Disqualification of auditor

Section 226(1)(d) of Companies Act only requires that the auditor must not be indebted to the company for a sum exceeding Rs.1000. It does not prevent the auditor from providing loan to the company. So the auditor is not disqualified.

I AGREE WITH SIDDARTH

This transaction is out of the reach of section 226(3) and (4) of the companies act, 1956.

But this transaction will 100% affect the independence of statutory auditor and defeat the sole purpose of auditing so as per my opinion this transaction is not advisable at all.

Further am quite sure this kind of transaction can't escape from ICAI manuals. So avoid this transaction.

Thanks

100% Agree with Ankur

This transaction is against the Principles of Governing an Audit...

Therefore, Avoid this transaction

I agree. There is bound to be a serious governance issue as the independence and objectivity of the auditor may be affected by such a transaction, although it is not prohibited by the Companies Act. It is better that Auditors don't have anything to do with their client except ,of course their audit responsibilities.