Module: | SEBI LODR & Corporate Governance Frameworks
Q15: Consider the following statements regarding the disqualification of auditors under Section 141 of the Companies Act, applicable in 2025-2026:
1. A person is disqualified from being appointed as an auditor if their relative holds any security of or interest in the company exceeding a face value of Rupees 1 Lakh.
2. An auditor is immediately disqualified if they or their partner are indebted to the company for an amount exceeding Rupees 5 Lakhs.
3. The provision of specialized investment banking services by the audit firm to the holding company does not attract disqualification.
Which of the above statements is/are correct?
2. An auditor is immediately disqualified if they or their partner are indebted to the company for an amount exceeding Rupees 5 Lakhs.
3. The provision of specialized investment banking services by the audit firm to the holding company does not attract disqualification.
Which of the above statements is/are correct?
✅ Correct Answer: A
🎯 Quick Answer:
A. Only 1 and 2 are correct.Structural Breakdown: Statement 1 is correct.
Statement 2 is correct.
Statement 3 is incorrect; Section 144 prohibits providing investment banking services to the client or its holding company.
Historical/Related Context: The Rs 1 Lakh relative threshold was implemented to sever financial self-interest.
Causal Reasoning: An auditor providing lucrative consulting services may compromise integrity to ensure the continuation of those contracts.