appointment of auditor

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chintan (Querist)
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07 July 2009 A person Mr.x is a consultant in a co-operative society.His son is a auditor in the same society.Is appointment of auditor valid ??? pls answer and also give some reference to prove the above case.and if not valid then what action can be taken against the auditor??pls suggest .according to me he is employee of the society so he is disqualified according to sec 224...

Ankur Garg

Ankur Garg (Expert)
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07 July 2009 Hi chintan,

Kindly appreciate Section 224 is applicable on company incorporated under companies act, 1956 and the same has no applicability in society.

But if you go by the concept of independence of auditor such appointment will definitely create conflict of interest so as per my opinion avoid such appointment.

Regards

chintan

chintan (Querist)
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07 July 2009 But sir, what to do if appointment is already done? any legal action can be taken

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Ashish Shah

Ashish Shah (Expert)
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24 July 2009 I think, the appointment is not void. As section 224 is only applicable to companies, and also There is no prohibition of such appointment in case if it was a company also.

But yes, He would be guilty of professional misconduct in case he reports anything on the Company in which his relative is a employee