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Appointment of auditor

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Querist : Anonymous

Querist : Anonymous (Querist)

30 August 2010 Can a private company appoint an auditor who is a relative of the director or share holder assuming they have significant influence? Pl clarify

Ankur Garg

Ankur Garg (Expert)
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30 August 2010 Hi,

This appointment is not advisable.

Appointment of a relative of a director as an auditor should not be made
In the legal sense a relative of a director of a company is not disqualified for appointment as an auditor of the company. However, special resolution under section 314 shall be passed if the remuneration of auditor exceeds the limits specified in section 314.

However, the council of the Institute of Chartered Accountants of India has suggested that a chartered accountant shall not accept the audit of a company where he is relative of the company's managing director or whole-time director and he believes that he would not be in a position to express his independent opinion.

Regards

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