What are the disqualification of Auditors?

Open uri20170510 32134 ughyv5?1494421703 gunesh asked almost 3 years ago

Hi I am preparing for CA exam. May I know, What are the disqualification of Auditors?

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6 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered almost 3 years ago

a) A body corporate other than LLP registered under the LLP Act, 2008 b) An officer or employee of the company. c) A person who is partner or who in the employment, of an officer or employee of the company. d) A person who or his relative or partner (i) is holding any security/interest in the company or its subsidiary or of its holding or associate company or subsidiary of such holding company. It has been further provided that an relative may hold security or interest in the company of face value not exceeding one lac rupees.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered almost 3 years ago

The companies act 2013 did specify the qualification of auditor, rather it has listed the disqualification of auditors According to Provisions of Section 141(3) of the Companies Act, 2013 , following persons shall not be eligible as auditor of the company: ‐ a) A body corporate other than LLP registered under the LLP Act, 2008 b) An officer or employee of the company. c) A person who is partner or who in the employment, of an officer or employee of the company. d) A person who or his relative or partner (i) is holding any security/interest in the company or its subsidiary or of its holding or associate company or subsidiary of such holding company. It has been further provided that an relative may hold security or interest in the company of face value not exceeding one lac rupees. (ii) is indebted to the company or its subsidiary, or its holding or associate company or subsidiary of such holding company, in excess of Rs. 5 lacs rupees (iii) has given guarantee or provide any security in connection with the indebtness of any third person to the company or its subsidiary, or its holding or associate company or a subsidiary of such holding company for value in excess of Rs. 1 lacs. e) A person or a firm who (whether directly or indirectly) has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company. Here the business relationship shall be construed as any transactions enter into for a commercial purpose except: ‐ a) Commercial transactions which are in the nature of professional services permitted to be rendered by an auditor or audit firm by the professional bodies regulated such members. b) Commercial transactions which are in ordinary course of business of the company at arm’s length price as customer. f) A person whose relative is a director or is in the employment of the company as a director or key managerial personnel. g) A person (i) who is in full time employment elsewhere or (ii) a person or a partner holding appointment as its auditor is at the date of such appointment or reappointment holding appointment as auditor for more than 20 companies. h) A person who has been convicted by a court of an offence involving fraud and a period often years has not elapsed fromthe date ofsuch conviction. i) Any person whose subsidiary or associate company or any other form of entity is engaged as on the date of appointment in consulting or specialised services in reference to provision of Section 144 of the Companies Act, 2013.

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Picsjoin 2017224123730582 Archana answered almost 3 years ago

Hie Gunesh, **According to Provisions of Section 141(3) of the Companies Act, 2013 , following persons shall not be eligible as auditor of the company: ‐** a) A body corporate other than LLP registered under the LLP Act, 2008 b) An officer or employee of the company. c) A person who is partner or who in the employment, of an officer or employee of the company. d) A person who or his relative or partner (i) is holding any security/interest in the company or its subsidiary or of its holding or associate company or subsidiary of such holding company. It has been further provided that an relative may hold security or interest in the company of face value not exceeding one lac rupees. (ii) is indebted to the company or its subsidiary, or its holding or associate company or subsidiary of such holding company, in excess of Rs. 5 lacs rupees (iii) has given guarantee or provide any security in connection with the indebtness of any third person to the company or its subsidiary, or its holding or associate company or a subsidiary of such holding company for value in excess of Rs. 1 lacs. e) A person or a firm who (whether directly or indirectly) has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company. Here the business relationship shall be construed as any transactions enter into for a commercial purpose except: ‐ a) Commercial transactions which are in the nature of professional services permitted to be rendered by an auditor or audit firm by the professional bodies regulated such members. b) Commercial transactions which are in ordinary course of business of the company at arm’s length price as customer. f) A person whose relative is a director or is in the employment of the company as a director or key managerial personnel. g) A person (i) who is in full time employment elsewhere or (ii) a person or a partner holding appointment as its auditor is at the date of such appointment or reappointment holding appointment as auditor for more than 20 companies. h) A person who has been convicted by a court of an offence involving fraud and a period often years has not elapsed fromthe date ofsuch conviction. i) Any person whose subsidiary or associate company or any other form of entity is engaged as on the date of appointment in consulting or specialised services in reference to provision of Section 144 of the Companies Act, 2013.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pushkala Santhanam answered almost 3 years ago

According to Section 141 of the Companies Act, 2013 The following persons shall not be eligible for appointment as an auditor of a company, namely:— (a) a body corporate other than a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009); (b) an officer or employee of the company; (c) a person who is a partner, or who is in the employment, of an officer or employee of the company; (d) a person who, or his relative or partner— (i) is holding any security of or interest in the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company: Provided that the relative may hold security or interest in the company of face value not exceeding one thousand rupees or such sum as may be prescribed; (ii) is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of such amount as may be prescribed; or (iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, for such amount as may be prescribed; (e) a person or a firm who, whether directly or indirectly, has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company of such nature as may be prescribed; (f) a person whose relative is a director or is in the employment of the company as a director or key managerial personnel; (g) a person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than twenty companies; (h) a person who has been convicted by a court of an offence involving fraud and a period of ten years has not elapsed from the date of such conviction; (i) any person whose subsidiary or associate company or any other form of entity, is engaged as on the date of appointment in consulting and specialised services as provided in section 144.

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Open uri20170510 32134 1nqu8aj?1494421649 sowmya answered almost 3 years ago

Disqualifications of auditors. The following persons shall not be eligible for appointment as an auditor of a company, namely:— -a body corporate other than a limited liability partnership registered under the Limited LiabilityPartnership Act, 2008; -an officer or employee of the company; -a person who is a partner, or who is in the employment, of an officer or employee of the company; -a person who, or his relative or partner— - is holding any security of or interest in the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company: Provided that the relative may hold security or interest in the company of face value not exceeding Rs. 1000 or such sum as may be prescribed; - is indebted to the company, or its subsidiary, or its holding or associate company or a ubsidiary of such holding company, in excess of such amount as may be prescribed; or has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, for such amount as may be prescribed; -a person or a firm who, whether directly or indirectly, has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company of such nature as may be prescribed; - a person whose relative is a director or is in the employment of the company as a director or key managerial personnel; - a person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than 20 companies; - a person who has been convicted by a court of an offence involving fraud and 10 years has not elapsed from the date of such conviction; any person whose subsidiary or associate company or any other form of entity, is engaged as on the date of appointment in consulting and specialised services as provided in section 144. Vacation of office: Where a person appointed as an auditor of a company incurs any of the disqualifications as mentioned above after his appointment, he shall vacate his office as such auditor and such vacation shall be deemed to be a casual vacancy in the office of the auditor.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 jitendra etikala answered almost 3 years ago

> Disqualification of Auditor According to Provisions of Section 141(3) of the Companies Act, 2013 , following persons shall not be eligible as auditor of the company: ‐ a) A body corporate other than LLP registered under the LLP Act, 2008 b) An officer or employee of the company. c) A person who is partner or who in the employment, of an officer or employee of the company. d) A person who or his relative or partner (i) is holding any security/interest in the company or its subsidiary or of its holding or associate company or subsidiary of such holding company. It has been further provided that an relative may hold security or interest in the company of face value not exceeding one lac rupees. (ii) is indebted to the company or its subsidiary, or its holding or associate company or subsidiary of such holding company, in excess of Rs. 5 lacs rupees (iii) has given guarantee or provide any security in connection with the indebtness of any third person to the company or its subsidiary, or its holding or associate company or a subsidiary of such holding company for value in excess of Rs. 1 lacs. e) A person or a firm who (whether directly or indirectly) has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company. Here the business relationship shall be construed as any transactions enter into for a commercial purpose except: ‐ a) Commercial transactions which are in the nature of professional services permitted to be rendered by an auditor or audit firm by the professional bodies regulated such members. b) Commercial transactions which are in ordinary course of business of the company at arm’s length price as customer. f) A person whose relative is a director or is in the employment of the company as a director or key managerial personnel. g) A person (i) who is in full time employment elsewhere or (ii) a person or a partner holding appointment as its auditor is at the date of such appointment or reappointment holding appointment as auditor for more than 20 companies. h) A person who has been convicted by a court of an offence involving fraud and a period often years has not elapsed fromthe date ofsuch conviction. i) Any person whose subsidiary or associate company or any other form of entity is engaged as on the date of appointment in consulting or specialised services in reference to provision of Section 144 of the Companies Act, 2013. Further According to Provisions of Section 141(4) of the Companies Act, 2013, where a person appointed as auditor of the company incurs any of the disqualification mentioned in Section 141(3) of the Companies Act, 2013 after his appointment, he shall vacate his office as such auditor and such vacancy shall be deemed to be casual vacancy in the officer of the auditor. It must be noted that the aforesaid provisions are applicable to all types of auditors i.e. cost auditors, statutory auditors and secretarial auditors.

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