Appointment and Resignation of Auditor
An Auditor is an independent professional person who is qualified to perform an audit; An Auditor is responsible for evaluating the validity and reliability of company’s financial statements.
Section 138 to 148 of the Companies Act deal with accounts, audit and auditors, as companies are required to file financial reports with the ROC for each financial year, thus these should be thoroughly checked and assessed before submission, and here the auditor performs such duty.
A person will be qualified to be appointed as an auditor of a company only if he is a qualified Chartered Accountant and where a firm is appointed as an auditor of a company; only the partners who are Chartered Accountants are authorized to act and sign on behalf of the firm.
Appointment of Auditor:
First Auditor: Every company within 30 days of registration of the company during the annual general meeting or within 90 days in EGM by the board of Directors. The first Auditor (or the Auditing firm) appointed will hold office from the conclusion of the meeting.
In case of Government companies, the first auditor would be appointed by the Auditor-General of India and Comptroller within 60days from the date of registration of the company and where it fails to appoint the auditor within the said time period, the board of directors would appoint such auditor within 30days
Documents Required:
- A written consent from the Auditor: Consent is a proof that the person or firm qualifies the criteria provided under Section 141 of the Act, needs to be submitted before an appointed.
- Notice of Appointment: Company will issue an appointment notice to the auditor and E-form ADT-1 is required to be filled within 15 days of the meeting in which the auditor is appointed.
Resignation of Auditor:
Under Section 140(2) of Companies Act, 2013, the Auditor who has resigned from the company shall file within 30 days from the date of resignation shall file E-form ADT-3 with the ROC.
If the auditor does not comply with sub-section (2), he or it shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
In case of Casual Vacancy:
Under Section 139(8) of Companies Act, 2013:
If casual vacancy is arising due to the resignation of auditor, it shall be filled within 30 days by the Board of Directors, and the recommendation so made by the board shall be approved in a general meeting (it can be EGM or AGM ) convened within 3 months from the date of recommendation of the board.
Any auditor appointed in a casual vacancy shall hold office until the conclusion of the next Annual General Meeting.
Documents Required:
- Resignation letter from the resigning Auditor mentioning the reason and date of resignation.
- The resigning Auditor will intimate to the Company his resignation within 30 days of his resignation.
- File E-form ADT-3 with the Registrar of Company within 30 days of resignation.
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Author- CS Aakansha Negi and can be contacted at [email protected]
Author Bio
Should ADT-1 for appointment of new auditor in case of casual vacancy be filed only after ADT-3 is filed by old auditor.Or can we file ADT-1 before ADT-3 of old auditor..?