Company Auditor- Company Audit Ceiling Limit under the Companies Act 2013

The companies registered under the Companies Act, 2013 needs to abide by the provisions of the act. The Act has prescribed certain compliance which the company so incorporated needs to fulfil. These compliance depends on the threshold limits and if the company falls under these threshold limits prescribed by the act of that particular provision, then these company mandatorily needs to follow that provision. In this article we have discussed Company Audit ceiling limit for a company auditor under the Companies Act 2013.

What is a Company Audit?

Audit means to examine or verification of various books of accounts thoroughly by an auditor. An audit also includes physical checking of inventory to ensure that all the departments are up-to-date with the documented system of recording transactions. The purpose behind this is to ascertain the accuracy of financial statements provided by the organization.

To conduct the audit is mandatory irrespective of the business structure, legal forms, status or size of the business when such examination is conducted to express an opinion thereof”.

Who can be appointed as an Auditor of a Company?

A chartered Accountant holding a valid certificate of practice under the Chartered Accountants Act, 1949 can only become an auditor of the company. Also, a firm can be appointed as an auditor by the company provided majority of partners are practising in India and are eligible for the appointment. However, only the partners who are certified chartered accountants shall be allowed to sign the report or certificates on behalf of such firm.

Company Audit ceiling limit

Company audit ceiling limit or restriction on number of audits that an auditor can conduct is prescribed in Section 141(3) (g) of the Companies Act 2013. Following are the provisions for company audit ceiling limit under section 141(3) (g):

• A person having full time employment elsewhere, or a person or a partner of a firm holding appointment as its auditor, if such person or partner is at the date of such appointment or reappointment holding appointment as auditor of more than 20 companies then such person shall not be eligible for appointment or reappointment as an auditor of company.
• This means an auditor shall not accept audit of more than 20 companies.
• However, the MCA has exempted the Dormant company and One Person Company from this ceiling limit. Also, the small companies and Private Limited Companies with less than 100 crores paid up share capital are excluded from the this limit.

Hence, now the ceiling limit for company audit only includes Public Limited Company and Private Limited Company with 100 crores or more paid up share capital. However, As per Section 44AB of Income Tax Act,1961, In order to maintain the quality of Tax Audit to be conducted by CAs, ICAI prescribed the maximum amount of audit that an auditor can undertake is 60 in a year.