Chiranjibi
Mar. 21, 2018
This fact of Purchase of Goods on Credit by the Auditor is covered under Section 141(3)(d)(ii) of the Companies Act, 2013.
What this section basically says is that if an auditor becomes indebted to the client's business for a sum of Rs. 5 lakhs or more, he shall be disqualified to act as the auditor of that company after he becomes indebted.
It doesn't matter whether the credit period is availed to other customers or not. What matters is that the auditor has become indebted to his client's business and thus can not keep auditing the books of accounts of that company.
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