DISQUALIFICATION OF AUDITOR

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Brijesh Patel (Querist)
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27 October 2010 Can the company in its AGM/ Directors(as the case of first appointment of Auditor) appoint an Auditor who is relative of one of the Director(say Brother)?

Similarly can a firm under tax audit appoint an Auditor who is relative(say Brother) of one of the parter of the Firm?

Is the term " Relative" is defined under The Companies Act?

Ajay Mishra

Ajay Mishra (Expert)
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27 October 2010 Hi

Appointment of a relative of a Director as an auditor
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 of the Companies Act shall be passed if the remuneration of auditor exceeds the limits specified in section 314.
However, the council of the ICAI has suggested that a chartered aountant shall not accept the audit of a company where he is relative of the company managing director or WTD and he believes that he would not be in position to express his independent opinion.

Regards

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