Auditors resposibility on reporting of frauds

This query is : Open

Mukund Joshi (Querist)
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20 July 2014 Dear,

As per Sec 143 (12) of New Companies Act, 2013 it is the responsibility of the auditor to report on frauds to CG. Whether auditor should report fraud even if it is not material or prejudicial to the company?

Hitendra Jain

Hitendra Jain (Expert)
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20 July 2014 "Has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company.."

above wording clear that his professional judgment required for measure the activity to be fall in criteria of offence or fraud.
Concept of materiality is not important but the word "Against the company" is important.

an offence or fraud which is not against the company is not within ambit of section 143(12).