The Auditing and Assurance Standards Board (AASB) of the Institute of Chartered Accountants of India (ICAI) has issued a Technical Guide on the revised directions of the Comptroller and Auditor General (CAG) issued under Section 143(5) of the Companies Act, 2013.
The guide is intended to support auditors in effective and consistent compliance with the revised reporting directions applicable to specified entities.
1. Background – CAG Directions under Section 143(5)
Under Section 143(5) of the Companies Act, 2013:
- The Comptroller and Auditor General of India (CAG) may issue directions to auditors of government companies and certain other entities
- Auditors are required to conduct audits and report in accordance with such directions, in addition to the requirements under the Act and auditing standards
The revised directions necessitate clarity on scope, reporting format, and audit approach.
2. Objective of the Technical Guide
The Technical Guide aims to:
- Clearly explain the revised CAG directions and their implications
- Assist auditors in understanding the reporting expectations under each direction
- Promote uniformity and quality in audit reporting across CAG-mandated audits
3. Key Features of the Guide
3.1 Explanation of Reporting Requirements
- Detailed explanation of each reporting area prescribed by the CAG
- Clarification of the nature, scope, and depth of audit procedures expected
3.2 Practical and Illustrative Examples
- Illustrative examples provided for each reporting requirement
- Guidance on how auditors may structure observations and conclusions
- Practical insights into addressing commonly encountered audit issues
4. Collaborative Development with CAG
The guide has been developed in close consultation with officials of the CAG, ensuring that:
- The guidance is aligned with the intent and expectations of the CAG
- Interpretational ambiguities are minimised
- Auditors receive authoritative and practical direction
5. Applicability and Professional Relevance
The Technical Guide serves as an essential reference for:
- Auditors of government companies
- Auditors conducting CAG-mandated audits
- Chartered Accountants involved in public sector and statutory audits
6. Key Takeaway
The AASB’s Technical Guide strengthens audit quality and consistency by translating the revised CAG directions into clear, actionable guidance supported by illustrations. It is a critical tool for auditors engaged in audits under Section 143(5), helping ensure robust compliance and reliable reporting in the public sector audit framework.
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