Enquiry:

It is requested to please advise whether Public Procurement Regulatory Authority Rules are applicable on the selection process for the appointment of Statutory Auditors of a government owned entities as the government owned entities have to abide by the said rules for the acquisition of goods and services.

It is also viewed that the appointment of statutory auditor’s under the Companies Ordinance, 1984 or any other law governing the corporate entities is the sole prerogative of the shareholders and such appointment does not fall within the ambit of the classification, ‘procurement of services’ where Federal or Provincial Procurement Rules are applicable.

Opinion:

The Statutory Auditors are appointed to fulfill obligations under the statute (i.e. Companies Ordinance, 1984). This statute does not make any difference between public sector companies or other companies as far as appointment of auditors under section 252 is concerned.

The questions:

i. Whether fulfillment of the said statutory obligation under the Companies Ordinance, 1984 constitutes “acquisition of services” under the PPRA Rules; and
ii. Whether PPRA Rules have an overriding effect on the provisions of the Companies Ordinance, 1984 in this regard

involve legal aspect and the inquirer should seek legal advice thereon.

(June 24, 2016)