Statutory audit of a share broker

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 February 2013 Please advice whether a CA can do the statutory audit of a share Broker where the CA himself has made investments in shares as a client.

CA Priyank Singhi

CA Priyank Singhi (Expert)
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20 February 2013 No you will be disqualified as an auditor and cannot audit the broking firm where you transact.

Querist : Anonymous

Querist : Anonymous (Querist)

21 February 2013 but suppose the substantial interest in the firm is less than 20% than can the said CA can do the audit of the same firm

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CA Priyank Singhi

CA Priyank Singhi (Expert)
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21 February 2013 3) None of the following persons shall be qualified for appointment as auditor of a company—

(a) a body corporate;

(b) an officer or employee of the company;

(c) a person who is a partner, or who is in the employment, of an officer or employee of the company;

(d) a person who is indebted to the company for an amount exceeding one thousand rupees, or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees;

You will be indebted to the firm because you are trading there. The question of substantial interest does not arise here. Since you are trading with the company, it is advisable not to take up such an audit.