The companies registered under the Companies Act, 2013 need to abide by the
provisions of the act. The Act has prescribed certain compliance which the
company so incorporated needs to fulfill. This 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
the Company Audit ceiling limit for a company auditor under the Companies Act
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 the majority of
partners are practicing 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 a firm.
Company Audit ceiling limit
Company audit ceiling limit or restriction on the number of audits that an
auditor can conduct is prescribed in Section 141(3) (g) of the Companies Act
Following are the provisions for company audit ceiling limit under section
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 the company.
This means an auditor shall not accept audits 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 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, 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.