Aashriya & Associates has two Partners holding Certificate of practice. It has 14 Public company clients and other small clients. The firm is in dilemma as to accept the forthcoming audit request of two Public companies. Give your opinion with reasons.
The Directive issued ICAN on Ceiling over the number of audits requires that a member holding COP can audit the books of accounts of a maximum 100 clients only, in a financial year. Out of these 100
clients, number of Public Companies shall not exceed 10. The above limit is applicable for each member of a partnership firm. Provided, organizations whose annual turnover is less than NRs. 20 lakhs, such as small Cooperatives, Religious organizations, Social Organizations, Consumer Group, Different Committees, Trade Unions, Professional Associations and other entities of similar nature are not included while calculating the above limit. Thus, in view of above requirement, new audit can be accommodated subject to total limit for two partners.