LLP agreement with an auditor

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baggy (Querist)

12 July 2009
We have got this scenario here. We have formed a LLP (Limited Liability Partnership)with 2 partners who are not qualified chartered accountants. Obviously, LLP is not approved by ICAI as well.

Can this LLP appoint a qualified chartered accountant with public practice certificate on an agreement in salary basis to provide accountancy services which includes audit to the LLP clients? The individual person operates as a sole practioner .

Please advise.

regards,
R.Iyer

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)

12 July 2009 You can appoint. But the certification should be not form your LLP but from the auditor in his firms's capacity in his practicing chartered accountant capacity then only the doucuments which are being signed are vaild.

Intead of salary you have to enter into mou that the practicing auditor is servicing yor LLP clients.

baggy

baggy (Querist)

12 July 2009 Sir, thanks for your reply. I understand all the documents will be signed in his capacity as sole practicioner chartered accountant.

We prefer it to be on salary basis , and plan to receive the client's fees in the LLP name. In turn, we have proposed a salary for the auditor on a monthly basis.

My question is, for company audit fee can the companies pay the fee in the LLP name or should it be on the auditor precisely?

thanks,

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

12 July 2009 Only a partner of a firm can sign on the audit report.
So, he as a employee will not be able to do so.
There can be "Internal Arrangements" which you are speaking about and that is prevalent in many big firms.
But, be sure that the "covering" is proper.

baggy

baggy (Querist)

12 July 2009 would you recommend a Memorandum of Understanding with between the LLP & the auditor?

this MOU would cover all clauses including acting as a partner for the LLP for audit purposes.

Does that solve it?

baggy

baggy (Querist)

26 March 2010

I have got a query with registration of firm with the Institute. We have formed a LLP and have 2 partners who are not qualified CA's. We are planning to include 2 qualified CA's in the partnership and regsiter it with ICAI. Can the two unqualified partners remain in the partnership after ICAI registration?

thanks,
baggy

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