Remuneration of auditors

This query is : Resolved

thanumalayan (Querist)
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16 October 2007 During the course of audit, the auditor, due to some increase in his work load and expenses, want to raise his remoneration.

How can it possible for him and what are all the modalities to be followed by him in this regard?

Can he resign if the remuneration cannot be raised?

What is the remedy?

Ramasubbu K

Ramasubbu K (Expert)
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16 October 2007 If the members of the Company delegated the power of fixing the remuneration at the time of appointment in general meeting, then it can be done by the Board of Directors.

THe appointed Auditor can resign at any time for any reasons. If he resigns, new auditor has to be appointed as per proviso to section 224(6)(a) of the Companies Act, 1956.i.e only by the shareholders in the general meeting.

CMA Gul S

CMA Gul S (Expert)
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16 October 2007 BOD has the powers to increase the Auditors Remuneration.

Ravikumar.G

Ravikumar.G (Expert)
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16 October 2007 Sec.224(8) of the Companies Act, 1956 deals with fixation of remuneration of an auditor. Normally speaking, an auditor has right to receive his remuneration after completing his work, that is, submission of the audit report. But as a matter of professional ethics, it would not be proper for the auditor if he links delivery of the audit report conditional upon receipt of audit fees.
Moreover he would not be performing his duties under the companies act, 1956 in such case. It would be better to approach the Court of Law only after submitting his audit report.