Qualification and Disqualification of Auditors

Sections 270 and 296 of the Companies Act, 1963 (Act 179) set out clearly who is qualified to be appointed an auditor of a company and who is disqualified.  We take a brief look at the provisions very important to us as auditing students.

 

1.   Qualification of Auditors of Private Companies  (Section 270)

For a person to qualify for appointment as auditor of a private company, the person should be one or both of the following:

·         Member of the Institute of Chartered Accountants who is not disqualified;

·         A practicing accountant licensed by the Institute of Chartered Accountants who is not disqualified.

 

2.   Qualification of Auditors of Public Companies  (Section 296)

For a person to qualify for appointment as auditor of a public company, the person should be a member of the Institute of Chartered Accountants.

 

3.   Disqualification of Auditors of Companies

The following persons are disqualified for appointment as auditor of a company.

a.    an officer of the company or of an associated company;

b.    a person who is a partner of or in the employment of an officer of the company or of an associated company;

c.    an infant;

d.    a person found to be of unsound mind by a law court;

e.    a person in respect of whom order has been made under section 186 of the code while the order remains in force;

f.     an undischarged bankrupt;

g.    a person who is disqualified by instrument of the Registrar.

Please visit us on facebook for download of this lecture note.