A PIA is required to appoint auditors as detailed in roles and responsibilities section of this chapter of SOP. The auditors shall be independent. The independence of the Auditors may be defined as below:

Independence: The auditor appointed should be independent and should be free from economic, financial and other relationships with PIA (the term "PIA" includes its franchisee, subsidiaries etc., in case applicable).The following relationships, though not exhaustive, will be considered as threats to independence to auditor:-

Auditor, its partner or associate could benefit from financial interest in the project or PIA such as (i) direct financial interest or materially significant indirect financial interest (ii) loan or guarantee to or from the PIA (iii) undue dependence on PIA fees and work (iv) close business relationship with the PIA (v) potential employment with PIA (vi) contingent fees for the audit engagement

Review of any judgement or conclusion reached in a previous audit or non-audit engagement or when a member of the audit team was previously a director or senior employee of the PIA, e.g. (i) when an auditor was recently a director or senior employee of the PIA, (ii) when auditor performs services that are themselves subject matters of audit.

Auditor promotes or is perceived to promote, a client's opinion to a point where people may believe that objectivity is getting compromised, e.g. when the auditor is PIA's advocate in litigation or third party disputes

Familiarity of auditor with PIA (i) close relative of the audit team working in a senior position in PIA (ii) former partner of the audit firm being a director or senior employee with PIA, (iii) more than 5 years of association as an auditor with PIA (iv) acceptance of significant gifts or hospitality from PIA, its directors or employees.

The auditor needs to verify in accordance to his professional judgement if there is any perceived risk to his independence and must provide a written declaration on the same before appointment as auditor.

The PIA shall appoint auditor for the following roles:

1. Periodical Auditor
2. Annual Auditor

As mentioned in section 8.2.1, a PIA has option of appointing one auditor for both the roles or appointing a separate auditor for each of the role. The procedure for appointment of periodical auditor is laid down in section 8.9.1 below. PIA may follow same procedure if the PIA plans to appoint a separate annual auditor.

8.9.1 Procedure for appointment of a Periodic/Annual Auditor

Overview

Item	Description
Purpose	To perform various roles prescribed in different processes.
Reference to Guidelines	NA
Prerequisite/s	Uploading of approved EC minutes
Time for completion	At least 5 days prior to the execution of MoU (referred as I3-5)
Resource/s	SF 8.9A: Format of Joint Declaration by PIA and Auditor
Process owner	PIA OP Team (Finance)

 

Activities

Actor	Action	Time for completion	Relevant documents
PIA OP Team (Finance)	Appoint Periodical/Annual Auditor[6] as per the rules & regulations prescribed by The Institute of Chartered Accountants of India (ICAI).	Within 10 days of uploading of sanction order (I2+10)
PIA OP Team (Finance)	Upload Periodical/Annual Auditor information in ASDMS	Within 10 days of uploading of sanction order (I2+10)
SRLM finance team (in case of APS) and CTSA finance team (in case of YPS)	Collect the joint declaration of the PIA and the Periodical Auditor	At least 5 days prior to the execution of MoU (I3-5)	SF 8.9A: Format of Joint Declaration by PIA and Auditor
PIA OP Team (Finance)	In case of change in Periodical Auditor, update details of Periodical Auditor in ASDMS and obtain joint declaration.	Within 3 days of appointment of new Periodical Auditor