# Remuneration of Auditor — Section 142

## Who Fixes the Remuneration?

Auditor	Authority to Fix Remuneration
First Auditor	Board of Directors
Subsequent Auditors	Shareholders at General Meeting (GM) — or in such manner as the GM determines

The Board may be authorised by the GM to decide the remuneration of subsequent auditors.

## What is INCLUDED in Auditor's Remuneration?

Expenses incurred by the auditor in connection with the audit of the company.
Any facility extended to him for such audit.

## What is EXCLUDED?

Remuneration paid to the auditor for any other services rendered by him (taxation, certification, etc.) at the request of the company.

## Visual Summary

```

Remuneration of Auditor

├── INCLUDES → Audit fee + Audit expenses + Facilities extended

└── EXCLUDES → Fees for other (non-audit) services

```

Worked example

### Example 1

Q: The first auditor of a newly incorporated company was appointed by the Board on 15.4.2025. Who shall fix his remuneration?

A: Under Section 142, the Board of Directors fixes the remuneration of the first auditor. Shareholders fix remuneration only for subsequent auditors.

### Example 2

Q: During FY 2025-26, an auditor charged ₹5,00,000 for statutory audit, ₹1,50,000 for taxation work, and ₹20,000 as travel reimbursement. What is his 'remuneration' under Sec 142?

A: Remuneration = ₹5,00,000 (audit fee) + ₹20,000 (expenses) = ₹5,20,000. The ₹1,50,000 for taxation is for 'other services' and is excluded from auditor's remuneration.

⚠️ Common exam mistakes

Stating that shareholders fix remuneration of the first auditor — it is fixed by the Board.
Including fees for taxation, certification, or consultancy services in 'auditor's remuneration' for disclosure.
Excluding out-of-pocket expenses and facilities extended — these are specifically included.

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

Section 142 — (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 an 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.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →