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Attention of the members is invited to the Statement on Payments to Auditors for Other Services (hereinafter referred to as “the Statement”) issued by the Institute in 1975. The Statement deals with the performance of other services, apart from audit, for a company by the statutory auditor of that company, and also the disclosure of payments made by the company to the auditor for those other services performed by him.

Members’ attention is also invited to Circular No. 29/76, dated 27-8-1976 issued by the Department of Company Affairs (now known as Ministry of Corporate Affairs) wherein the Department of Company Affairs has specifically prohibited a statutory auditor of a company from becoming the internal auditor of the same company. Members’ attention is further invited to the Code of Ethics issued by the Institute, which also prohibits a statutory auditor to accept an internal audit engagement of the same auditee.

The Council of the Institute at its 268th meeting held on April 30 through May 2, 2007 considered the need to retain the Statement in the light of the legal and professional requirements as on date. The Council noted that the Statement on Payments to Auditors for Other Services provided for disclosure of the payments to auditors under following heads:
  • for taxation matters;
  • for company law matters;
  • for management services;
  • for internal audit; and (emphasis added)
  • for other services.
The Council noted that in the light of above legal and professional requirements, a statutory auditor of a company could not be the internal auditor of the same company. The Council further noted that Part II of Schedule VI to the Companies Act, 1956, exhaustively covered the disclosure requirements for payments to auditor in other capacities. Accordingly, the Council has decided to withdraw the Statement on Payments to Auditors for Other Services.

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