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Why canâ??t a company be an auditor of another company?
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Best Answer
There are many possible reasons why Companies Act does not allow companies to do business of auditing. Eg: - there is professional skill, care & expertise required for which only CA are trained. - in a company the management is different and the shareholders/stakeholders are different. In case of any mistake in audit it is difficult to put responsibility on any one individual. Where as if the audit is done by one person signing, he can be held responsible. - Main objective of company is profit making. Where as the work of Audit includes responsibility and independently pointing out flaws. it's difficult to make profit with that kind of independent attitude. Moreover such company can't market their services of auditing. CA in practice are barred from marketing their services.
Balamurali Unnithan M S
But, Firms are allowed to do, why, it's also 2 or more persons.
issues of reputation, limited liability, individual responsibility - same reason lawyers are not allowed to form companies for representing cases