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Q. > Please Help: AUDIT
whether the proprietor of CA firm who is also partner in another firm can take internal audit when the partnership Firm is the statutory Auditor
answered Oct 10, 2013 by shankygarg , Karnal
INTERNAL AUDITOR HAS THE STATUS OF AN EMPLOYEE. AS PER SEC. 226(3) OF COMPANIES ACT, REGARDING THE DISQUALIFICATION OF STAT. AUDITOR , AN EMPLOYEE & A PERSON WHO IS A PARTNER OF AN EMPLOYEE OF THE CO. CAN NOT BE APPOINTED AS STAT. AUDITOR i.e. a CA firm can not accept internal audit of same co. in which it works as a STAT. AUDITOR because they will be disqualified as STAT. AUDITOR AFTER THE ACCEPTANCE.
answered Oct 10, 2013 by shankygarg , Karnal
INTERNAL AUDITOR HAS THE STATUS OF AN EMPLOYEE. AS PER SEC. 226(3) OF COMPANIES ACT, REGARDING THE DISQUALIFICATION OF STAT. AUDITOR , AN EMPLOYEE & A PERSON WHO IS A PARTNER OF AN EMPLOYEE OF THE CO. CAN NOT BE APPOINTED AS STAT. AUDITOR i.e. a CA firm can not accept internal audit of same co. in which it works as a STAT. AUDITOR because they will be disqualified as STAT. AUDITOR AFTER THE ACCEPTANCE.
Experts Panelist
Comments
r krishna chaitanya
10-Oct-2013 , 10:42:30 amNO. He will get disqualification under section 226 to be appointed as statutory auditor if he is an internal auditor to the same company.
kunal kumar
10-Oct-2013 , 11:06:11 amNo, bcz disqualified sec.226.
Aseem Rana
10-Oct-2013 , 12:09:59 pmSection 226(3) of Companies Act 1956, Says that: None of the following persons shall be qualified for appointment as auditor of a company: (a) a body corporate (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 is indebted to the company for an amount exceeding one thousand rupees, or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees. (e) a person holding any security of that company after a period of one year from the date of commencement of the Companies (Amendment) Act, 2000. Internal Auditor is Appointed by the Management of company and Auditor has to report to his appointing authority, that means an Internal Auditor is an employee of the company. An Internal Auditor and Statutory Auditor cannot be the same person because an employee of company cannot be a partner of the Statutory Auditor. Even if the member accepts the company's Internal Audit Assignment then Statutory Auditor needs to Vacate his office due to the above disqualification clause coming into effect.
Prince Garg
10-Oct-2013 , 12:42:34 pm