What must the section 143 report state?
What section 143 of the Companies Act, 2013 requires in the auditor's report, when fraud of ₹1 crore or more goes to the Central Government in Form ADT-4, and the penalty for a missed fraud report.
In this guide
The section 143 report must say whether the accounts give a true and fair view, and must cover books, branch returns, accounting standards, section 164(2) disqualification, and internal financial controls. A negative answer must give reasons. Fraud of ₹1 crore or more goes to the Central Government in Form ADT-4. Below that, the auditor reports to the audit committee or the Board within two days. A missed report draws a penalty of ₹5,00,000 for a listed company and ₹1,00,000 otherwise.
What must the section 143 report state?
Whether the accounts give a true and fair view, and a set list of further matters. Section 143(2) requires the auditor to report to the members on the accounts examined, and on every financial statement laid before the company in general meeting. Section 143(3) then lists what that report shall also state.
| Clause | What the report states |
|---|---|
| 143(3)(a) | Whether the auditor obtained all information and explanations necessary for the audit |
| 143(3)(b) | Whether proper books of account have been kept, and proper returns received from branches not visited |
| 143(3)(c) | Whether a branch auditor's report under section 143(8) was received, and how it was dealt with |
| 143(3)(d) | Whether the balance sheet and profit and loss account agree with the books and returns |
| 143(3)(e) | Whether the financial statements comply with accounting standards |
| 143(3)(f) | Observations that have an adverse effect on the functioning of the company |
| 143(3)(g) | Whether any director is disqualified under section 164(2) |
| 143(3)(h) | Any qualification or adverse remark on maintenance of accounts |
| 143(3)(i) | Whether internal financial controls with reference to financial statements are adequate, and operating effectively |
Clause (j) adds such other matters as may be prescribed. Those sit in the Companies (Audit and Auditors) Rules, 2014, not in the section. Read the rule before you treat the table above as the whole report.
What may a section 143 auditor inspect?
The books and vouchers, at any time, wherever they are kept. Section 143(1) gives every auditor a right of access at all times to the books of account and vouchers, whether at the registered office or elsewhere, and a right to require information from the officers.
The same subsection lists inquiries the auditor shall make. They include whether loans on security are properly secured and not prejudicial, whether book-entry transactions are prejudicial, whether securities were sold below cost (other than by an investment or banking company), whether loans have been shown as deposits, whether personal expenses have been charged to revenue, and whether cash said to have been received on allotment of shares was actually received.
The auditor of a holding company also has access to the records of subsidiaries and associate companies so far as they relate to consolidation. The right covers records that relate to the consolidated statements. It does not extend to subsidiary records that have nothing to do with that consolidation.
When must a section 143 answer explain?
Whenever the answer is no, or qualified. Section 143(4) says that where any matter required in the report is answered in the negative or with a qualification, the report shall state the reasons. A tick-box qualification with no reason does not meet the subsection.
When is section 143 fraud reported up?
At ₹1 crore, individually. Section 143(12) requires the auditor, if in the course of the audit there is reason to believe that an offence of fraud involving the prescribed amount is being or has been committed in the company by its officers or employees, to report the matter to the Central Government. Fraud below that amount is reported to the audit committee under section 177, or to the Board where there is no such committee.
Rule 13(1) of the Companies (Audit and Auditors) Rules, 2014 sets the prescribed amount at ₹1 crore or above, individually, including fraud expected to involve that amount. The report to the Central Government follows rule 13(2): the auditor tells the Board or the audit committee within two days and seeks their reply within forty-five days, then forwards the report and the reply to the Central Government within fifteen days of receiving it. If forty-five days pass with no reply, the auditor forwards the report with a note that none was received.
G.S.R. 359(E) dated 30 May 2025, in force from 14 July 2025, changed only the filing method in rule 13(2)(d). The report is filed electronically in Form ADT-4. It did not change the ₹1 crore line or the two-day, forty-five-day and fifteen-day steps.
Below ₹1 crore, rule 13(3) still requires a report to the audit committee or the Board within two days, covering the nature of the fraud, the approximate amount, and the parties. Rule 13(4) requires those frauds to be disclosed in the Board's report. The second proviso to section 143(12) says the same thing for frauds reported to the committee or the Board and not to the Central Government.
Does resignation end the duty?
No. The duty in section 143(12) arises in the course of performance of duties as auditor. Leaving the engagement after the auditor has reason to believe a fraud of ₹1 crore or more has occurred does not erase the report. Section 143(13) protects a report made in good faith: that report is not itself a breach of the auditor's duty.
What is the section 143(15) penalty?
₹5,00,000 if the company is listed, and ₹1,00,000 if it is not. Section 143(15) imposes that penalty on an auditor, a cost accountant, or a company secretary in practice who does not comply with section 143(12). Section 143(14) extends subsection (12) to a cost audit under section 148 and to a secretarial audit under section 204. Rule 13(5) repeats that extension for the rule.
The earlier text made the same failure a fine from ₹1,00,000 up to ₹25,00,000. The operative text is the fixed penalty. Quote India Code, not a pre-2020 reprint, if a board paper still shows the fine band.
How does section 143 treat government companies?
The Comptroller and Auditor-General appoints the auditor, under section 139(5) or 139(7), and directs the manner of audit. The auditor submits a copy of the audit report to the CAG, including the directions issued, the action taken, and the impact on the accounts.
Section 143(6) then gives the CAG sixty days from receipt of that report to conduct a supplementary audit and to comment on or supplement the report. Comments are sent to every person entitled to the financial statements under section 136, and placed before the annual general meeting with the audit report. The sixty days run from receipt, not from the date of the auditor's signature.
Appointment of that auditor is a separate duty. The section 139 appointment guide covers the first auditor, the five-year term, and ADT-1. Section 143 assumes that appointment has already been made.
Where is a section 143 amendment notified?
The fraud-filing change in 2025 arrived as G.S.R. 359(E), an amendment to the Audit and Auditors Rules, not as a rewrite of the section. Read section 143 against the current rule 13 before you follow a sealed-cover checklist, and watch the MCA updates feed for the next amendment to that rule.
Practical checks
Common questions
My auditor found a ₹40 lakh suspected fraud. Who gets the report?
The audit committee, or the Board if there is no audit committee. Rule 13(1) of the Companies (Audit and Auditors) Rules, 2014 sends fraud of ₹1 crore or more, individually, to the Central Government. Below that amount, rule 13(3) requires a report to the audit committee or the Board within two days, stating the nature, the approximate amount, and the parties. Those Board-level frauds are then disclosed in the Board's report.
A fraud is ₹1.2 crore. What are the deadlines?
Two days, then forty-five, then fifteen. Rule 13(2) says the auditor reports to the Board or the audit committee immediately, and not later than two days after knowledge of the fraud, and asks for their reply within forty-five days. On receiving the reply, the auditor forwards the report, the reply, and the auditor's comments to the Central Government within fifteen days. If no reply comes in forty-five days, the auditor forwards the report anyway, with a note that none came.
Is ADT-4 still sent in a sealed cover?
No. G.S.R. 359(E) dated 30 May 2025, in force from 14 July 2025, substituted rule 13(2)(d). The report to the Central Government is filed electronically in Form ADT-4. The old sealed-cover and speed-post route is not the current clause.
What if the auditor never files the fraud report?
Section 143(15) imposes a penalty of ₹5,00,000 if the company is listed, and ₹1,00,000 in any other company. The same penalty applies to a cost accountant conducting a cost audit under section 148, and to a company secretary in practice conducting a secretarial audit under section 204, because section 143(14) extends subsection (12) to both.
Does a qualification without reasons invalidate the report?
Section 143(4) says that where any matter required in the report is answered in the negative or with a qualification, the report shall state the reasons. A bare 'no' against books of account, or a qualification with no reason, does not meet that subsection.
Which auditing standards apply if MCA has not notified any?
The standards specified by the Institute of Chartered Accountants of India. Section 143(9) requires every auditor to comply with the auditing standards. Section 143(10) lets the Central Government notify standards after consultation. Until that notification, the proviso deems ICAI standards to be the auditing standards.
Does the company auditor have to visit every branch?
No. Section 143(8) allows the branch accounts to be audited by the company's auditor or by another person qualified for appointment under the Act and appointed under section 139. A branch outside India may be audited by an accountant qualified under that country's law. The branch auditor sends a report to the company auditor, who deals with it in the section 143 report.
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This guide is published by the Complied AI research desk. Its source list and stated position were checked against the official records shown below on 24 September 2026.
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