limit on number of audits and regarding section 314 co. act

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anmol (Querist)
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02 September 2007 sir,
1.what is the latest amendment on the maximum number of audits by an auditor as per section 224 (1B).

2.what is the maximum amount of salary of a relative of a director or officer, for which approval of central Govt. and special resolution required as per section 314

CMA Gul S

CMA Gul S (Expert)
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03 September 2007 Section 224 (1B) : Section 224 (1B) places a ceiling on the number of audits of public companies which a Chartered Accountant not in full time employment, or a firm of Chartered Accountants, can conduct.

(a) A person can be appointed as an auditor, who is not in full-time employment elsewhere, of a maximum of 20 companies as described below
(b) Where some companies have paid-up capital of or more than 25 Lacs, a person can be appointed as auditor of only 20 companies out of which not more than 10 companies can have paid up capital of or exceeding Rs. 25 Lacs.
(c) In a firm of auditors, total number of 20 companies shall be for every partner of the firm who is not in full-time employment elsewhere.

As per the fourth proviso added to sub-section (1B) by the Companies (Amendment) Act, 2000, private companies have been excluded from the existing ceiling of 20 audits per partner and sub-ceiling of 10 audits for companies having a paid up capital of Rs. 25 Lacs or more. Thus, apart from 20 audits of public companies, an auditor may conduct audit of private companies without any ceiling.

Section 314 : Govt. approval for such routine matter is not considered necessary. Presently for any appointment beyond Rs.20,000/- a month, the company has to take Central Govt. approval. This will not be necessary in view of the change proposed.

anmol

anmol (Querist)
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03 September 2007 sir in a recent notification by icai i have seen somewhere that overall limit for an audit has been raised to 45.

is it just a proposal or announcement

i would be thankful to you if you could clear my doubt

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anmol

anmol (Querist)
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06 September 2007 Dear sir,
Mr. GUL ,
i thank you for giving reply to my question regarding the maximum audits sec.224(1B).

but i have searched other websites and found that in the 268th meeting of ICAI held from 30th April to 2nd May 2007 has decided to increase the Tax Audit limit for practising Chartered Accountants, as individual or as a partner in a firm, from 30 to 45.

i hope someone can claryfy on this little more..

CA Prasanna Krishnan V

CA Prasanna Krishnan V (Expert)
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16 September 2007 Dear Sir,

What has been mentioned by Mr Gul is rightly applicable in respect of the Company Audits (statutory audit of companies under the Companies Act 1956).

ICAI has prescribed enhanced limit of 45 units in respect of (Income Tax) audits.

So while taking up statutory audits under companies act please consider the limit of 20 numbers per member per annum.

In case of income tax audits, irrespective of nature of constitution of clients (individual/firm/AOP/Co Op Society etc) please consider upper limit of 45 tax audit units per annum per member.

anmol

anmol (Querist)
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16 September 2007 dear sir / mam

thanks a lot and lot.