An individual shall be eligible for appointment as company auditor only when such individual is a qualified chartered accountant in practice.
If a company has decided to appoint an audit firm as company’s auditor then majority of partners must be practicing chartered accountants in India.
Earlier provision of companies act 1956 required all the partners to be chartered accountant to get appointed as company auditor. This provision has been changed with the new companies act 2013 in which majority partners has to be chartered accountants.
In this article we will be discussing qualifications and disqualifications of company auditor as per the provisions of companies act 2013.
However following persons are not eligible to get appointed as company auditor;
- A body corporate other than a LLP registered under LLP 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 associated company or a subsidiary of such holding company valuing not more than Rs. 1000 (face value):
- Is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of Rs. 500000; 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 associated company or a subsidiary of such holding company in excess of Rs. 100000;
- 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 associated 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 person or partner is at the date of such appointment or reappointment holding appointment as auditor for more than 20 companies;
- a person who has been convicted by a court of an offence involving fraud and a period of 10 years has not elapsed from the date of such conviction.
- any person whose subsidiary or associated company or any other form of entity, is engaged as on the date of the appointment in consulting and specialized services such as accounting, book keeping services, internal audit, investment advisory services, investment banking services and such other services prescribed.
If after getting appointed as company auditor, the auditor incurs any of the above said disqualification then he shall vacate his office and such vacation shall be deemed to be a casual vacancy in the office of the auditor.
If an audit firm is appointed as company auditor then those partners who are chartered accountants are only authorized to act and sign on behalf of the audit firm.