18 June 2014
Can a Statutory Auditor be appointed as an Accountant of the company. If No, then what are the provision regarding penalties to the Auditor as well as to the Company under Companies Act, 1956 & 2013 or under other laws ( CA Code of Ethics, SEBI Act etc).
PS: Kindly support your reply with the relevent Section No. of the respective Act for better clarification & Understanding.
An Auditor is prohibited to provide accounting and book keeping services under section 144 of companies act, 2013. So statutory auditor can not act as an accountant.
Penalty for violation of section 144 is given under section 147.
Further he may be questioned by the ICAI for this kind of basic violation.
147. (1) If any of the provisions of sections 139 to 146 (both inclusive) is contravened, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees, or with both.
(2) If an auditor of a company contravenes any of the provisions of section 139, section 143, section 144 or section 145, the auditor shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees:
Provided that if an auditor has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or creditors or tax authorities, he shall be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees.
(3) Where an auditor has been convicted under sub-section (2), he shall be liable to— (i) refund the remuneration received by him to the company; and (ii) pay for damages to the company, statutory bodies or authorities or to any other person for loss arising out of incorrect or misleading statements of particulars made in his audit report.
(4) The Central Government shall, by notification, specify any statutory body or authority or an officer for ensuring prompt payment of damages to the company or the persons under clause (ii) of sub-section (3) and such body, authority or officer shall after payment of damages to such company or persons file a report with the Central Government in respect of making such damages in such manner as may be specified in the said notification.
(5) Where, in case of audit of a company being conducted by an audit firm, it is proved that the partner or partners of the audit firm has or have acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to or by, the company or its directors or officers, the liability, whether civil or criminal as provided in this Act or in any other law for the time being in force, for such act shall be of the partner or partners concerned of the audit firm and of the firm jointly and severally.
18 June 2014
Is there any provision for the same in Companies Act, 1956 or SEBI Act or is there any guideline issued by MCA or ICAI regarding the same?
18 June 2014
No there was no such provision in CA 1956. However ICAI guidance note restrict to do accounting work by Auditor due to independence issue.
19 June 2014
So if an auditor violates the ICAI guidance note then what would be the penalty to the auditor and what is the procedure for complaining against the auditor
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