Holding shares of listes entity by member of audit team

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 October 2013 I am working in a firm of CA's. My mother holds 25 shares of a listed Co., to whom I have been allocated to audit.

Query:
1 Wether i can audit the said co.?

2.If I can audit it, what necessary disclosures, I need to make to my firm and SEBI?

The shares are long term, with no objective of making profits from insider information.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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06 October 2013 as such you can.

Given that your mother holds only 25 shares, I believe it is not a substantial interest.

There may not be any compulsory disclosures in this regard. However, you may refer to Clause (4) of Part 1 of the Second Schedule to the Chartered Accountants Act, 1949 which provides that a Chartered Accountant in practice shall be deemed to be guilty of professional misconduct if he expresses his opinion on financial statements of any business or any enterprise in which he, his firm or a partner in his firm has a substantial interest, unless he discloses his interest also in his report.

Even here substantial interest is the relevant factor.

However, it would be advisable that you make a disclosure to this effect stating the factual position in the audit report to ensure no question is raised on you independence on a later date.