The provision of section 141 of the Companies Act, 2013 (CA 2013) provides for Eligibility, Qualifications and Disqualifications of Auditors of company. This section corresponds to section 226 of the Companies Act, 1956 i.e. Qualifications and disqualifications of auditors. Section 141 of CA 2013 has come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014.
Eligibility and Qualifications of Auditors of a Company [Section 141(1) & (2)]
Chartered Accountants (CA):
A person shall be eligible for appointment as an auditor of a company only if he is a chartered accountant. As per clause (17) of Section 2 of CA 2013, the term “chartered accountant” means a chartered accountant as defined in clause (b) of subsection (1) of section 2 of the Chartered Accountants Act, 1949 who holds a valid certificate of practice under sub-section (1) of section 6 of that Act.
That means Chartered Accountants holding certificate of practice can only be appointed as an auditor of a company. In other words, an auditor must be a member of ICAI and he should also hold a valid COP.
Firm of Chartered Accountants (CA Firm):
A firm of Chartered Accountants whereof majority of partners practicing in India are qualified for appointment as an auditor of a company. CA firm may be appointed by its firm name to be auditor of a company.
Thus, the eligibility requirement that a firm could be appointed as an auditor only if all the partners practicing in India are qualified for appointment has now been changed under the New Companies Act, 2013. In other words, there is no need to practice in India by all partners of a CA firm as required under the Companies Act, 1956.
Accordingly, if majority of partners of a CA firm practicing in India, the firm shall be eligible to be appointed as an auditor in a company.
Limited Liability Partnership (LLP):
As per explanation given under section 139(4) of CA 2013, the word “firm” shall include a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008.
Accordingly, a Limited Liability Partnership (LLP) may also be appointed as an auditor of a company. However, only the partners who are chartered accountants shall be authorised to act and sign on behalf of the LLP firm.