Restrictions on Auditors

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 November 2009 Is it permissible for a person who is himself a CA and a partner of an audit firm, to serve as a professional consultant in his individual capacity and receive professional fees, from a Company, which is being audited by the same audit firm where the said individual is also a partner, on the plea that the audit firm is a different legal entity from the individual ?

CA Ravi Sisodia

CA Ravi Sisodia (Expert)
Follow

29 November 2009 YES

Querist : Anonymous

Querist : Anonymous (Querist)

30 November 2009 If the answer is YES, then it would become a very convenient way of bypassing the provisions of Section 226(3) which prohibits "a person who is indebted to the Company for an amount exceeding Rs.1000" from becoming an auditor or continue to be one for the same company which is being audited by his own audit firm.

The rationale behind the answer may please be explained.

Upgrade to CAclubindia Pro. Subscribe Now!

CA Shailesh +91 9393926464

CA Shailesh +91 9393926464 (Expert)
Follow

30 November 2009 How come a person renders professional services to the company be inbedted to the company?

Rather, the Company could be indebted to the professional.

I believe, your doubt is clear now.