Section 161 of Companies Act Cap 486 states:
(1)A person or firm shall not be qualified for appointment as auditor of a company unless he, or in the case of a firm, every partner in the firm is the holder of a practising certificate issued pursuant to section 21 of the Accountants Act, 2008.
(2) (a) None of the following persons shall be qualified for appointment as auditor of a company–
- an officer or servant of the company;
- a person who is a partner of or in the employment of an officer or servant of the company;
- a body corporate:
Provided that subparagraph (ii) shall not apply in the case of a private company.
(b) References in this subsection to an officer or servant shall be construed as not including references to an auditor.
(3) A person shall also not be qualified for appointment as auditor of a company if he is, by virtue of subsection (2), disqualified for appointment as auditor of any other body corporate which is that company’s subsidiary or holding company or a subsidiary of that company’s holding company, or would be so disqualified if the body corporate were a company.
(4) If any person who is not qualified so to act is appointed as auditor of a company such person and the company and every officer in default shall each be liable to a fine not exceeding four thousand shillings. In conclusion Section 161 of Companies Act Cap 486 clearly states the following:
- Any person or person who does not hold a practising certificate disqualified as an auditor
- An officer of the company cannot be appointed as an auditor
- A person who is a partner of an officer of the company cannot be appointed as an auditor
- A relative of an officer of the company cannot be appointed as an auditor
- If a person who cannot be appointed as an auditor is appointed in default then the appointing authority is liable to a fine of not exceeding five thousands shillings