Q.Which of the following persons would be DISQUALIFIED from being appointed as the auditor of a company?
(A) A practising Chartered Accountant with no financial interest in the company
(B) A firm of Chartered Accountants, all of whose practising partners are qualified
(C) A person who is presently an employee of the company
(D) A Chartered Accountant who has never worked for the company before

Disqualification rules exist to protect one thing above all: the auditor's independence from the entity being examined.

Options (A), (B), and (D) all describe persons/firms who meet the formal Chartered Accountant qualification with no disqualifying connection to the company. Option (C), by contrast, describes an employee of the company itself — someone wh …

Section i lists categories of persons barred from being appointed (or continuing) as a company's auditor, and every category traces back to a single underlying concern: protecting the auditor's independence from the entity under examination. An officer or employee of the company — or of an associate/subsidiary company — is explicitly disqualified, because an employee auditing their own employer's accounts would be examining work they are themselves connected to, undermining the very independence an audit exists to provide. …

A frequent mistake is assuming disqualification is only about a person's FORMAL qualification (i.e. 'are they a CA or not'). In fact, a person can be a fully qualified Chartered Accountant and STILL be disqualified from a specific company's audit because of their RELATIONSHIP to that company (as an employee, a person indebted …