13 May 2009
Internal Auditor acting as Statutory Auditor:
Where an Internal Auditor is an employee of the company, he is disqualified for appointment as a Statutory Auditor. But where a company employs an outside firm to conduct its Internal Audit, the Internal Auditor does not become an employee of the company. Even in such a case, the Internal Auditor cannot be appointed as a statutory Auditor, because it will not be possible for him to give as independent and objective report under section-227 read with CARO, 2003.
As per CARO, 2003 Statutory Auditor has to state in his report whether there is adequate Internal Control System in the company….
Keeping in view the responsibility of statutory auditor to comment on Internal Control System of the company I would say in no case internal auditor can be appointed as a statutory auditor.
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