Easily Appoint Auditors
Apply for the Appointment of Company Auditor with a hassle-free process. Quick, reliable, and fully compliant with legal requirements.
Understanding the Appointment of Auditor
Who is an Auditor?
Every government and non-government organization must maintain accurate financial records. As the financial year ends, these records need to be examined and audited before submission to the relevant authorities. This process is carried out by an auditor, who ensures that financial statements are accurate and comply with regulations.
An auditor is a professional trained to review and verify financial data. To be legally recognized as an auditor, an individual must be a Chartered Accountant (CA) as per the Chartered Accountant Act, 1949.
Eligibility & Qualifications for the Appointment of an Auditor
- Only a Chartered Accountant can be appointed as an auditor.
- If a firm is appointed, the majority of its partners must be Chartered Accountants practicing in India.
- In the case of a Limited Liability Partnership (LLP) firm, only partners who are Chartered Accountants are authorized to act and sign on behalf of the firm.
The appointment of an auditor is a crucial step for businesses as it ensures financial transparency and compliance with legal requirements. An auditor reviews a company’s financial records and provides insights that help management make informed decisions to achieve business goals.
If you are looking to apply for the appointment of company auditor, our expert services ensure a seamless and compliant process. Get started today and keep your business audit-ready!
Responsibilities & Documentation for the Appointment of Auditor
Key Duties of an Auditor
An auditor plays a crucial role in maintaining a company’s financial integrity. The appointment of auditor comes with several important responsibilities, including:
- Providing an Audit Report – Reviewing financial statements and presenting an audit report to ensure accuracy and compliance.
- Making Proper Enquiries – Examining financial records and transactions to detect any discrepancies.
- Assisting in Branch Audits – Supporting audits for company branches, ensuring consistency in financial reporting.
- Compliance With Auditing Standards – Following the prescribed auditing guidelines to maintain transparency.
- Reporting of Frauds – Informing the management and authorities about any fraudulent activities found during the audit.
- Providing Assistance in Investigations – Helping in any financial investigations when required.
- Adhering to Principles of Auditing – Maintaining independence, integrity, and confidentiality throughout the audit process.
- Providing a Negative Opinion – Issuing an adverse audit report if financial records do not reflect a true and fair view.
Documents Required to Apply for Appointment of Company Auditor
When appointing an auditor, the following documents are necessary:
- Copy of the Company’s Board Resolution approving the auditor’s appointment
- NOC from old auditors (if applicable)
- Written consent from the auditor agreeing to the appointment
- Certificate from the auditor confirming eligibility under Section 141
- Copy of the intimation sent by the company to the auditor regarding the appointment
- New auditor firm’s details, including:
- Name
- Address
- Email ID & PAN number
- Duration of appointment
- Details of the resigning auditor firm (if applicable)
- Appointment date of the new auditor firm
- Digitally signed Form ADT-1 (signed by the company’s director)
A proper appointment of an auditor ensures compliance with financial regulations and helps businesses maintain accurate financial records. If you need expert assistance to apply for the appointment of a company auditor, get in touch with Corp File for a seamless and hassle-free process.
Step-by-Step Process for the Appointment of Auditor
The appointment of an auditor is a structured process that must comply with the Companies Act, 2013. Below are the key steps involved in appointing an auditor for your company.
1. Checking Eligibility of the Auditor
Only a practicing Chartered Accountant (CA) can be appointed as an auditor. This is as per Section 141 of the Companies Act, 2013, which outlines the eligibility criteria for auditors.
2. Obtaining Auditor’s Consent & Certificate
Before the appointment of auditor, the company must obtain:
- A written consent from the auditor confirming acceptance of the role.
- A certificate stating that the auditor meets all legal requirements under Section 141 and that the appointment follows the prescribed conditions.
3. Filing Form ADT-1
- For the first auditor, filing Form ADT-1 with the Registrar of Companies (ROC) is optional.
- For subsequent appointment of company auditor, filing Form ADT-1 is generally required to inform the ROC.
4. Passing a Board Resolution
Once the auditor gives consent, the company’s Board of Directors must pass a resolution for the appointment of the auditor.
5. Informing the Registrar of Companies (ROC)
The company must notify the ROC about the appointment of company auditor within 15 days of appointment to ensure compliance with regulations.
6. Tenure of the First Auditor
The first auditor remains in office from the time of appointment until the conclusion of the company’s sixth Annual General Meeting (AGM).
7. No Need for Annual Ratification
Earlier, companies were required to ratify the appointment of an auditor every year at the AGM. However, this requirement has now been removed under amendments to the Companies Act.
Looking to apply for the appointment of company auditor? Our experts ensure a smooth and compliant process. Get in touch today!
Rules for the Appointment of Auditor in Different Companies
Appointment of First Auditor After Incorporation
- Non-Government Company: The Board of Directors must appoint the first auditor within 30 days of company registration. If they fail to do so, the members can appoint one at an Extraordinary General Meeting (EGM) within 90 days.
- Listed/Specified Company: Follows the same rule as non-government companies. The Board appoints an auditor within 30 days, and if not done, the members can appoint one at an EGM within 90 days.
- Government Company: The Comptroller and Auditor General of India (CAG) appoints the auditor within 60 days of company registration. If not done, the Board of Directors can appoint within 30 days, and if the Board also fails, the members can appoint an auditor within 60 days.
Appointment of Auditor at the First Annual General Meeting (AGM)
- Non-Government and Listed/Specified Companies: Members appoint an auditor who holds office until the 6th AGM. In some cases, listed/specified companies can appoint an auditor for a 5 to 10-year term, with a 5-year cooling-off period before reappointment.
- Government Company: The CAG appoints the auditor within 180 days from the start of the financial year (April 1st).
Appointment of Subsequent Auditors
- Non-Government and Listed/Specified Companies: The members appoint the auditor, who continues in office until the end of the 6th AGM, following the same rules as the first AGM.
- Government Company: The CAG appoints the auditor within 180 days from April 1st each year.
Appointment of Auditor in Case of Casual Vacancy
- Non-Government and Listed/Specified Companies: If an auditor resigns or leaves for any reason, the Board must recommend a replacement, and the members must confirm the appointment within 3 months. The new auditor serves until the next AGM.
- Government Company: The CAG must fill any vacancy within 30 days.
Need assistance to apply for appointment of company auditor? Our expert services make the process quick, compliant, and hassle-free. Get started today!
Changing the Auditor: Special Notice & Compliance Requirements
When a company decides to replace its current auditor or chooses not to reappoint the retiring auditor, a special notice must be issued as per Section 115 of the Companies Act, 2013. This notice allows the proposal for such a resolution to be presented at the upcoming Annual General Meeting (AGM).
Exemption from Special Notice
A special notice is not required if the retiring auditor has completed their full tenure of five years (for an individual auditor) or ten years (for an audit firm), as per regulations.
Written Representation by the Auditor
If the auditor submits a written representation, the company must:
- Mention this representation in the notice related to the resolution.
- Send a copy of the representation to all members receiving the meeting notice.
- If the representation is not sent, it must be filed with the Registrar of Companies (ROC).
Process After Receiving the Special Notice
- The company must forward a copy of the notice to the retiring auditor.
- The auditor’s representation must be clear and concise and circulated in a timely manner.
Meeting Requirements & Protection Against Misuse
- If the auditor’s representation is not shared with members due to delay or default, the auditor can request it to be read aloud during the meeting.
- If the Tribunal finds that the auditor’s rights are being misused, it may prevent the representation from being circulated or read.
If your company needs to apply for appointment of company auditor or requires assistance with a change in appointment of auditor, we ensure a smooth and legally compliant process.
Rules for Rotation of Auditors
When re-appointing an auditor for a limited or specified company, it is important to follow the regulations on the appointment of auditor and their rotation.
- An individual auditor can hold office for a maximum of 5 years.
- An audit firm can be appointed for two terms of 5 years each.
- After completing the term, the auditor cannot be re-appointed for 5 years.
Key Rules for Rotating Auditors:
- The time an auditor has served before the commencement of the Companies Act is counted in their term.
- A new audit firm cannot be appointed if it is associated with the outgoing firm under the same network.
- If an auditor takes a break of 5 years, they will be considered eligible for re-appointment.
- If a partner in charge of an audit firm, who also certifies financial statements, joins another firm, that firm cannot be appointed for 5 years.
Casual Vacancy of Auditor
If a company faces a casual vacancy in the position of an auditor, the Board of Directors must fill the vacancy within 30 days. If the vacancy is due to an auditor’s resignation, the company must get the appointment approved in an Extra-Ordinary General Meeting (EGM) within 3 months.
Re-Appointment of Retiring Auditor
A retiring auditor can be re-appointed at an Annual General Meeting (AGM) if:
- They are not disqualified for re-appointment.
- They have not declined re-appointment in writing.
- No special resolution has been passed to appoint another auditor or prevent their re-appointment.
If no new auditor is appointed at the AGM, the existing auditor continues in their position.
Maintaining compliance with appointment of auditor services is essential for transparency and accountability. If you need expert guidance to apply for the appointment of a company auditor, our team is here to help!