Question

A Chartered Accountant who has purchased on credit goods worth Rs. 2,000 from a company (Z) Ltd. is _________.

• A. Not disqualified from being appointed an auditor of Z Ltd.
• B. Disqualified from being appointed an auditor of any company of the group
• C. Disqualified from being appointed an auditor of Z Ltd.
• D. Disqualified from being appointed an auditor of any company having dealings with Z Ltd.

Answer 1

Answer: (C)

Disqualified from being appointed an auditor of Z Ltd.

A chartered accountant to be appointed as an auditor cannot be indebted to the company for an amount above Rs.$1500$.

In the given case, he has purchased goods on credit for Rs.$2000$, which disqualifies him from being appointed as a statutory auditor of Z Co..

Since, it affects his independence, he is disqualified.