AUDITOR
WHO CAN BE A AUDITOR– Any person who is chartered Accountant shall be eligible to be appointed as auditor of the company. In case of firm where majority of partners are chartered accountant practicing in india are eligible to be appointed as auditor of the company here firm include LLP also.
APPOINTMENT OF AUDITOR SEC-139(1)– Every company at its first AGM shall appoint an individual or firm as an auditor of the company by passing ordinary resolution in this regard. An individual auditor shall hold office for term of 5 years only and a firm shall hold office for 2 term of 10 year only.
In case of government company or company who controlled or owned by government auditor shall be appointed by CAG within 180 days of financial year which shall hold office till the conclusion of AGM as per section- 139(5)
CONDITION FOR APPOINTMENT-
1. An individual or firm is eligible for appointment and is not disqualified for appointment under Companies Act, 2013, Chartered accountant Act, 1949, and rules made thereunder.
2. Said appointment should be as per the Act.
3. Said Appointment is done within time limit provided by the Act.
4. List of proceedings against the auditor or audit firm or any partner of the said firm pending with respect to professional misconduct as disclosed in the consent certificate.
Apart from above an individual or firm shall also meet the criteria mentioned under section 141 of the Companies Act, 2013.
ROC FILING– Every company shall file E-form ADT-1 within 15 days of such appointment to concerned ROC.
RESTRCITION ON COMPANIES FOR RE-APPOINTMENT- Followings companies shall not appoint or re- appointment auditor for more than term respectively: an individual as auditor for more than one term of five consecutive years; and an audit firm as auditor for more than two terms of five consecutive years:
Every listed Company,
1. All unlisted companies having pad up share capital 10 crore or more
2. All private companies having paid up share capital 50 crore or more
All companies who’s paid up share capital below threshold limited mentioned in point A and B but shall have public borrowings from financial institution, banks including deposits 50 crore or more
Note- Above appointment or Re-appointment shall be made only after 5 year of completion of term only. Above condition shall not apply on one Person Company and small company.
APPOINTMENT OF FIRST AUDITOR IN THE COMPANY- in case of company other than government company first auditor shall be appointed by the Board of Director within 30 days of registration of the company. If board fails to do so, then member of the company shall appoint first auditor at EGM within 90 days which hold office till the conclusion of first AGM as per section- 139(6)
In case of government company or company who controlled or owned by government first auditor shall be appointed by CAG within 60 days from the registration of company. if CAG fails to do so, then Board shall appoint first auditor in next 30 days. If Board also fails to do so, then members of the company shall appoint first auditor next 60 days in the EGM which shall hold office till the conclusion of first AGM as per section- 139(7)
CASUAL VACANCY OF AUDITOR– if any casual vacancy occurred in the company other than government company shall be filled by Board of Director within 30 days, if such casual vacancy occurred as a result of resignation of auditor then such appoint shall also be approved by general meeting by shareholder within 3 months which shall hold office till the conclusion of next AGM as per section- 139(8)
In case of government company or company who controlled or owned by government casual vacancy shall be filled by CAG within 30 days and if fails to do so, then Board shall filled such casual vacancy in next 3o days.
KEY NOTE- Where a company is required to constitute an Audit Committee under section 177, all appointments, including the filling of a casual vacancy of an auditor under this section shall be made after taking into account the recommendations of such committee.
REMUNERATION OF AUDITOR– 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 as per section-142
RESIGNATION AND REMOVAL OF AUDITOR- The auditor appointed under section 139 may be removed from his office before the expiry of his term only by a special resolution of the company, after obtaining the previous approval of the Central Government. The auditor concerned shall be given a reasonable opportunity of being heard as per section- 140(1)
Auditor can also make resignation to the company if he doesn’t want to continue in that company and company shall file E-form ADT-3 within 30 days of his resignation to ROC as per section- 140(2)
SIGNING OF AUDITOR REPORT, FINANCIAL STATEMENTS- The person appointed as an auditor of the company shall sign the auditor’s report or sign or certify any other document of the company and also make qualifications, observations or comments on financial transactions or matters, which have any adverse effect on the functioning of the company mentioned in the auditor’s report as per section-145
Auditor shall also have right to attend AGM of the company and all documents including notice relating to AGM shall also be forwarded to auditor of the company as per section- 146.
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