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audit

Vishvajeet Chaurasia (40 Points)

10 June 2018

why an employee of a company is in eligible for appointment as an auditor

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Siddharth Goel (Chartered Accountant) (3031 Points)
Replied 11 June 2018

Hi,

As per the Section, only chartered accountants are eligible for appointment of auditors. Where a firm including a limited liability partnership is appointed as an auditor of company, only the partners who are chartered accountants shall be authorised to act and sign on behalf of the firm. However, (a) a body corporate other than a limited liability partnership registered under Limited Liability Partnership Act, 2008; (b) an officer or employee of the company ;(c) a person who is a partner, or who is in the employment, of an officer are not eligible for appointment of auditors.

The reason as to why the employees of the company cannot be appointed as the Auditor of the company is that the employee may not be independent of the affairs and conduct of the company and the Auditor of the company is expected to be independent of all the bias.

Also, the employee may not be a Chartered Accountant which is a basic requirement to get appointed as an Auditor of the Company.

However it can be noted that, the employee of the company can be appointed as an Internal Auditor of the Company because, the Internal Auditor is merely an agent of the company who makes sure the bsiness operations and accounts are in place.

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