Disqualification of auditor

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CA Jaydeep Vaghela (Querist)
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18 June 2013 If statutory auditor purchases goods from the company on credit exceeding the value of Rs. 1000 but subject to the time limit which generally company allows in ordinary course of business then whether such auditor is disqualified as per section 226 ?

Ajay Mishra

Ajay Mishra (Expert)
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18 June 2013 If such person is indebted to the company exceeding Rs. 1000/- then they will be disqualified under section 226.

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CA Jaydeep Vaghela

CA Jaydeep Vaghela (Querist)
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18 June 2013 Agreed Sir but i heard that it was decision of high court which had favored auditor in this respect so got confused.

Ajay Mishra

Ajay Mishra (Expert)
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18 June 2013 Hi

I don't have any such Court order, I am not aware of that fact.

Ganeshbabu K

Ganeshbabu K (Expert)
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18 June 2013 No,.he is disqualified..he is deemed to vacated office of auditor

1)If amount outstanding exceeds Rs.1,000 irrespective of nature of purchase or period of credit allowed to other custmer(normal credit period)..

2)The provisions concerning disqualification of auditor as contained in section 226(3)d will be attracted...

3)The provision aims to ensure auditor is independent and under no obligation to company.

4)The auditor cannot argue that he is enjoying only normal credit period allowed to other customers.

5)Icai expert committee opinion in this regard

https://220.227.161.86/eac/eacfinal/vol9/1.htm

Thanks & regards
Ganesh babu k

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