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Unit 14: Audit of a Partnership Accounts and Government Company

(b) The notification shall be effective to the extent to which it is approved by Parliament Notes
(Sec. 620). Subject to such notification, such companies are governed by the
Companies Act like any other limited company without any discrimination. The
Central Government has issued notifications (published in the Gazette of India,
dated 11 February and 4 March, 1978) granting exemptions to Government
Companies from the application of certain Sections of the Companies Act.
For example, they have been exempted from complying with the provisions of Sections
198,259,268, 269, 309, 310, 311, 387 and 388 relating to the appointment of Managing or
Whole time directors and payment of remuneration to them. Similarly, Sections 255,
256 and 257 pertaining to appointment and retirement of directors, and Section 370
relating to making of loans, etc., to companies under the same management shall not
apply to such Government Companies which are wholly owned by the Central or
State Government. Examples of popular Government Companies are: Heavy
Engineering Corporation Ltd., Hindustan Machine Tools Ltd., State Trading
Corporation of India Ltd., and Indian Drugs and Pharmaceuticals Ltd.
(c) A Government Company, no doubt, has certain special feature” but it should not be
placed on the same footing as a State or Government. It basically remains a company
in the ordinary sense, having a legal entity of its own, separate from that of its
shareholders whoever they may be. It makes no difference whether the entirety of
the capital is subscribed by the Government or Government holds only 51 per cent
of the share capital. In no case a Government Company is identified with the State
and its employees do not become Government servants, holders of civil posts under
the Union or State Governments (S. K. Debnath vs. Mining and Allied Machinery
Corporation.

14.2.7 Audit Fees

Minimum Audit Fee in respect of Audit

A member of the Institute in practice shall not, on behalf of the firm of chartered accountants in
which he is a partner, accept or carry out any audit work involving receipt of audit fees (excluding
reimbursement of expenses, if any) for such work of an amount less than what is specified
hereunder:
1. Consisting of 5 or more partners but less than 10 partners with at least one partner holding
a certificate of practice for five years or more; or
2. Consisting of 10 or more partners with at least one partner holding a certificate of practice
for five years or more.

Provided that such restriction shall not apply in respect of the following:
1. Audit of accounts of charitable institutions clubs, provident funds, etc. where the
appointment is honorary i.e. without any fees;.
2. Statutory audit of branches of banks including regional rural banks;

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