LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Outstanding Audit Fees

Ajay S.Yadav (Student) (147 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.

Reply
Follow
Share

7 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 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 Agrawal (Practice) (1356 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) (7290 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.

debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
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 (756 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) (7290 Points)
Replied 23 October 2021

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

Nayan Medic (Professional + Student) (322 Points)
Replied 27 July 2023

Audit fees are the fees charged by a professional auditor or audit firm for conducting an audit of a company's financial statements. This audit is performed to ensure that the financial statements are accurate, reliable, and comply with the relevant accounting standards and regulations. The audit fees may vary based on the size and complexity of the company and the scope of the audit work required.

The audit fee is considered an indirect expense and is shown on the debit side of the profit and loss account. When an audit fee remains unpaid, it is initially recorded as an outstanding expense. This outstanding expense is then shown on the liabilities side of the balance sheet as "Outstanding Audit Fees" or "Audit Fees Payable" until it is paid.