In India, the Companies Act 2013 mandates the audit of all company accounts. This critical procedure involves the independent inspection of a company’s books of accounts and financial statements, conducted by a qualified auditor. The audit ensures the accuracy and authenticity of accounts maintained by the company. This article offers an in-depth understanding of the audit process, the role of an auditor, and the procedures for the appointment and reappointment of auditors, including the steps to fill a casual vacancy.
First, let’s understand what is Audit & who is Auditor?
Audit is the process of independent examination or inspection of various books of accounts, financial statements by an auditor followed by physical checking of inventory to ensure accuracy and correctness of accounts maintained.
Auditor is the person who is appointed to do so.
Appointment of an Auditor
Every company shall appoint an individual or a firm as an Auditor at the first AGM and there after till the conclusion of every 6th meeting, He hold the office.
Before such appointment is made the return consent of the auditor and the certificate (Regarding whether the Auditor Satisfies the criteria provided in section 141) of him shall be obtained from the auditor.
♦ First Auditor
- First Auditor of the company (other than a government company) shall be appointed by BOD within 30 days from the date of registration of the company.
- If BOD fails to appoint within 30 days, members of the company shall appoint the first auditor within 90 days at an extraordinary general meeting.
- In case of government company First Auditor shall be appointed by CA&G within 60 days from the date of registration of the company.
- If CA&G fails to appoint, by BOD within next 30 days.
- If BOD again fails, by the members of the company within 90 days at an extraordinary general meeting.
Note: – Tenure of the first auditor till the conclusion of first AGM.
♦ Subsequent Auditor
As first AGM, appoint an individual or a firm as an auditor who shall hold office from conclusion of that meeting till the conclusion of its 6th AGM.
Before such appointment, it is mandatory to get the written consent and a certificate from him with the condition as may be prescribed.
Within 15 days of the meeting the company shall file a notice of such appointment with the ROC in Form ADT-1.
♦ Re-Appointment: –
After 6th AGM of appointment of auditor, re-appointment is necessary the previous Auditor may also re-be re-appointed at AGM if.
a) He is not disqualified.
b) Be he has not given notice of his unwillingness to be re-appointed.
♦ Appointment in case of casual vacancy.
Casual vacancy arises due to resignation of previous auditor, death, unsound mind, or for any reason previous auditor vacant the office.
♦ Steps for re-appointing auditor in casual vacancy.
i. Obtain ADT- 03 from previous auditor (Resignation letter).
ii. Obtain written consent confirming his or her eligibility from proposed auditor for such appointment.
iii. Intimate the proposed auditor with copy of board resolution and appointment letter.
iv. Conduct board meetings within 30 days of resignation, inviting all directors and discuss the matters regarding resignation of previous auditor and appointment of new auditor.
v. Publish a notice for extra ordinary general meeting before 21 days of conducting EGM.
vi. Conduct EGM confirming appointment of proposed director.
vii. Fill form ADT-1 on MCA portal.
Attachments Required in filing ADT -1.
> Copy of board resolution passed for appointing the Auditor
> Appointment letter
> Consent of auditor in written of auditor regarding confirming his eligibility for audit of a company.
Conclusion
Appointing an auditor in casual vacancy is to be done within 3 MONTHS from the date of resignation of previous auditor. And the auditor appointed in such a case may hold office till the conclusion of that year’s AGM. In that AGM Board may decide to appoint that auditor for further 5 years or may appoint a new auditor.
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The above comments do not constitute professional advice. The Author can be reached at [email protected] or visit our website www.financialtreecompany.com or call us on 9111872247 . My name is Ayushi Loth and I am tax consultant at Financial Tree Company (Your Honest Tax Assistant). We also make educational videos on Youtube and name of our channel is Financial Tree Company. Our main aim is to bring best possible solutions, spread knowledge and love.
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