Can the same person prepare accounts and audit?

Pvt ltd 4392 views 6 replies

Hello,

In usual practice, at least for small scale private limited companies, it is usually the CA who both does the accounting and the Company Statuory Audit. But legally I don't think a person who prepares the accounts can audit the same. Isn't this so? Is there any section in the Companies Act, 1956 that deals with this?

Anyways, we all know these kinds of rules are only on paper and in practical life it is very difficult to abide them. So if I were to prepare the Accounts of a Company and also Statutory Audit them, is it safe to bill them for both? Or does it have to tweaked in some other name?

Replies (6)

You can make teh Bill of teh accounts writing charges say in the name of your wife, so that you can avail teh tax benefit as she is a lady citizen.

And the Statutory Audit fees can be taken in the name of yourself.  this can be done so in case of an proprietary concern.  In case of a p'ship fimr this might pose some difficulty.  But you can shown that the wife of the partner is doing the business of acounts writing & draw the bill in the name of the wife's firm.

Hello,

Yes I know of various ways of how to overcome this issue. But am I really breaking a law when I bill a client for both Account Writing Charges and Audit for the same Company? Is there any Section in Companies Act which deals with this issue precisely?

I don't think that there's such section in the Co's Act, that the accounts & audit can be done by the same person as I have gone throuhg sections 209 & 214 & nothing is mentiond in those sections that accounts & audit shud not be done b y the same person.  But as per the ICAI guidelines, it is prudent commercial practice that the accounts & audit be conducted by differnet parties & not by the statutory auditor.

IF you are providing the Accounts writing charges Bill in the name of your wife's firm and the Audit Fees bill is prepared in the name of your firm, then I don''t think that you are breaking any law.

Dear Yash,

 

Do whatever you want to do….but nobody should know that you were involve in the preparation of accounts of the company under your statutory audit.

 

So do not bill them for preparing accounts. You are advised to fix your charges in the beginning like you may raise a higher bill against your statutory audit.

 

Regards

 

Thanks Ankur for the frank advise! :)

As per section 144 of Companies Act 2013 there are certain prescribed services which cannot be rendered by the auditor of that company. Services are: Accounting and bookkeeping Internal audit Design and implementation of financial info system Actuarial services Investment advisory services Investment banking services Rendering of outsourced financial services Management services If the auditor found guilty he shall be disqualified and shall the vacate the office as an auditor. This provision is attracted even if auditor himself or through any of his relative or any associated person provides such services.


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