2.5 Query
Acceptance of Audit by Undercutting Audit Fees-3. Whether ‘C and Co.’ appointed by the Company Law Board for auditing the accounts of a Government Company for a particular year can without infringing the relevant law and rules and procedure accept such audit on a remuneration which is lesser than that paid to another auditor for auditing the accounts of the immediately preceding previous year.
It may be pointed out that in year in question i.e. 1969-70, there has been a substantial reduction in the work.
Opinion April 23,1971
In view of the fact that in the case under consideration on the facts given by the querist, there has been a substantial reduction in the work for the year 1969-70, it would appear that a lower fee charged for the year 1969-70 by C and Co., Chartered Accountants, would not constitute ‘under-cutting’. Hence, in the opinion of the Committee the acceptance of audit by Messrs C. & Co., Charted Accountants, on the facts given by the querist, would not amount to a professional misconduct on the part of Messrs C. & Co. and by accepting the said appointment they would not commit any breach of the Code of Conduct to be observed by members of the Institute. _______________________
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