The following named persons cannot act as auditors of the company.
- a person who is a director, other officer or employee of the company or held such a position at any time during the preceding three years;
- a person who is a partner of a director, officer or employee of the company or is in the employment of any of these persons;
- the spouse of a director of the company
- a person who is indebted to the company other than in the ordinary course of business of such company. A person is not considered as indebted:
- if the company is a utility provider and the unpaid bills are not for more than ninety days
- if the company is a credit card issuer and outstanding credit card amount is not more than Rupees one million
- a person who has given a guarantee or provided any security in connection with the indebtedness of any third person to the company other than in the ordinary course of business of such entities;
- Person or a firm who, directly or indirectly, has business relationship with the company other than in the ordinary course of business of such entities
- A person who has been convicted by the court of an offence involving fraud and a period of ten years has not elapsed from the date of such conviction;
- A body corporate;
- A person who is not eligible to act as auditor under the code of ethics as adopted by the Institute of Chartered Accountants of Pakistan and the Institute of Cost and Management Accountants of Pakistan; and
- a person or his spouse or minor children, or in case of a firm, all partners of such firm who holds any shares of an audit client or any of its associated companies. There is as an exception if such a person holds shares prior to his appointment as auditor, the fact shall be disclosed on his appointment as auditor and such person shall disinvest such shares within ninety days of such appointment.
- If at the time of appointment there was no defect or disqualification in the appointment of the auditor and afterwards the defect or disqualification appears, then the auditor shall vacate the office of the auditor immediately.
- A person shall also not be qualified for appointment as auditor of a company if he is, by virtue of above stated disqualifications, disqualified for appointment as auditor of any other company which is that company’s subsidiary or holding company or a subsidiary of that holding company
- If an unqualified or disqualified person is appointed as auditor; It shall be void and Commission may appoint a qualified person in place of the auditor appointed by the company.
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