Some Important Sections Related with Audit
224. Appointment and remuneration of auditor.
224A Auditor not to be appointed except with the approval of the company by special resolution in certain cases.
225 Provisions as to resolutions for appointing or removing auditors
226. Qualifications and disqualifications of auditors
227. Powers and duties of auditors
228. Audit of accounts of branch office of company
229. Signature of audit report, etc.
230. Reading and inspection of auditor’s report
231. Right of auditor to attend general meeting
232. Penalty for non-compliance with sections 225 to 231
233. Penalty for non-compliance by auditor with sections 227 and 229
233A. Power of Central Government to direct special audit in certain cases
233B. Audit of cost accounts in certain cases
SECTION 226: - Qualification and Disqualification of Auditor
226 (1)
· Chartered Accountant with in the meaning of the Chartered Accountants Act, 1949
· a firm whereof all the partners practicing in India are qualified for appointment, as aforesaid, may be appointed by its firm name to be the auditors of a company in which case any partner so practicing may act in the name of the firm
226 (2)
· Not being in force
226 (3)
Disqualification of auditor
· a body corporate;
· an officer or an employee of the company;
· a person who is a partner, or who is in the employment of an officer or employee of the company;
· a person who is indebted to the company for more than Rs. 1,000 or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for more than Rs. 1000; and
· a person holding any security of that company.
226 (4)
· disqualified from acting as auditor of that company’s subsidiary or holding company or of any other subsidiary of the same holding company
226 (5)
· When the auditor appointed but later on he fails the requirement of sub section 3-4 then he will be automatically vacated.
SEC. 314 – A C.A is not disqualified if his relative or his employee works as a director, secretary or any other person. But the permission of CG is must
Sec. 224: - Appointment of Auditor
224 A
Cases when the auditor appointed by SPECIAL RESOLUTION
· A company in which 25% of the SUBSCRIBED CAPITAL
o A public financial institution (NABARD, ICICI, AVIC, HUDKO) or a government or the CG or any SG, or
o A financial or any other institution established by provincial or State Act in which a SG, holds not less than 51% SUBSCRIBED CAPITAL
o A nationalized bank or an GENERAL INSURANCE COMPANY
o Any combination of these.
· IN case of pass ordinary resolution than the appointment of auditor done by CG u/s 224 (3)
· 25% capital is considered as the Closing date of the register of members
224 (1)
Appointment by Shareholders
224 (1A)
Intimation of auditor to join the job or not in the form 23B
224 (1B)
Ceiling limit of the auditors
· Total 30 co. audits but not more than 20 public co. in which 10 co. does not have the share capital more than Rs. 25 Lakh.
224 (2)
No notice of the intended resolution to appoint some other person or persons in place of the retiring auditor was received by the company that could not be proceeded with due to death, incapacity or disqualification of the other person or persons.
224 (3)
Appointment by C.G
· In that case if auditor not appointed in A.G.M
· In that case when the co. passes the ordinary resolution whether he pass the special resolution u/s 224 A.
· Penalty is 5,000 rs. In case of default.
224 (5)
Appointment of First auditor
It can be appointed by the Board of directors within one month of the date of registration.
If fails to appoint it can be appointed in GENERAL MEETING*
first auditor doesn’t need to intimate.
224 (6)
Appointment in case of casual vacancy*
Other than resignation all the cause the appointment done by the BOARD OF DIRECTORS
In case of resignation the auditor appointed in GENERAL MEETING*.
SECTION. 619: - Auditor
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