# Section 142 — Remuneration of Auditor

## 1. Who Fixes the Remuneration?

Type of Auditor	Authority to Fix Remuneration
First Auditor	Fixed by the Board of Directors (BOD)
Subsequent Auditor	Fixed at the Annual General Meeting (AGM) or in such manner as decided in the AGM

> Note: The AGM may delegate the manner of fixing remuneration to the Board.

## 2. What 'Remuneration' Includes [Section 142(2)]

Fees payable to the auditor.
Expenses reimbursed in connection with the audit (e.g., travel, lodging incurred for audit work).
Any facility extended to the auditor.

## 3. What 'Remuneration' EXCLUDES

Remuneration paid for any other service rendered at the request of the company (e.g., tax audit, certification work, advisory).
These are billed separately and are NOT part of statutory audit remuneration.

## 4. Engagement Letter — Validity

An engagement letter signed by the CA without stating the fee is still valid, provided that the fees are to be decided later mutually between the auditor and the company.

## Visual Summary

```

Remuneration of Auditor

│

┌───────────────┴───────────────┐

First Auditor Subsequent

(BOD) (AGM)

```

Worked example

### Example 1

Example 1: XYZ Ltd's first auditor is appointed by the Board within 30 days of incorporation. The Board also fixes his remuneration at ₹50,000. → Valid under Section 142, as first auditor's remuneration is fixed by BOD.

### Example 2

Example 2: At the AGM of ABC Ltd, members appoint M/s PQR & Co. as auditors and resolve that 'the Board may fix remuneration as it deems fit.' → Valid — AGM has delegated the manner.

### Example 3

Example 3: Statutory audit fee = ₹2,00,000. Auditor incurred ₹15,000 as travel + ₹10,000 for tax audit separately requested. → Remuneration u/s 142 = ₹2,00,000 + ₹15,000 = ₹2,15,000. Tax audit fee of ₹10,000 is excluded.

⚠️ Common exam mistakes

Treating tax audit / certification fees as part of statutory audit remuneration — they are EXCLUDED.
Believing that an engagement letter without a fixed fee is invalid — it is valid if fees are to be mutually decided later.
Confusing who fixes first auditor's remuneration — it is the BOD, NOT the AGM.
Forgetting that out-of-pocket expenses and facilities form part of remuneration.

Bare-Act text Section 142 · Companies Act, 2013 · click to expand

(1) The remuneration of the auditor of a company shall be fixed in its general meeting or in such manner as may be determined therein. Provided that the Board may fix remuneration of the first auditor appointed by it. (2) The remuneration under sub-section (1) shall, in addition to the fee payable to the auditor, include the expenses, if any, incurred by the auditor in connection with the audit of the company and any facility extended to him but does not include any remuneration paid to him for any other service rendered by him at the request of the company.

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