Section 142 of CA 2013 : Section 142: Remuneration Of Auditors

Explanation using Example

Imagine a scenario where "XYZ Private Limited" is holding its Annual General Meeting (AGM). One of the agenda items is to appoint the firm "ABC Auditors LLP" as the company's auditors for the next fiscal year. During the AGM, shareholders discuss and approve the remuneration for "ABC Auditors LLP." This approval process is a direct application of Section 142(1) of The Companies Act, 2013, which mandates that an auditor's remuneration must be fixed in the company's general meeting.

In addition to their audit fee, "ABC Auditors LLP" incurs expenses for travel and accommodation while conducting the audit at "XYZ Private Limited's" out-of-town factory site. According to Section 142(2) of The Companies Act, 2013, these expenses will be reimbursed to "ABC Auditors LLP" over and above their audit fee, as they are incurred in connection with the audit. However, if "ABC Auditors LLP" also provides tax consultancy services to "XYZ Private Limited" for which they charge a separate fee, this fee is not covered under the remuneration fixed for the audit as per this section.