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Outstanding Audit Fees

Ajay S.Yadav (Student) (137 Points)

07 May 2021  
Dear Sir / Madam,

In one of the company Audit fees of Auditor is outstanding for last 3 years. Can Auditor continue with the Audit of the company without receipt of fees?
Company will pay the fees once it's financial positions gets better.

Is there any provision under Companies Act 2013 or ICAI act 1949 which barred the Auditor from Audit? Please guide with supporting if any. Thanks 🙏 in advance.

 6 Replies

Sourav (Student) (23892 Points)
Replied 07 May 2021

It's upto Auditors professional skepticism and his ethics whether he should work or not. Otherwise if company willfully didn't pay fees then auditors have the right to lien

Lotus Choudhary (1056 Points)
Replied 07 May 2021

It's upto auditor's judgement if he want to continue or not.

yasaswi gomes (My grammar is 💯 good I)   (6636 Points)
Replied 07 May 2021

Sick industrial companies act monitors the chairman and other members including auditors. So they will give a notice if there is any issue within probably.

Similarly sick companies act 2013 does not mention anything about wages and treats them under creditors under this act.

Replied 23 September 2021

An unpaid audit fee, first, is added to Audit Fees Account and then the same is shown in liabilities side of balance sheet as outstanding expenses or expenses payable. Audit Fees is indirect expenses. Therefore, it will be shown in debit side of Profit and Loss Account.

Kev Men (228 Points)
Replied 23 October 2021

As per Chapter VII of the Council General Guidelines...A member of the Institute in practice shall not accept the appointment as auditor of an entity in case the undisputed audit fee of another Chartered Accountant for carrying out the statutory audit under the Companies Act, 2013 or various other statutes has not been paid: Provided that in the case of sick unit, the above prohibition of acceptance shall not apply.

yasaswi gomes (My grammar is 💯 good I)   (6636 Points)
Replied 23 October 2021

Nice, I don’t know how Kev knows this from England. How about having some snacks?

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