Auditor explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Many guides still tell auditors that a fraud must be reported to the Central Government "within sixty days of knowledge". That was the wording of rule 13 of the Companies (Audit and Auditors) Rules, 2014 as first made. It was substituted by the Companies (Audit and Auditors) Amendment Rules, 2015 (dated 14 December 2015), and the rule as consolidated today has no sixty-day period at all. This guide sets out the rule as it reads now, for companies and auditors who need a clear sequence. If your Board needs help with its reply to an auditor's report, see our legal consultation service.
This article follows the rule as amended up to the Companies (Audit and Auditors) Amendment Rules, 2025 (in force 14 July 2025) per the MCA e-book. Later amendments should be checked.
For a fraud involving or expected to involve individually rupees one crore or above, the auditor reports to the Board or Audit Committee immediately but not later than two days of his knowledge, asks for a reply within forty-five days, and then forwards his report to the Central Government within fifteen days of the reply, filed electronically in Form ADT-4 (rule 13(1) and (2)). A smaller fraud goes to the Audit Committee or the Board within two days and is disclosed in the Board's report (rule 13(3) and (4)). Rule 13 names the Central Government as the recipient and does not mention the Serious Fraud Investigation Office.
What changed from the 60-day version
The old text of rule 13(1), preserved as a note in the MCA e-book, required the auditor to report to the Central Government "immediately but not later than sixty days of his knowledge", after forwarding his report to the Board or Audit Committee. Three things have moved since:
| Point | Rule as first made | Rule as consolidated now |
|---|---|---|
| Outer period | Sixty days from knowledge (to the Central Government) | No sixty-day period; first report to Board or Audit Committee within two days of knowledge |
| Amount | No amount stated | Fraud of rupees one crore or above, individually, goes to the Central Government (13(1)) |
| Mode | Sealed cover by Registered Post or Speed Post, followed by an e-mail, on the auditor's letter-head | Filed electronically in Form ADT-4 (13(2)(d), from 14 July 2025) |
The 2015 amendment brought in the two-day first report and the one-crore line, and the current text has a separate route for smaller frauds. The 2025 amendment replaced the postal mode with electronic filing and omitted the clauses on letter-head, signature and form of statement. The two-day, forty-five-day and fifteen-day periods are printed in the rule; do not use any other period.
Rule 13(1) and (2): fraud of rupees one crore or above
Trigger. In the course of performing his duties as statutory auditor, the auditor has reason to believe that an offence of fraud, which involves or is expected to involve individually an amount of rupees one crore or above, is being or has been committed against the company by its officers or employees.
| Step | What the rule says |
|---|---|
| 13(2)(a) | Report to the Board or the Audit Committee, as the case may be, immediately but not later than two days of his knowledge, seeking their reply or observations within forty-five days |
| 13(2)(b) | On receiving the reply, forward his report, the reply or observations and his comments on them to the Central Government within fifteen days of receipt |
| 13(2)(c) | If no reply comes within the forty-five days, forward his report to the Central Government with a note of the details of the report earlier sent to the Board or Audit Committee, for which no reply was received |
| 13(2)(d) | The report is filed electronically in Form ADT-4 |
The sequence is the same for a cost auditor and a secretarial auditor in their duties under section 148 and section 204 (rule 13(5)). The step-by-step guide to the form is in How to File Form ADT-4: Reporting of Fraud by Auditor, and the dividing line between the two routes is discussed in Fraud Reporting Under Section 143(12): The One Crore Dividing Line.
Rule 13(3) and (4): fraud below one crore rupees
Where the amount is lower than in sub-rule (1), the auditor reports to the Audit Committee constituted under section 177, or to the Board, immediately but not later than two days of his knowledge, specifying the nature of the fraud with description, the approximate amount involved and the parties involved. Each fraud so reported during the year is then disclosed in the Board's report with the nature and description, the approximate amount, the parties involved if remedial action has not been taken, and the remedial actions taken. The Board's report itself is covered in Section 134: Board Report.
What about the SFIO?
The old title of this post spoke of "SFIO intimation". Rule 13 does not use the term. It requires the report to the Central Government and says nothing about onward steps. The Serious Fraud Investigation Office has its own functions under the Act, and the separate SFIO (Arrests) Rules deal with arrest by that office: see Rules 1 to 9 of the SFIO Arrest Rules, 2017 and the general guide Inspection and Investigation: ROC and SFIO Powers. Nothing in rule 13 tells an auditor to intimate the SFIO directly.
Penalties
The rule itself prints no penalty. Consequences of failing to report, and the penalty for the company's officers, sit in the Act, and the Act as amended should be checked. This article gives no figure because rule 13 prints none.
A worked example
Kaveri Packaging Limited (invented) has a statutory auditor who finds, on 3 March, that a purchase officer has diverted funds of rupees one crore twenty lakh. By 5 March the auditor writes to the Audit Committee, seeking a reply within forty-five days. The committee replies on day thirty. Within fifteen days of the reply the auditor files his report, the committee's reply and his comments in Form ADT-4. If the committee had not replied within forty-five days, the auditor would have filed his report with a note on the earlier report and the missing reply. In a different case, a diversion of rupees eight lakh goes to the Audit Committee within two days, and the company later shows its nature, amount, parties and remedial action in the Board's report.
Common mistakes
- Using the sixty-day period from the first version of the rule; the current periods are two days, forty-five days and fifteen days.
- Applying the Central Government route to a smaller fraud, or the committee route to a fraud of one crore rupees or above.
- Sending a paper report by post when the rule now requires an electronic filing in ADT-4.
- Forgetting that the Board's report must carry the details of frauds reported under rule 13(3).
- Assuming the rule applies only to statutory auditors; cost and secretarial auditors are covered by rule 13(5).
Need help when an auditor reports a fraud?
A report under rule 13 starts clocks for the Board and the committee. We can help management prepare its reply and observations, document remedial action and draft the Board's report disclosures through our legal consultation service.
Key takeaways
- Rule 13 no longer has a sixty-day rule.
- One crore or above: Board or Audit Committee within two days, forty-five days to reply, Central Government within fifteen days of the reply, in ADT-4 electronically.
- Smaller fraud: Audit Committee or Board within two days, then the Board's report.
- Rule 13 mentions the Central Government, not the SFIO.
Read next
- How to File Form ADT-4: Reporting of Fraud by Auditor
- Rules 13 and 14 of the Audit and Auditors Rules
- Section 143: Auditor's Powers and Duties
- Secretarial Audit: Section 204
Disclaimer: Based on the Companies (Audit and Auditors) Rules, 2014 as consolidated in the MCA e-book (consulted on 3 October 2026). Later amendments, forms and Companies Act, 2013 provisions should be checked. This article is general information, not legal advice; check the official text before acting.