Full Time Employment-Cost Auditor

Full Time Employment:-


Section 224(1)(B) inter-alia provides that no company or its Board of directors shall appoint or
re-appoint any person who is in full time employment elsewhere or fi rm as its auditor if such
person or fi rm is, at the date of such appointment or re-appointment, holding appointment as
auditor of the specifi ed number of companies or more than the specifi ed number of companies.
Thus no person, who is in full time employment, can take up the practice as Cost Auditor under
the provisions of Companies Act. This proviso was added vide Companies (Amendment) Act,
1988. However, the Companies Act has not defi ned the term ‘full time employment’. Therefore, the
following guidelines could be helpful:

(a) The Cost auditor should not be a whole time director of any company under the provisions
of Section 269 of the Companies Act, 1956 or Secretary under provisions of Section 383A of
the Companies Act, 1956. Since both these Sections refer to such director or secretary being in
whole time employment, it may be diffi cult to substantiate to be in part time employment.

(b) Anyone receiving a salary and receiving provident fund contribution from his employer or
getting such other benefi ts or perquisites like Ex-Gratia or Bonus, House Rent Allowance etc.
may amount to be in full time employment.

(c) Similarly, there is a separate head of income titled ‘Salaries’ under the Income Tax Act. A
person declaring income under that head may be termed to be in employment.