10 November 2009
can a person (CA) who is the wife of a shareholder of the company (another Chartered Accountant) be the statutory auditor of the same company?
10 November 2009
It will be a biased auditing if it is an unlisted company or private limited company and in all cases if the shareholder together with his relatives own substantial voting power, even in the listed companies.
10 November 2009
The issue relates to conflict of interests.If the shareholder is able to flex his muscles as a shareholder in the company and influence its business decisions at the time of appointment (AGM to AGM) of his wife as a statutory auditor then there is a conflict of interest and the same should be conveyed to the company through a proper notice before proceeding to function as statutory auditor. copy of notice to be sent to ROC also.
10 November 2009
Appointment of a relative of a director as an auditor should not be made In the legal sense a relative of a director of a company is not disqualified for appointment as an auditor of the company. However, special resolution under section 314 shall be passed if the remuneration of auditor exceeds the limits specified in section 314.
However, the council of the Institute of Chartered Accountants of India has suggested that a chartered accountant shall not accept the audit of a company where he is relative of the company's managing director or whole-time director and he believes that he would not be in a position to express his independent opinion.
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