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Auditor - Qualification, Disqualification, Remuneration & Resignation

 Qualifications of an Auditor:

  1. A person shall be eligible for the appointment of an auditor of a company only if he is a chartered accountant.
  2. Where a firm including a limited liability partnership is appointed as an auditor of a company, only the partners who are chartered accountants shall be authorized to act and sign on behalf of the firm.

Disqualifications of an Auditor:


The following persons shall not be eligible for the appointment as an auditor of a company:

  1. An officer or employee of the company.
  2. A person who is a partner, or who is in employment or an officer or employee of the company.
  3. A person or a firm who, whether directly or indirectly has a business relationship with the company, or subsidiary of such holding company or associate company of such nature as may be prescribed.
  4. A person whose relative is the director or is in the employment of the company as a director or key managerial personnel.
  5. A person who is in full-time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than 20 companies.
  6. A person who has been convicted by a court of an offence involving fraud and a period of 10 years has not elapsed from the date of such conviction.

Remuneration of an Auditor (sec 142):

  1. The remuneration of the Auditor of a company shall be fixed in its general meeting or in such manner as may be determined therein.
  2. The Remuneration under subsection (1) shall, in addition to the fee payable to an auditor, include the expenses, if any, incurred by the auditor in connection with the audit of the facility extended to him but does not include any remuneration paid to him by any other services rendered by him at the request of the company.

Removal, Resignation of an Auditor

  1. The Auditor appointed under section 139 may be removed from his office before the expiry of his a term only by a special resolution of the company after obtaining the previous approval of the central Government.
  2. The Auditor who resigns from the company shall file within a period of thirty from the date of resignation, a statement in a prescribed form with the company a registrar, the auditor shall also file such statement with the comptroller and auditor –general indicating the reasons and other facts as may be relevant with regard to his resignation.
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