Correct Answer Explanation: c) Majority of the partners should be practicing in India

A partnership firm can indeed be appointed as the statutory auditor of a limited company under the Companies Act, 2013 in India. However, the requirement that the majority of partners should be practicing in India is not accurate. The Companies Act doesn’t stipulate such a condition for the appointment of a partnership firm as a statutory auditor.

The correct answer, c) Majority of the partners should be practicing in India, is inaccurate in the context of the Companies Act’s stipulations for the appointment of a partnership firm as a statutory auditor of a limited company. The Act does not expressly require the majority of partners in the firm to practice in India for eligibility as statutory auditors.

Instead, the Act emphasizes qualifications such as professional expertise, competence, and compliance with the standards set by the Institute of Chartered Accountants of India (ICAI).

The Act lays down stringent criteria to ensure the firm’s capability to perform the audit effectively, focusing on the firm’s overall expertise and adherence to professional standards rather than the geographical practice locations of its partners.

Therefore, the requirement regarding the majority of partners practicing in India is a misconception in the context of appointing a partnership firm as a statutory auditor under the Companies Act, 2013.

Now, let’s delve into why the other options are not correct:

a) A partnership firm can be appointed as a statutory auditor of a limited company:

This statement is indeed correct. The Companies Act, 2013, allows for the appointment of a partnership firm as a statutory auditor of a limited company. The Act specifies that the auditor of a company can be an individual or a firm, and in this case, a partnership firm, registered under the Chartered Accountants Act, 1949, can be appointed.

This flexibility enables firms of chartered accountants to undertake the responsibilities of auditing companies, ensuring expertise and professional competence in conducting statutory audits.

b) Appointment can be made in the name of the firm:

This statement is accurate as well. When a partnership firm is appointed as a statutory auditor, the appointment is indeed made in the name of the firm. It is the firm as an entity that assumes the responsibilities, obligations, and liabilities related to the audit engagement.

This distinction allows for a clear identification of the auditing entity and ensures that the firm is accountable for the audit services rendered to the company.

d) All partners should be chartered accountants:

This statement is not accurate as per the provisions of the Companies Act, 2013. The Act does not mandate that all partners in a firm appointed as a statutory auditor must be chartered accountants. Instead, it emphasizes the collective qualifications, expertise, and adherence to professional standards of the firm as a whole.

While having partners who are chartered accountants can significantly enhance the firm’s capabilities, the Act does not impose a blanket requirement that all partners must hold this specific qualification for the firm to be eligible as a statutory auditor.

In essence, the Companies Act outlines criteria and qualifications that a partnership firm must meet to be eligible for appointment as a statutory auditor, focusing on the firm’s competency, expertise, and adherence to professional standards, rather than imposing specific conditions like all partners being chartered accountants or a majority practicing in India.