Can a Statutory Auditor be internal auditor?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 August 2010 Hi

Can a statutory auditor of holding company be internal auditor of its subsidiary company?

X is statutory auditor of ABC. ABC has a subsidiary company DEF. ABC shareholders requested X to be internal auditor of DEF. Can he accept this offer? Does he has any restriction to accept this offer.

Please respond at the earliest.

Regards,
CA. Sunil Saini

Ankur Garg

Ankur Garg (Expert)
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06 September 2010 Internal Auditor acting as Statutory Auditor:

Where an Internal Auditor is an employee of the company, he is disqualified for appointment as a Statutory Auditor. But where a company employs an outside firm to conduct its Internal Audit, the Internal Auditor does not become an employee of the company. Even in such a case, the Internal Auditor cannot be appointed as a statutory Auditor, because it will not be possible for him to give as independent and objective report under section-227 read with CARO, 2003.

As per CARO, 2003 Statutory Auditor has to state in his report whether there is adequate Internal Control System in the company….

Hope now you can interpret yourself….

To conclude I would say in no case internal auditor can be appointed as a statutory auditor or visa-versa.

If you still have a doubt then please post it.

Best Regards

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