Comments/suggestions are invited from CA firms/LLPs for any change/revision in the Draft revised policy of Empanelment of CA firms and Selection of Auditors available at
https://care.cag.gov.in/policy/policy26_27.pdf
Comments/suggestions may please be provided on designated email id: saoca5@cag.gov.in by 13 January 2026 alongwith detailed justification.
Key Points of the Draft Policy of Empanelment of CA Firms/LLPs and Selection of Auditors
- Legal Framework: The policy is governed by the Companies Act, 2013, specifically sections 139(5) and 139(7), enabling the Comptroller & Auditor General of India to empanel auditors for Government Companies.
- Eligibility Criteria:
- Only Chartered Accountant firms and Limited Liability Partnerships (LLPs) with at least one full-time FCA Partner or Sole Proprietor can apply for empanelment.
- Firms must fulfill certain income criteria based on their location and partner category.
- Empanelment Points System:
- Point allocation is based on quantitative (e.g., number of full-time CA partners, experience, firm turnover from audit services) and qualitative factors (e.g., peer reviews, audit experience).
- There are specific point awards for additional qualifications and continuous skill upgrading of full-time CA partners and employees.
- Professional Track Record Implications:
- Firms face penalties if partners are found guilty of professional misconduct or if the firm receives poor performance ratings.
- Audit refusals and reprimands from regulatory bodies lead to point deductions and potential disqualification from future empanelment.
- Aggregation of Firms:
- Parent LLPs can apply for empanelment and include one Partner LLP. Both must not apply separately.
- Merging firms will have a year’s grace before points for the merging partners are considered.
- Audit Allotment Process:
- Selection for audits is determined by correlating point scores with audit fees.
- Specific criteria for major audits require firms to have adequate staffing, experience in handling large audits, and established operational years.
- Rotation of Audits:
- Audit appointments are typically for one financial year, with a maximum of three years for re-appointments unless ineligible based on performance or misconduct.
- Special provisions apply for Maharatna Companies regarding cooling-off periods for firms that retire or surrender audits.
- Criminal Proceedings Protocol:
- Firms under criminal investigations may still be empaneled unless charges are filed, leading to ineligibility for future audits.
- Gift City Provisions:
- Specific criteria exist regarding LLPS located in Gift City and their empanelment conditions.
- Educational Qualifications and Training:
- Continuous professional development is encouraged and rewarded through points for further qualifications and certifications from recognized institutions.
This policy aims to ensure transparency, accountability, and competency in the selection of auditors for government entities in India.