Auditors independence

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Querist : Anonymous

Querist : Anonymous (Querist)

30 August 2010 A CA can not become Auditor of the company in which his spouse is director.. Please provide me provision that explains this..

Ankur Garg

Ankur Garg (Expert)
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30 August 2010 A relative is not expressly disqualified by the companies act, 1956 through section 226.

However it is not advisable to appoint someone as statutory auditor who is relative of the director of the company keeping in view the independence of statutory auditor.

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.

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Querist : Anonymous

Querist : Anonymous (Querist)

30 August 2010 and if he is a share holder, then can he be an auditor of the same company??

Querist : Anonymous

Querist : Anonymous (Querist)

30 August 2010 and if he is a share holder, then can he be an auditor of the same company??

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