ICAI Advisory on Auditor’s Reporting on directors remuneration u/s 197(16) of the Companies Act 2013

ICAI Advisory on Auditor’s Reporting on directors remuneration u/s 197(16) of the Companies Act 2013

ICAI has issued an advisory for chartered accountants for Auditor’s Reporting requirement on directors remuneration u/s 197(16) of the Companies Act 2013.

The advisory issued is as under:

Advisory on Auditor’s Reporting on Section 197(16) of the Companies Act, 2013

1. Section 197(16) of the Companies Act, 2013 requires as under:

“The auditor of the company shall, in his report under section 143, make a statement as to whether the remuneration paid by the company to its directors is in accordance with the provisions of this section, whether remuneration paid to any director is in excess of the limit laid down under this section and give such other details as may be prescribed”

2. The aforesaid reporting requirement for auditors of public companies needs to be covered in auditor’s report under the Section “Report on Other Legal and Regulatory Requirements”. Accordingly, auditors of public companies are advised to comply with the aforesaid reporting requirements in their auditor’s reports.

3    This Advisory will come into force from immediate effect.

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