can a relative of a director appointed as an auditor??

Sec 226 contains qualifications & disqulaifications of an auditor.  Relative of a director is not disqualified from being appointed as auditor of company.  Hence he can be appointed as auditor provided either his or the director's independence should not be effected due to this appointment. 

One should also consider sec 314 regarding office or place of profit while making such appointment. (although generally 314 is not applicable for professional services)

Hence for details refer sec 226 & 314 of companies act

Dear Ravi,

Section 226 of the Companies Act says "A person shall not be qualified for appointment as auditor of a company unless he is a chartered aacountant within the meaning of the Chartered Accountants Act,1949". Thus it becomes clear that there is no restriction by the companies act on appointing a director's relative as an auditor of the company.

Chapter – 7 (Very important chapter for compulsory question in exam) 

Disqualifications under section 226 

Note: 

1. If a relative or partner of the auditor holds substantial interest in the business of the client, the auditor should not accept the appointment as per the latest amendment to the Code of Ethics. Before the amendment the auditor was required to disclose the substantial interest in his report. After the amendment the auditor cannot make such disclosure.

2. If the auditor of a company is a relative of the director, then the appointment of the auditor requires special resolution under section 314 of the Companies Act, 1956

ABHISHEK SARDA IS RIGHT

Originally posted by : Payal Gupta
	ABHISHEK SARDA IS RIGHT

 according to provisions of CA ACT1949 relative can't be appointed as an statutory auditor

i.e he is disqualified as per CA ACT 1949