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Audit & auditors

Corporate & Other Laws

Auditor is disqualified due to indebtedness. The limit is 5 lakhs In case the loan taken from the company by Person(auditor) is 2 lakhs Spouse is 2 lakhs Partner is 2 lakhs On an aggregate it exceeds the limit Does the auditor is disqualified?

Ashfaq Ahmed

CA Final

★ 24K+

18-Jan-22 09:26

214

Answers (2)

Yes auditor is disqualified as limit will be applied on aggregate basis. On plain reading of the section, it appears that indebtedness limit can be applied individually. But here stricter interpretation is required given the intention of law, so auditor, partner, relative(s) together should not be indebted for amount in excess of Rs. 5 lakh. Good question, happy studying!