Thursday, April 17

ICAI's representation to MCA on Sec. 141(3)(g) of The Companies Act, 2013, to consider the ceiling for audit not to apply to Pvt Co. & OPC

Section 141(3)(g) of the Companies Act, 2013 talks about the ceiling limit for an auditor for audit of companies, which reads as under-
''141. Eligibility, qualifications and disqualifications of auditors


(3) The following persons shall not be eligible for appointment as an auditor of acompany, namely:—

(a) ..................

(g) a person who is in full time employment elsewhere or a person or a partner ofa 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 twenty companies;''


As quoted, the above section gives a ceiling limit for an auditor on no. of audit, and only 20 companies are allowed to be audited by 1 auditor. But what has created a confusion in the profession is the use of word "Company" instead of using word "public company". The word company includes every type of company (which even include One Person Company, Private Company, Small Company). Obviously, the intention of the law maker must not be that one auditor can only audit 20 companies, including private co. and OPC.

To avoid this confusion, ICAI has sough the correct view of MCA on the same, and also to stress that even if the intention is to give limit of 20 companies, then that limit must be removed as it will create the hardship on CA profession at large and also audits will cost the companies high. Copy of the ICAI's letter is attatched below.

See the letter:

(The original letter is hosted at ICAI's website. This copy of the letter has been highlighted wherever it was necessary for better understanding of the users.)

Courtesy: ICAI

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