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Appointment of Auditor – Procedure As Per Companies Act 2013

appointment of auditor

Each company shall appoint an individual or an auditing firm to act as its initial and subsequent auditors. A company’s auditor represents the interests of the shareholders. Every business must appoint an auditor under the 2013 Companies Act. Within 30 days of the business’ incorporation, auditors must be selected and this process is called appointment of auditor.

Appointment of the first auditor

According to the 2013 Companies Act provisions, there are various guidelines for appointing company auditors of several types.  While doing the appointment of auditor the initial type is first auditor appointment.

In government company

Within sixty days of the company’s incorporation or registration date, the Comptroller and Auditor General of India (CAG) must appoint the first auditor.

In non-government company

Within 30 days of the company’s incorporation or registration, the Board of Directors must appoint the first auditor by passing a B/R.

Appointment of subsequent auditor

In government company

The CAG of India must appoint an additional auditor at a government firm within 180 days of the annual general meeting that ends the fiscal year.

In non-government company

The shareholders choose the next auditor at the first annual general meeting (AGM) of non-government organizations and are appointed for a five-year term.

Casual vacancy

According to the first proviso of section 139’s subsection (1), a casual vacancy may result from the auditor’s death, ineligibility, resignation, removal, etc., or the shareholders’ failure to approve the Appointment.

In a government company

The C&AG must fill any casual vacancy within 30 days. However, if the C&AG does not serve the vacancy within the allotted time, the board must do so within 30 days.

In non-government company

If a company other than a government-owned company is hiring, the board must fill the position within 30 days. However, if the casual vacancy results from an auditor’s resignation, the company must also approve the Appointment at a general meeting within three months of the board’s recommendation.

Documents required for the Appointment of auditor

When doing appointment of auditor for a company, the following forms must be submitted by the company.

  • When the first auditor is appointed, submit Form MGT-14 and proof of the resolution.
  • Form ADT-1 must be delivered to the ROC (Registrar of Companies)
  • In addition to the forms mentioned above, the ROC also requires the following data.
  • The brand-new auditing firm’s name.
  • The new auditing firm’s location.
  • Email address and PAN Number
  • How long the company has been employed.
  • Information about the departing auditing firm.
  • The day the brand-new auditing company was hired.
  • ADT-1 form with a digital signature (along with the signature of the company’s director).

Appointment of auditor procedure

Appointment of the first auditor

The Audit Committee may make recommendations, which the Board of Directors considers before recommending that the company’s shareholders appoint an auditor. If the audit committee decided not to review its submissions, the board would note the reasons for disagreement and send its recommendation to the company’s members.

Within 60 days of the company’s registration date, the Comptroller and Auditor-General of India must appoint the first auditor for Government Companies. The Company’s Board of Directors must appoint the auditor within 30 days if the Auditor-General of India and Comptroller fail to do so within the allotted time. The initial auditor may continue to work through the first annual general meeting.

Other than the first auditor’s Appointment

The company’s shareholders must choose auditors at the annual meeting. The general meeting that selects the auditor for an appointment is the first meeting, and the auditor officially starts working after that meeting.

However, if registration causes a momentary vacancy in the auditor position, the members’ approval must be obtained within three months of the board’s date of recommendation. This auditor may continue working until the following annual general meeting ends. The company must submit Form ADT-1 within 15 days of the auditor’s Appointment to proceed with the Appointment of the subsequent auditor.

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