AUDITOR’S LIEN ON CLIENT’S BOOKS AND RECORDS - 1. Lien refers to the right of lawful possession of somebody else’s property on which he has worked. 2. He has a right to retain such properties for non-payment of his dues for the work done. 3. ICAEW has expressed a view that an Auditor may exercise lien on his Client’s books, subject to the following conditions: a.Documents retained must belong to the Client who owes money. b.Such documents must have come into the Auditor’s possession on the Client’s authority. c.Some work must have been done in relation to such documents. d. The fees for which the lien is exercised must be outstanding in respect of such work 4. In R.D. Saxena vs Balram Prasad Sharma, Supreme Court had held that “ no professional can be given the right to withhold the returnable records relating to the work done by him with his Clients’ matter, on the strength of any claim for unpaid remuneration. The alternative is that the professional concerned can resort to other legal remedies for such unpaid remuneration”. 5. Conclusion: Auditor cannot exercise lien on his Client’s books & records for unpaid remuneration. 6. Practical problems in enforcing lien: a.Under Sec.209 of the Act, all the books of accounts of a company must be kept at the registered office only. These create difficulties for the auditor to have possession. b.He must provide reasonable facility for inspection of the books of accounts by directors and others authorised to inspect under Sec.209A.
Posted on: Wed, 14 May 2014 09:30:00 +0000