The new regime of Companies Act 2013 has changed the requirement for appointment of the auditor in Companies. There has been a paradigm shift in the provisions relating to appointment of Statutory Auditor. This article broadly covers the provisional requirement for appointment of the auditor under Companies Act, 2013. The responsibility of evaluating the validity and reliability of financial statements is to the auditors.
It involves an intelligent scrutiny of the books of account of a Company with reference to documents, vouchers and other relevant records to ensure that the entries made therein giving a clean and clear picture of the business. Hence, the need to appoint Statutory Auditor arises.
As per section 139(6) the first auditor of the company other than a government company shall be appointed by the Board within 30 days of Incorporation. In case of Board’s failure, an EGM shall be called within 90 days to appoint the first auditor. The law is silent regarding from when this time limit of 90 days be reckoned, it is better to take a stricter view and interpret that the 90 days limit starts from Incorporation rather than expiry of 30 days.
In case of Government Companies the first auditor shall be appointed by the Comptroller and Auditor-General of India within sixty days from the date of registration of the company and in case the Comptroller and Auditor-General of India does not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next thirty days; and in the case of failure of the Board to appoint such auditor within the next thirty days, it shall inform the members of the company who shall appoint such auditor within the sixty days at an extraordinary general meeting
The first auditor shall hold office till the conclusion of 1st Annual General Meeting.
Every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting.
The following class of Companies shall not appoint or reappoint:-
(a) an individual as auditor for more than one term of five consecutive years; and
(b) an audit firm as auditor for more than two terms of five consecutive years:
The class of companies shall mean the following classes of companies excluding one person companies and small companies:-
(a) all unlisted public companies having paid up share capital of rupees ten crore or more;
(b) all private limited companies having paid up share capital of rupees twenty crore or more;
(c) all companies having paid up share capital of below threshold limit mentioned in (a) and (b) above, but having public borrowings from financial institutions, banks or public deposits of rupees fifty crores or more.
For the appointment of first auditor it is optional for the Company to file Adt-1 with ROC. The question arise when we will file Aoc-4 what we have to put in SRN of ADT-1. The answer is we can put Z9999999. So for the appointment of first auditor filing of ADT-1 is optional.
For appointment of subsequent auditor it is mandatory for the Company to file ADT-1 within 15 days of appointing the auditor.