Auditor's disqualification

As per section 141(3) , a person is disqualified to be appointed as the auditor if he is an officer of the company. Officer includes Directors. Therefore a person can't be auditor if he is Director of THE COMPANY. However, the word used is THE COMPANY. So as per the literal meaning of section , there is no restriction as such that director of subsidiary can't be the auditor of holding company. However, the requirement of Independence must be kept in mind. The Ethical Standards Board has further clarified that requirement of Independence should be considered above the law. Hence, there is no restriction in companies act to accept the audit. However, if the auditor feels that there is a threat to his Independence he should not accept such an audit.