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Sub: Clarification with regard to applicability of the provisions of Section 139 of the Companies Act 2013 read with Rule 5 and 6 of the Companies (Audit and Auditors) Rules, 2014 Query Whether a Proprietary firm (having FRN) or individual CA who is practicing either in his own name or trade n
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FAQ :
The ICAI has clarified that an individual Chartered Accountant (CA) practicing in their own name or under a trade name can only be appointed as an auditor for one term of five consecutive years.
No, Section 139, as per Rules 5 and 6 of the Companies (Audit and Auditor) Rules, 2014, applies to specific classes of companies, excluding One Person Companies and small companies. These include unlisted public companies with paid-up capital of ₹10 crore or more, private limited companies with paid-up capital of ₹50 crore or more, and companies with public borrowings or deposits of ₹50 crore or more.
An individual auditor can be appointed for a maximum of one term of five consecutive years.
The term 'same network' includes firms operating under the same brand name, trade name, or common control, either currently or in the future.
While the clarification specifically addresses individual CAs, Section 139 also states that an audit firm cannot be appointed for more than two terms of five consecutive years.
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