Auditor disqualification

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Muralidharan (Querist)
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05 May 2014 Dear Members

I have an query regarding the disqualification of an audit firm from being appointed as statutory auditors of a company

Subsection (3)(e) of Section 141 of the Companies Act, 2013, is reproduced below

(3) The following persons shall not be eligible for appointment as an auditor of a company, namely:—

(e) a person or a firm who, whether directly or indirectly, has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company of such nature as may be prescribed;

My query is as follows:

ABC Private Limited appoints XYZ & Co as its Statutory Auditors. There are three partners X, Y and Z in the audit firm. The wife of Mr.Z (partner) has a business relationship with the company ABC Private Limited.

Whether such business relationship of the wife of the partner will deemed to be an indirect relationship for the Audit Firm of the Company thereby attracting disqualification from being appointed as Statutory Auditors.

Kindly clarify

with regards

Muralidharan

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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06 May 2014 There is no clarity on the cited issue in rule 10(4) of the Companies (Audit and Auditors) Rules,2014. But to be prudent, it is a disqualification.

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