for small firms
 Common

Firms which are handling large number of
audits will have to spread the work
amongst more professionals now
 Cap

financial year
of 20 audits per partner
Other firms in the same town / region are
likely to gain more work
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Consolidated Financial
Statements
 All
companies which have subsidiaries,
associates and JVs will need to prepare
consolidated financial statements
 Many small and mid sized groups will not
have internal capabilities to compile CFS
 This opens up opportunities for practicing
CAs to undertake consolidation services
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Fixed Assets and Depreciation
 Companies
are going to be looking at
advisory and support for



Revising depreciation, esp. where they
were following Schedule XIV rates
Componentization
Effect of revaluation
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Revision of Accounts


Reopening/recasting of accounts –Court/Tribunal
order (130)/ Voluntary (131):
Who can apply?






CG
IT authorities
SEBI
Any other statutory/regulatory authority
Board/Company- S 131
Opportunity


Advising companies on appropriate steps and process
Independent evaluation of the proposed treatments in
reopening / recasting of accounts
*Sections yet to be notified
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Internal Audit

Mandated for




Listed cos
All companies with TO Rs 200 cr or more or o/s loans
and borrowings from Banks/FI Rs 100cr or more
Unlisted public cos with Share capital Rs 50cr or more
or Public deposits Rs 25 cr or more
Shall appoint a

CA /cost accountant / other professionals in practice
or not; can be firm of internal auditors;


Employee or not
AC or Board in consultation with IA to formulate
scope, functioning, periodicity and methodology of
IA
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Internal Financial Controls
A
large engagement opportunity to the
profession
 All companies need to have a system
which is also documented so that the
Board and auditors can place reliance on
the system and its testing for effective
operations…
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Fraud Reporting


There are stringent requirements on reporting
in respect of frauds
This requires the company to set up a
mechanism of



Investigation into all suspected cases of frauds
for an independent evaluation
Detailed action plan based on such
investigations
Independent evaluation and advisory to the AC
/ Board on matters and the information being
reported on frauds to the CG
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Related Parties
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Related Party Transactions - 1
 Throws
open a new area of practice for
firms…
 CAs can advice companies and groups in
setting up an appropriate framework
systems and process for



identification of related parties, related
party transactions,
evaluation of arm’s length pricing and
approvals by the Audit Committee / Board
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Related Party Transactions - 2
 Identification
of RTP
 In many groups identification of RTP itself
will require a lot of efforts and action
 Audit Committees and Boards are going
to seek independent confirmation in
terms of such processes to ensure that
their responsibilities are properly
discharged
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Related Party Transactions - 3
 Audit
Committees and Boards are also
going to seek out professional expertise
and independent opinions on
determination of arm’s length basis of
transactions
 CAs – especially other than the statutory
auditors can look for opportunities
unfolding in this regard
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Valuation Services
 The
Act mandates valuation services to
be rendered by registered valuers…
 Members getting registered as valuers
once the process for the same is effective
could throw open opportunities…
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Independent Directors
 Need
for independent directors is bound
to grow…
 As Chartered Accountants provide a pool
of financial experts to be on the Board of
companies…
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CSR
 Another
great opportunity for the
profession
 Advisory on CSR activities to be taken up
and selection of agencies through which
the activities could be undertaken
 Monitoring and audit of CSR spends…
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SFIO
 Opportunities
to work on forensic
investigations
 Development of early warning systems
for being implemented for online
monitoring and tracking
 SFIO being viewed as a large
employment provider for CA
professionals
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Official Liquidator
 Opportunities
to work as provisional
liquidator or the Company Liquidator (sec
275)
 Chartered accountants, advocates,
company secretaries, cost accountants
or firms or bodies corporate having such
chartered accountants, advocates,
company secretaries, cost accountants
and other professionals may be
appointed and having at least ten years’
experience in company matters.
*Section yet to be notified
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NCLT
 Representation
before NCLT is also
another area of opportunity which is now
being opened up for the members
 This is also an opportunity for members to
work on higher value professional services,
as it arises in this area
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Thank You