Question ID :
40558
Appointment of an Auditor in case of non-payment of undisputed fees
Can a CA in practice take the Appointment of an Auditor in case of non-payment of undisputed fees of a private limited company having their net worth is negative? And there is a case pending litigation with previous auditor already.
whether following provision will applicable and can the new auditor take the appointment as it is a sick unit?
will private limited company having negative net worth is considered as sick unit in the above case?
company went to strike off status with MCA because non filing of annual return. since the old auditor makes an objection the new auditor could not take up the engagement.
7.0 A member of the Institute in practice shall not accept the appointment as auditor of an entity in case the undisputed audit fee of another Chartered
Accountant for carrying out the statutory audit under the Companies Act, 1956 or various other statutes has not been paid:
Provided that in the case of sick unit, the above prohibition of acceptance shall not apply.
7.1 Explanation 1:
For this purpose, the provision for audit fee in accounts signed by both – the auditee and the auditor shall be considered as “undisputed” audit fee.
7.2 Explanation 2:
For this purpose, “sick unit” shall mean where the net worth is negative.
Please guide
Posted by
ANSAR ABDUL RAZAK
on
Jan 29, 2020
Filed Under
AUDIT
in the case of sick units as suggested by the code of ethics the appointment may be accepted. But be slow in acceptance and make sure that high standards of morality are maintained.
Posted by
SIVADAS CHETTOOR on
Jan 30, 2020