qualification or disqualification of an auditor

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Querist : Anonymous

Querist : Anonymous (Querist)

06 May 2010 one of my client is a manufacture (co.,) of UPS, and my auditor purchased UPS from them on reasonable value. And they r in servicing also and they provide services to our auditor, if any problem araises in UPS

my query is :

(a) whether my auditor is disqualified nor qualified under the above situation

and,

(b) whether qualification or disqualification will be applicable only for companies or other than companies also

kindly clear my doubt ASAP

Aditya Maheshwari

Aditya Maheshwari (Expert)
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06 May 2010 The following persons cannot be appointed as auditor of a Company:
(a) An officer or employee of the company;
(b) A person who is partner with an employee of the company or employee of an employee of the company;
(c) Any person who is indebted to a company for a sum exceeding Rs. 1,000/- or who have guaranteed to the company on behalf of another person for a sum exceeding Rs. 1,000/-.
(d) A person who is holding any security of that company, after a period of one year from the date of commencement of Companies (Amendment) Act, 2000.

So if in the above transactions if the auditor is not indebted to a company for a sum exceeding Rs. 1,000/- then the auditor is not disqualified as being appointed as auditor

Aditya Maheshwari

Aditya Maheshwari (Expert)
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06 May 2010 Regarding your second question the qualification or disqualification has been specified in Section 224 of the Companies Act, 1956 and hence is applicable to companies only.

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Ankur Garg

Ankur Garg (Expert)
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06 May 2010 DISQUALIFICATION PROVISIONS ARE LIMITED TO COMPANIES ONLY.

TRANSACTION WITH COMPANY IS NOT PROHIBITED IN LAW. HOWEVER THERE SHOULD NOT BE INDEBTEDNESS EXCEEDING RS. 1000.

REGARDS

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