CA GIRISH (Chartered Accountant) (1796 Points)
05 January 2010Hi i wanna i ask u guys a query regarding my firm.
my firm is a statutory auditor of a Pvt.ltd company having turnover of more than 30Crores.in addition we provide them business consultancy like forcasting , expenses control techniques for which we receive seperate monthly fees.My Query is dont we attract in disqulalification.If yes then tell me preferably with reference to the Section.
thanks in advance
CA. ANKUR JAIN
(CA.....)
(2800 Points)
Replied 05 January 2010
No yar as per my knowledge your firm is not falling under disqualifications of auditor.... as u said ur firm is getting consultancy fees also from client compny then as per the guidence note issued by ICAI your firm must not get consultancy fees more than the audit feees.
i think this provision is made to assure the independence of auditor........
just check m sure that ur firm will be getting less consultancy fees than the audit fees
Ravi Singh
(Article Assistant)
(100 Points)
Replied 05 January 2010
no way....brother read sec 226.....if d solution cm out diff frm my opinion den plz do let me knw...my id is rahul9312 @ gmail.com
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 05 January 2010
DISQUALIFICATIONS: As per Sub section (3) of Section 226 , none of the following persons shall be qualified for appointment as Auditor of a Compny.
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 the officer or employees of the company
d) A person who indebted to the company for an amount of more than Rs.1000/-
e) A person who has given any guarantee or provided any security in connection with the indebtness of any third person to the company for an amount exceeding Rs,1000/-
f) A person holding any security of that company ( After a period of one year from the date of commencement of the Companies (Amendment ) Act, 2000)
For the purpose of security means an instrument which carried voting rights.
According to Sub section (4 ) of Section 226 provides that if a person disqualified as a Auditor for the reasons enumerated in sub section (3) of Section 226 then he cannot be appointed as Auditor of any body corporate which is
1) A subsidiary of that company or
2) Holding company of that company or
3) A subsidiary of that company’s holding company
The disqualification comes into effect immediately after the reasons enumerated in sub section (3) or Sub Section (4) of the Companies Act, 1956.
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 05 January 2010
Sope, its definately not the case of disqualification... it shows
Amir
(Learner)
(4016 Points)
Replied 05 January 2010
Ankur & Dhiraj are rite..
No disqualification in this case...
Further, Schedule VI Requirement to disclose the Auditor's Remuneration makes it amply clear that Auditor can also provide consultancy to the Clients..
Ankur's point to be kept in mind in terms of ICAI Notification otherwise it would be a professional misconduct..
nikhil bapat
(CA)
(212 Points)
Replied 06 January 2010
i agree with ankur
there is no disqualification subject to fulfilment of conditions prescribed in the guidance note
Varun
(Student)
(82 Points)
Replied 06 January 2010
no the stautory auditor is not disqualified as per provision of sec226
kumarsatish022
(Professional)
(165 Points)
Replied 06 January 2010
services like forcasting , expenses control techniques doesnot cover under the ambit of Ceiling Limit prescribed by ICAI. Also as per common sense for providing these kind of services no specific qualifications exist
CAclubindia
