Is an CA qualified to be appointed as an auditor of a company in which he was debtor but became indebted before him being appointed as an auditor ??
3 Replies
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 07 May 2010
Hello,
If at the time of appointment as statutory auditor he was still indebted to the company for an amount exceeding Rs. 1000 then he is disqualified to be appointed as statutory auditor u/s 226(3)(d).
If he has cleared the transaction then you may appoint him as statutory auditor.
Also take care of section 226(5) i.e. post appointment disqualification.
Section 226(5) says If an auditor becomes subject, after his appointment, to any of the disqualifications specified in sub-sections (3) and (4), he shall be deemed to have vacated his office as such.
Best Regards
Kalpesh Chauhan,
(Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com))
(8311 Points)
Replied 10 May 2010
Ya the auditor should have vacated his office of auditor as soon as he became indebted as debtor of the company as per Section 226(5) to be read with 226(3) and 226(4).
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