Appointment of Auditor Resignation and Removal of Auditor. Easy guide for FY 21-22 & onwards

Appointment of Auditor Resignation and Removal of Auditor – Companies registered in India has to mandatorily appoint auditor and get its books of Account audited. This article is brief guide on process of appointment of First Auditor and subsequent auditor, process of resignation by auditor or process of removal of auditor by company.

All the forms are available on MCA Portal >> https://www.mca.gov.in/content/mca/global/en/home.html

Appointment of First Auditor – Appointment of Auditor Resignation and Removal of Auditor

Company (Applicable to both public and private companies) has to mandatorily appoint first auditor within 30 days from the date of Incorporation. First auditor will be appointed in first board meeting. The decision of board is ratified in General Meeting. The tenure of first auditor will be till conclusion of sixth annual general meeting of the company or tenure of first auditor will be till conclusion of first annual general meeting of the company and renewed for next 5 AGMs.

In case board fails to appoint auditor, Members of the company have to appoint first auditor within 90 days from the date of Incorporation. The tenure of first auditor will be till conclusion of first annual general meeting of the company.

However, in case of Government companies, first auditor is appointed by Comptroller and Auditor General of India (CAG) within a period of 60 days from date of incorporation and if same is not appointed by CAG withing 60 days, board member within next 30 days. The tenure of first auditor will be till conclusion of first annual general meeting of the company.

Company has to intimate ROC on appointment of Auditor by filing form – ADT-1 (Information to the Registrar by Company for appointment of Auditor). Form ADT-1 is optional to file in case of appointment of first auditor Note: Auditor must not be disqualified to be appointed as per Sec 141 of the Companies Act, 2013.

Appointment of Subsequent Auditor – Appointment of Auditor Resignation and Removal of Auditor

Subsequent auditors are appointed in general meeting.

Compulsory filing of Form ADT-1 within 15 days of appointment.

Before appointment written consent from auditor along with certificate has to be obtained specifying provisions of Sec 141 are in compliance and auditor is not disqualified.

Appointment of Auditor due to casual vacancy – Appointment of Auditor Resignation and Removal of Auditor

Company’s (Applicable to both public and private companies) casual vacancy of Auditor due to resignation is filled by board within 30 days and decision so made by board will be approved in General Meeting which has to be held within 3 months from such appointment. The tenure till conclusion of next annual general meeting of the company.

Company’s (Applicable to both public and private companies) casual vacancy of Auditor due to reasons other than resignation is filled by board within 30 days. No need for approval in General Meeting. The tenure till conclusion of next annual general meeting of the company.

However, in case of Government companies, auditor is appointed by CAG within 30 days from the date of casual vacancy. The tenure of first auditor will be till conclusion of first annual general meeting of the company.

What is casual vacancy?

Casual vacancy of Auditor means death of auditor or resignation of auditor or disqualification of auditor post acceptance of appointment letter because of which he ceases to act as auditor.

Auditor appointment for listed companies

A concept of rotation is applicable in case of listed companies’ auditor. Individual can be appointed as auditor for period of 5 years only in case of listed company. Audit Firm can be appointed as auditor for 2 tenures i.e., for 10 years.

Resignation by Auditor – Appointment of Auditor Resignation and Removal of Auditor

Auditor can resign by giving notice in writing to company.

Compulsory filing by Auditor of form ADT-3 (Notice of Resignation by the Auditor) within 30 days from the date of resignation.

Removal of Auditor – Appointment of Auditor Resignation and Removal of Auditor

Board Approval.

Compulsory filing of Form ADT-2 (Application for removal of auditor(s) from his/their office before expiry of term) for obtaining approval from Central Government for removal of Auditor.

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Also refer other articles refer from TaxLedgerAdvisor >> https://www.taxledgeradvisor.com/statutory-audit/ https://www.taxledgeradvisor.com/auditing/income-tax-audit/