Section 378ZG Companies Act 2013 - Duties of Auditor under Chapter XXIA

Section 378ZG of the Companies Act, 2013 prescribes additional matters that the statutory auditor of a Producer Company must report. These requirements operate in addition to the general auditor reporting framework under Section 143 of the Companies Act, 2013.

Legal position: Section 378ZG forms part of Chapter XXIA on Producer Companies. Chapter XXIA was inserted by Section 52 of the Companies (Amendment) Act, 2020 and came into force on 11 February 2021.

Meaning and scope of Section 378ZG

The expression "without prejudice to the provisions contained in section 143" means that Section 378ZG does not replace the auditor's general statutory duties. Instead, an auditor of a Producer Company must comply with Section 143 and also report on the Producer Company-specific matters listed in Section 378ZG.

Text of Section 378ZG - Duties of auditor under this Chapter

378ZG. Duties of auditor under this Chapter. Without prejudice to the provisions contained in section 143, the auditor shall report on the following additional matters relating to the Producer Company, namely:

  1. the amount of debts due alongwith particulars of bad debts, if any;
  2. the verification of cash balance and securities;
  3. the details of assets and liabilities;
  4. all transactions which appear to be contrary to the provisions of this Chapter;
  5. the loans given by the Producer Company to the directors;
  6. the donations or subscriptions given by the Producer Company; and
  7. any other matter as may be considered necessary by the auditor.

What the auditor must report

Reporting areaPractical scope
Debts and bad debtsAmounts due to the Producer Company and particulars of debts identified as bad debts.
Cash and securitiesVerification of the Producer Company's cash balance and securities.
Assets and liabilitiesDetails of assets owned and liabilities owed by the Producer Company.
Chapter XXIA complianceTransactions appearing to be contrary to the statutory provisions governing Producer Companies.
Loans to directorsDisclosure and reporting of loans given by the Producer Company to its directors.
Donations and subscriptionsReporting of donations or subscriptions made by the Producer Company, read with the applicable Producer Company provisions.
Other necessary mattersAny additional matter which the auditor considers necessary for proper reporting.

Relationship with Section 143

Section 143 contains the general powers and duties of auditors under the Companies Act, 2013. Section 378ZG expressly preserves those requirements and adds a Producer Company-specific reporting layer. Accordingly, the audit of a Producer Company should address both the generally applicable audit obligations and the additional matters expressly listed in Section 378ZG.

Related Producer Company provisions

Section 378ZG appears in Part VI of Chapter XXIA dealing with finance, accounts and audit. It should be read with Section 378ZE on books of account, Section 378ZF on internal audit, and Section 378ZH on donations or subscriptions by a Producer Company.

Key takeaway

For a Producer Company, the statutory auditor's report is not confined to the ordinary Companies Act audit requirements. Section 378ZG specifically requires attention to debts, cash and securities, assets and liabilities, Chapter XXIA compliance, loans to directors, donations and subscriptions, and any further matter the auditor considers necessary.

Legislative history: Chapter XXIA, including Section 378ZG, was inserted by the Companies (Amendment) Act, 2020, Section 52, with effect from 11 February 2021.