What are the Qualifications and Disqualification of Auditors?
Qualifications of Auditors:
As per Sections 141 (1) & (2) only a Chartered Accountant (individual) or a firm, where majority of partners practicing in India are Chartered Accountants, can be appointed as auditor of any company, whether public or private. Where a firm including a limited liability partnership (LLP) is appointed as an auditor of a company, only the partners who are Charterd Accountants shall be authorized to act and sign on behalf of the firm.
Disqualifications of Auditors
As per Section 141 (3), the following persons shall not be eligible for appointment as auditor of a company:
- A body corporate, except LLP.
- An officer or employee of the company.
- Any partner/employee of company.
- 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 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.
A person who himself or his partner is holding any security or interest in the company, or any company which is its holding, subsidiary, associate.
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A person who or whose relative or partner is indebted to the company or its subsidiary or its holding or associate company or a subsidiary of such holding company, in excess of rupees five lakh.
A person who or whose relative or partner has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary.
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.
Any person whose subsidiary or associate company or any other form of enity, is engaged as on the date of appointment in consulting and specialized services as provided in Section 144.
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A person whose relative is holding security or interest in the company of the face value exceeding One lac. In case this limit exceeds, the corrective, the action to maintain the limit (Rs. one lac) hall be taken by the auditor within 60 days of such acquisition, or interest.