Company audit (disqualification of an auditor)

Sir, it is told that An auditor can be a debtor of the company if the transaction made at armslenght.. Similarly whether Supplier can also be an auditor if the transaction is made at lrms length?? I got little confused with the example told by the faculty In the module. But in the exemption paragraph It is mentioned about the armslenght trancation So i think An audtior could also be a supplier.. Please tell mr am i right or not...

Sakthi Praveen

Sakthi Praveen

CA Inter


26-Jun-20 10:51


Answers (1)

Sec 141(3) refers to business relationship The term â??business relationshipâ?? has been defined under the Companies (Audit and Auditors) Rules, 2014.[vii] It says that a business relationship includes any transaction entered into for a commercial purpose except professional services by auditor permitted by ICAI or transactions in ordinary course of business like sale of goods Auditor has to be a practicing CA and if a member of ICAI has to be practicing, he or she cannot do any other business, hence an auditor can only be supplier of professional services permitted by ICAI, which are permitted as first exception. If auditor is into any other business of supplying any other goods or services

sudha reddy

sudha reddy


26-Jun-20 18:37

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