Guidance on Statutory Auditor NOC & Pending Fee Issue
This query is : Resolved
10 September 2025
Our company engaged P.Associates for all bookkeeping, GST filing, P&L, etc. They also coordinated with a statutory auditor (Ms. CKB) for balance sheet signing/ITR filing. All professional fee invoices were raised by Paramount Associates, and payments were made accordingly.
For FY 2023–24, the agreed statutory audit fee (X) was paid. However, due to a dispute (Paramount treated land sale as turnover and demanded 2X), management paid only the agreed fee. Paramount then abruptly stopped services.
Recently, we appointed a new statutory auditor. Ms. CKB has refused to issue NOC/resignation, citing “pending fees,” though she has never raised an invoice directly to us — only Paramount invoiced. She is also not responding to follow-ups.
My queries are:
Can the statutory auditor demand pending fees when no invoice was raised directly to the company?
Since all invoices were from Paramount Associates, is there any liability towards the statutory auditor personally?
What remedies are available if the auditor withholds NOC despite no dues being pending directly?
Can this be escalated to ICAI local chapter for resolution?
Any guidance from members who have dealt with similar cases will be appreciated.
For FY 2023–24, the agreed statutory audit fee (X) was paid. However, due to a dispute (Paramount treated land sale as turnover and demanded 2X), management paid only the agreed fee. Paramount then abruptly stopped services.
Recently, we appointed a new statutory auditor. Ms. CKB has refused to issue NOC/resignation, citing “pending fees,” though she has never raised an invoice directly to us — only Paramount invoiced. She is also not responding to follow-ups.
My queries are:
Can the statutory auditor demand pending fees when no invoice was raised directly to the company?
Since all invoices were from Paramount Associates, is there any liability towards the statutory auditor personally?
What remedies are available if the auditor withholds NOC despite no dues being pending directly?
Can this be escalated to ICAI local chapter for resolution?
Any guidance from members who have dealt with similar cases will be appreciated.
16 September 2025
The statutory auditor cannot demand pending fees from the company if no invoice was ever directly raised by the auditor themselves, and all payments were made against invoices from Paramount Associates. The liability of the company is only towards the entity (Paramount Associates) that raised and was paid these invoices, not towards the individual auditor, unless the contract specifically establishes otherwise.
16 September 2025
Auditor’s Right to Withhold NOC
Outstanding professional fees do not justify withholding a No Objection Certificate (NOC). ICAI guidelines are clear: valid grounds for withholding NOC are strictly limited to professional concerns like audit quality or regulatory compliance, not fee disputes.
If the previous auditor (or their representing firm) fails to respond within 15 days of receiving formal communication for NOC, the new auditor can proceed, provided there's documentary proof of such communication.
Outstanding professional fees do not justify withholding a No Objection Certificate (NOC). ICAI guidelines are clear: valid grounds for withholding NOC are strictly limited to professional concerns like audit quality or regulatory compliance, not fee disputes.
If the previous auditor (or their representing firm) fails to respond within 15 days of receiving formal communication for NOC, the new auditor can proceed, provided there's documentary proof of such communication.
16 September 2025
Liability Toward Statutory Auditor Personally
Since all invoices were raised by Paramount Associates and paid by the company, the company has no direct liability towards Ms. CKB unless a separate written agreement exists with her personally.
Auditors can only claim fees from the party with whom they contracted. If the auditor acted as an employee or subcontractor to Paramount Associates, then any pending fee claim is between Ms. CKB and Paramount.
Since all invoices were raised by Paramount Associates and paid by the company, the company has no direct liability towards Ms. CKB unless a separate written agreement exists with her personally.
Auditors can only claim fees from the party with whom they contracted. If the auditor acted as an employee or subcontractor to Paramount Associates, then any pending fee claim is between Ms. CKB and Paramount.
16 September 2025
Remedies if NOC Is Withheld
Document all communication (registered post/email) proving requests for NOC or resignation. If no response or NOC is forthcoming within a reasonable time (usually 15 days), the new auditor may accept the appointment based on evidence of communication.
The company or the new auditor may escalate this to the Disciplinary Directorate of ICAI. Complaints can be filed online with supporting documents, especially where an auditor withholds NOC on invalid grounds or fails to respond without professional justification.
ICAI has penalized CAs for not adhering to these norms and can initiate disciplinary action on complaint by aggrieved parties.
Document all communication (registered post/email) proving requests for NOC or resignation. If no response or NOC is forthcoming within a reasonable time (usually 15 days), the new auditor may accept the appointment based on evidence of communication.
The company or the new auditor may escalate this to the Disciplinary Directorate of ICAI. Complaints can be filed online with supporting documents, especially where an auditor withholds NOC on invalid grounds or fails to respond without professional justification.
ICAI has penalized CAs for not adhering to these norms and can initiate disciplinary action on complaint by aggrieved parties.
16 September 2025
Precedents show that disputes involving professional fees are not recognized by ICAI as valid reasons to withhold an NOC.
Communication with the previous auditor, not necessarily formal NOC, fulfills legal requirements for a new auditor’s appointment if communication is properly documented.
Maintain comprehensive records of communications and payments, and escalate to ICAI if the auditor’s conduct impedes statutory obligations despite no legal dues.
Communication with the previous auditor, not necessarily formal NOC, fulfills legal requirements for a new auditor’s appointment if communication is properly documented.
Maintain comprehensive records of communications and payments, and escalate to ICAI if the auditor’s conduct impedes statutory obligations despite no legal dues.
16 September 2025
Dear Sir, Thank you for your valuable time and insights. Regards.
16 September 2025
You are welcome...
16 September 2025
Good Luck.
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