Go AD-Free with CAclubindia Pro and get a FREE CCI Coffee Mug. Subscribe Now!

Auditor disqualification

23 May 2019

What if company comes to know that auditor is holding less than 1 percent of share from before appointment?what step should company take?

Reply
Follow
Share

2 Replies

Fareeha Jabeen (Articled Assistant) (160 Points)
Replied 24 May 2019

Hello Umair,

As per Section 141 of the Companies Act, 2013, the auditor is disqualified from appointment to a company if he has present shareholding in the company or any of its group companies. This is to prevent the conflict of interest at the time of audit as it affects the auditor's independence.

So, to answer to your question, although I am not sure whether the auditor's appointment has been completed or not, I would strongly recommend not appointing that auditor. If the auditor has been appointed then the process of removal of auditor must be followed as per the provisions of Section 140 of the Companies Act, 2013.

Hope this helps!