The firms of Chartered Accountants (CA Firms) in India and Chartered Accountants Limited Liability Partnerships (LLPs) with at least one Full Time FCA (Partner/Sole Proprietor) as on 1st January 2019 can apply for empanelment with the Office of the Comptroller and Auditor General (CAG) of India on www.cag.gov.in from 1st January 2019 to 15th February 2019 for appointment as auditors of Government Companies/Corporations for the year 2019-2020.
The last date for filing/ submission of online application form for Empanelment with O/o C&AG for the year 2019-20 for audit of PSUs is 15th February, 2019. Note that the last date for receipt of documents at O/o C&AG is 28th February, 2019 which would not be extended.
Empanelment of Chartered Accountant firms/LLPs for the year 2019-20
The CA Firms/ LLPs can apply/ update the data showing the status of their firm as on 1st January 2019 and generate online acknowledgement letter for allotment of audit of Public Sector Undertakings for the year 2019-20.
After successfully filling or updating the data, you are required to generate an online acknowledgment letter for the year. Thereafter, you are also required to submit hard copies of the relevant documents in support of your online application along with a print out of the acknowledgment letter generated online. Note that the application which does not have an online acknowledgment letter would not be entertained as a valid application.
CA Firms that are seeking empanelment for the first time should register and provide the required information as on 1st January 2019. However, CA Firms/LLPs that are already empanelled with the CAG’s office need only to modify the information that is already available in the application format for changes if any, reflecting the status of such firms as on 1st January 2019, as also to indicate whether they continue to be interested in empanelment.
Note that the online data submitted by Chartered Accountant firms/CA LLPs should match with the updated data of the firm available with the Institute of Chartered Accountants of India (ICAI) showing the position as on 1st January 2019.
Furnish Documents after Registration with CAG for PSUs Audits
After submission of online application form, the CA firms are required to furnish the following documents (to be notified officially on saiindia.gov.in), which should reach this office by 28th February 2019.
(i) Online acknowledgement letter for the year 2018 generated at the time of filing online application.
(ii) Statement I: Undertaking signed by the sole proprietors/partners of the firm as per format.
(iii) Statement II: Signature of CA employees of the firm.
(iv) Copy of the Income Tax return of the firm along with computation for the assessment year 2018-2019 including distribution of income to partners.
(v) Income tax return of those CA employees who have joined as partners in the firm during 2017-2018.
(vi) Copy of the annual accounts of the firm for the financial year 2017-2018 along with schedule indicating the distribution of income among the partners.
(vii) Copy of the Service tax return filed by the firm for the year 2017-2018. In case numbers of returns are more than two, summary sheet may also be attached.
(viii) In case of CISA qualified members, copy of the final CISA certificate granted by the “Information Systems Audit and Control Association” after successfully meeting all requirements.
(ix) Duly filled up check list of the documents as per format. (to be placed on the top).
(x) Self addressed acknowledgement form/post card for receipt of documents as per format.
The above documents should be addressed to:
Director General (Commercial)-I,
Office of the Comptroller & Auditor General of India,
10, Bahadur Shah Zafar Marg,
Policy of Empanelment (Eligibility Criteria) of CA Firms for Selection as Auditor of PSUs
Chartered Accountant firms in India with at least 1 full time FCA can apply for empanelment with CAG office for allotment of audit of Public Sector Undertakings (PSUs). However, the term full time FCA (partner/sole proprietor /CA employee) does not include:
- A person who is a partner/sole proprietor in other firm;
- A person who is employed part time/full time elsewhere, practicing in his own name or engaged in practice otherwise or engaged in any other business/activity which would be deemed to be in practice under section 2(2) of the Chartered Accountants Act, 1949;
- Partner whose compensation from the firm is less than the prescribed limit and /or not commensurate with the total compensation (share of profit, remuneration and interest on capital etc) paid to the partners during the financial year 2017-2018. Following are the prescribed limit for Compensation from CA Firms:
A) Partners whose total compensation* from the firm is below the following limit:
i) Head office of the firms located in Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad:
ACA partner ₹ 1.80 lakh in a year (₹ 15000/- per month)
FCA partner ₹ 3.00 lakh in a year (₹ 25000/- per month)
ii) Head office of the firms located other Places:
ACA partner ₹ 1.20 lakh in a year (₹ 10000/- per month)
FCA partner ₹ 1.80 lakh in a year (₹ 15000/- per month)
B) A partner whose total compensation* from the firm is less than:
Firms having more than 14 partners 1%
Firms having 10 to 14 partners 3%
Firms having 5 to 9 partners 5%
Firms having less than 5 partners 8%
*Total compensation = Sum total of share of profit, remuneration and interest on capital.
Selection Procedure of CA firms whose audit fees are up to ₹ 1.50 lakh
The selection for appointment as statutory auditors of PSUs shall be made by correlating the point score earned by CA firm towards empanelment with the size of the audit fee.
Selection of CA firms for appointment as statutory auditors of PSUs whose audit fees are up to ₹ 1.50 lakh
Experience of the firm
0.5 point for every calendar year -Maximum 15.
(Counted from the date of constitution of the firm with one full time FCA or date of joining of the firm by the existing partner having the longest association with the firm whichever is later.)
Full Time FCA Partners
5 points each for first 5 partners; and
2.5 points each from 6th partner onwards.
Full Time ACA Partners
3 points each for first 5 partners (including FCA partners); and
1.5 points each from 6th partner onwards.
Points for long association with the same firm
5 points for each partner above 25 years.
4 points for each partner above 20 years.
3 points for each partner above 15 years.
2 points for each partner above 10 years.
1 point for each partner below 10 Years but above 5 Years.
Full Time CA Employees
1 point each for first 20 C.A Employees-Maximum 20 points.
CISA/ISA Qualified Partners
2 points each for three partners. -maximum 6 points.
CISA/ISA Qualified Employees
1 point each –Maximum 3 points for 3 employees.
Selection Procedure of CA firms whose audit fees is above ₹ 1.50 lakh
Selection of CA firms for appointment as statutory auditors of PSUs for major audits where audit fee is above ₹ 1.50 lakh.
(a) Criteria for short-listing eligible firms of CAs for allotment of Major Audits are as under:
(i) Six Full Time CAs:
The firm should have at least 6 CAs (out of which 5 should be full time partners and one could be a full time paid CA employee), which is indicative of capacity to handle big audits.
(ii) At least 10 Years in Firms:
At least one partner should have an association of 10 years or more with the firm and at least 3 partners of the firm should have an association of 5 years or more with the firm and the remaining two should have an association of one year or more with the firm, to demonstrate stability over time.
(iii) Well Established CA Firm:
The firm itself should have been in existence for 10 years or more, to prove that it is a well-established firm.
(b) Allotment of major audits is based not only on the size of the firm considering the number of partners, and their association with the firm, number of CA employees, and the Zone in which the firms’ head office is located but also on the basis of factors such as sectoral experience, service tax paid by the firm on assurance services, capability of handling big audits, past performance, eligibility of the firm to conduct a particular audit, location of the firm’s branch offices etc.