Internal auditor

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CA Ankit Dalal (Querist)
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22 March 2012 Dear Members,

If audit firm appointed as internal audior of Parent company,shall the same firm eligible for appoint as Statutory audit of any subsidiaries company..?? please give me answer with support of code of conduct.....

Thanking you

Ankeet Dalal

Ajay Mishra

Ajay Mishra (Expert)
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22 March 2012 Hi

A Chartered Accountant should not accept appointment as an auditor of an entity in case the undisputed audit fees of outgoing auditor for carrying out statutory audit has remained unpaid. This is not applicable in case of sick units.
• Accept in a financial year, more than forty-five tax audit assignments under Section 44AB of the Income-tax Act, 1961.
• Accept appointment as auditor of a concern while indebted to the concern or has given a guarantee or provided any security in connection with the indebtedness of any third person to the concern, for limits fixed in the statute and in other cases amount exceeding Rs.10,000.
• Accept the appointment as Cost Auditor of a company under Section 233B of the Companies Act, 1956 while he —
a. is an auditor of a Company appointed under Section 224 of the Companies Act or
b. is an ofiicer or employee of the Company; or
c. is a partner, of any employee or officer of the Company; or
d. is a partner or is in the employment of the Company’s auditor appointed under Section 224 of the Companies Act, 1956; or
e. is indebted to the Company for an amount exceeding one thousand rupees, or has given any guarantee or provided any security in connection with the indebtedness of any third person to the Company for an amount exceeding one thousand rupees.
A member cannot accept appointment as Cost Auditor if after his appointment as Cost Auditor he becomes subject to any of the disabilities stated in points (a) to (e) above.
• Hold at anytime appointment of more than thirty audit assignments of Companies under Section 224 and/or Section 228 of the Companies Act, 1956.
• Accept the appointment as statutory auditor of Public Sector undertaking(s)/Government Company(ies) having turnover of Rs.50 crores or more in a year where he accepts any other work(s) or assignment(s) or service(s) in regard to the same undertaking(s)/Company(ies) on a remuneration which in total exceeds the fee payable carrying out the statutory audit of the same Undertaking/Company
Provided that in case appointing authority(ies)/regulatory body(ies) more stringent condition(s) restriction(s), the same shall apply instead of the conditions/restrictions specified under these Guidelines.
The above restrictions shall apply in respect of fees for other work(s) or service(s) or assignment(s) payable to the statutory auditors and their associate concern(s) put together.
• Without following the direction given by the Council or an appropriate committee or on behalf of any of them, accept the appointment as auditor(s), in the case of unjustified removal of the earlier auditor(s)

Regards

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