Section 143(12) of the Companies Act, 2013, says that auditors must report any frauds by company personnel to the Central Government. Ensuring that companies are responsible and honest in India is mainly the ministry's job, thanks to its major role in MCA.
 

Understanding Section 143(12)

According to Section 143(12), if an auditor detects that the Central Government's amount definition of fraud is or has been involved in a fraud by company officers or employees, the auditor must notify the Central Government within the specified period and method. Under this requirement, cost accountants and company secretaries carrying out audits under Sections 148 and 204 must also consider professional or related experience.
 

Reporting Procedure Under Rule 13

The Companies (Audit and Auditors) Rules, 2014, state the proper method for reporting frauds:

• If an audit reveals fraud, the auditor must tell the Board or the Audit Committee within two days and request a response within 45 days.
• Within 15 days of receiving an answer, the auditor must forward the report to the Central Government together with both the Board or Audit Committee's views and the auditor's statements.
• If there is no response after 45 days, the auditor should send the findings directly to the Central Government, along with a note explaining why.

The report should be sent to the Secretary, Ministry of Corporate Affairs and filled out on Form ADT-4.
 

Threshold for Reporting

Fraud cases, without regard to their value, were all recommended to be reported to the Central Government at first. Still, the Companies (Amendment) Act, 2015 set a materiality threshold in the law. For now, cases of frauds where the amount is ₹1 crore or more get reported to the Central Government, while those below ₹1 crore are dealt with by the Audit Committee or Board.
 

Role of the Ministry of Corporate Affairs

Section 143(12) relies heavily on the MCA which takes responsibility for the tasks below:

• The MCA processes and reviews reports of fraud as they are submitted on Form ADT-4.
• When a report is received, the MCA may use its agencies such as the Serious Fraud Investigation Office (SFIO), as part of the investigation into the reported fraud.
• The MCA and ICAI join forces to shape accounting policies and offer explanations on what needs to be reported.

Involvement of Regulatory Bodies

Apart from the MCA, there are other important and powerful bodies:

• The Companies Act, 2013, created the National Financial Reporting Authority (NFRA) to supervise how accounting and auditing standards are followed. A firm viewpoint has been made: auditors must still report fraud, even if they learn about it after others.
• MCA appoints the Serious Fraud Investigation Office (SFIO) to probe complex frauds, mainly those considered important to the general public.
   

Challenges and Considerations

Even though the process for reporting fraud is very solid, there are some remaining difficulties:

• Because it can be hard for auditors to know if an error is accidental or intentional, misinterpretations are possible and might result in increasing or lowering the numbers.
• When companies take too long to reply, it can slow down reporting which requires boards and audit committees to respond quickly.
• Auditors and company staff should receive training continuously to make certain they stay compliant both in their reporting and in knowing what the law requires.

Conclusion
It is the role of the Ministry of Corporate Affairs to ensure that the provisions of Section 143(12) are properly said and carried out. Because of its oversight and roles, the MCA helps promptly report and control corporate frauds which helps maintain the integrity of Indian companies.