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Disqualification of auditor
Auditing
Sir why shareholders are disqualified as auditor? if they become the auditor they will do best audit unless anyone who is not a shareholder of company since auditor has personal intrest in company.
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Thread Starter
Agrawal ChiragI am asking logic behind it. I know it is not possible as per law. But there should be something logic behind it.
If a shareholder is an auditor he/she will not be interested in actually issuing an opinion that reflects the true situation of the organization- they may be more interested in making financials look the best - that is not the intention of audit - There is a conflict of interest - shareholders are interested in increasing wealth and an auditor is supposed to issue a true and fair opinion - both these objectives are at loggerheads
Sai Geethika
We know that shareholders are owners of the company so I think that owner of the company is not allowed to be an auditor.Because you yourself cannot audit your company so no shareholder can become an auditor.
What if all the shareholders choose on member who is CA in practice that you go on behalf of us and audit the company. he or she will give the best opinion since he or she holds intrest in the company.
Sai Geethika
A member of the company is disqualified as an auditor as per law so how can the shareholders chose a member as an auditor.
I am asking logic behind it. I know it is not possible as per law. But there should be something logic behind it.
Thread Starter
Agrawal ChiragWhat if all the shareholders choose on member who is CA in practice that you go on behalf of us and audit the company. he or she will give the best opinion since he or she holds intrest in the company.
One who holds interest in a company cannot give an independent opinion. Auditing Standards says that the opinion of auditor should be unbiased. SA also says that auditor should be independent in his mind as well as in appearance. Just apply a simple logic. If you have shares in one company and you found that there is a fraud involved. Then will you give a qualified / adverse opinion? Obviously no na? If u do that the share price will go down and you will be affected. So the person doing audit must always be independent
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