(1) If an auditor is appointed by the Board of Directors or the Central Government, his remuneration is to be fixed by the Board or Central Government as the case may be.

(2) In other cases, the remuneration of the auditor shall be fixed by the company in General Meeting or in such a manner as the company in General Meeting may determine.

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For this purpose, the expression ‘remuneration’ includes any sums paid by the company in respect of the auditor’s expenses.

Qualifications of an Auditor:

According to section 226 (1) and (2) of the Companies Act, 1956, the prescribed qualifications are given as under:

A person shall not be qualified for appointment as auditor of a company unless he is Chartered Accountant within the meaning of the. Chartered Accountant Act, 1949 (XXXVIII of 1949).

Provided that a firm, where of all the partners practicing in India are qualified for appointment as aforesaid may be appointed by its firm name to be auditor of a company, in which case any partner so practicing may act in the name of the firm.

A person who holds a certificate under the Restricted Auditor’s Certificate (Part B states) Rules, 1956, is also qualified to act as an auditor of a company. Such persons are known as certified auditors and are always subject to the rules made in this behalf by the Central Government.

The Central Government may, by notification in the official Gazette, make rules providing for the grant, renewal, suspension or cancellation of auditor’s certificates to persons and may prescribe conditions and restrictions for such grant, renewal, suspension and cancellation.