Page 290 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes 4. Amalgamation with another firm
5. Review the Internal Controls

6. Study the Organizational structure of the firm

14.1.2 Appointment of Auditor by Individual Partners

According to the Companies Act (Section 224), 1956 every company shall, at each annual general
meeting, appoint an auditor or auditors to hold office from the conclusion of that meeting until
the conclusion of the next annual general meeting and shall, within seven days of the appointment,
give intimation thereof to every auditor so appointed. Every auditor appointed under
sub-section (1), shall within thirty days of the receipt from the company of the intimation of his
appointment, inform the Registrar in writing that he has accepted or refused to accept, the
appointment.
Provided that in the case of a firm of auditors “specified number of companies” shall be construed
as the number of companies specified for every partner of the firm who is not in full-time
employment elsewhere:
Provided further that where any partner of the firm is also a partner of any other firm or firms
of auditors, the number of companies which may be taken into account, by all the firms together,
in relation to such partner shall not exceed the specified number in the aggregate:

Provided also that where any partner of a firm of auditors is also holding office, in his individual
capacity, as the auditor of one or more companies, the number of companies which may be
taken into account in his case shall not exceed the specified number, in the aggregate.
Provided also that the provisions of this sub-section shall not apply, on and after the
commencement of the Companies (Amendment) Act, 2000, to a private company.

!

Caution Every auditor appointed under sub-section (1), shall within thirty days of the
receipt from the company of the intimation of his appointment, inform the Registrar in
writing that he has accepted or refused to accept, the appointment.

Self Assessment

State whether the following statements are true or false:
1. Bona fide partnerships entail the joint contribution of capital or services for the purpose of
carrying on a business or investment activity in which the partners share profits and
losses.

2. Like a corporation, which is taxed as a separate entity, a partnership is also taxpaying
entity.
3. Partnership firm is a firm registered or unregistered as per the Partnership Act, 1932.

4. If turnover of a partnership firm exceeds 40 Lakhs/annum, it is subject to Tax Audit as per
44 AB of Income Tax Act.

14.1.3 Key Audit Partner

“The engagement partner, the individual responsible for the engagement quality control review,
and other audit partners on the engagement team, such as lead partners on significant subsidiaries

284 LOVELY PROFESSIONAL UNIVERSITY