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Appointment of Auditor

An Auditor is defined as a person who has been trained to evaluate and verify financial data and is recognized as a Chartered Accountant (CA) under the Chartered Accountant Act, 1949. According to the Companies Act of 2013, every firm must appoint an auditor. Appointment of Company Auditor & First Auditor, Appointment of an Auditor for Different Kinds of Companies, How are auditors appointed.

 

The purpose for Appointment of Auditor

The auditors’ job is to safeguard the interests of the company’s shareholders. The auditor is required by law to analyze the accounts kept by the directors and to notify them of the company’s true financial position. The auditor provides an unbiased assessment to the company’s owners or shareholders to safeguard and maintain the company’s financial stability.

 

Appointment of an Auditor for Different Kinds of Companies

Particulars	Non-Government Company	Listed/Specified Company	Government Company
Application for 1st Auditor post Incorporation	The Board of Directors appoints him. This must be completed within 30 days after the registration date. Members can also appoint at an Extraordinary General Meeting within Ninety days of receiving information.	The Board of Directors appoints him. This must be completed within thirty days after the registration date. Members can also appoint at an Extraordinary General Meeting within ninety days of receiving the information.	The Comptroller and Auditor General of India appoint him. This must be completed within 60 days after the registration date. Within thirty days of establishment, the Board of Directors can choose someone. Members can also appoint within Sixty days after receiving information at an Extraordinary General Meeting.
Auditor at First AGM with the written consent and a certificate of Auditor.	The appointment is done by the members He will hold office till the end of the 6th Annual General Meeting (AGM). The appointment shall be in accordance with the conditions laid down by the auditor.	Members appoint members for a total of 5/10 years in a row. There will be a 5-year cooling-off period before the next appointment.	The Comptroller and Auditor General of India make the appointment. Within 180 days of April 1st, he must be appointed.
Appointment of Subsequent Auditor	The appointment is done by the members and he will hold office till the conclusion of the 6th meeting.	The appointment is done by the members for a Maximum term of 5/10 consecutive years.	The appointment is done by the Comptroller and Auditor General of India within 180 days from the 1st of April.
Casual Vacancy due to resignation and other reasons	The appointment is by the members within 3 months of the recommendations of the Board and he will hold office till the next AGM.	The appointment is by the members within 3 months of the recommendations of the Board and he will hold office till the next AGM.	The appointment is done by the Comptroller and Auditor General within 30 days.

Appointment Of Auditor Other Than Retiring Auditor by a Special Notice

·      A special notice under Section 115 of the Companies Act, 2013 must be given proposing that such a resolution be moved at the next annual general meeting if a person other than the retiring auditor is to be appointed as an auditor, or if the retiring auditor is not to be re-appointed.

·      A special notice is not required if the retiring auditor has served for five or ten years in a row. The following are the necessary points for special notice:

• If the auditor makes a written representation to the company and requests that the members be notified, the firm must: – State the fact of the representation in any notice related to the resolution.
• The corporation should send a copy of the representation to those members who get notice of the meeting, whether before or after the receipt of the representation.
• A copy of the representation must be submitted with the Registrar if it is not sent.
• The company shall provide a copy of the special notice for dismissing the auditor to the retiring auditor as soon as it receives it.
• The length of such a depiction should be fair and not excessive.
• For distribution to members, the special notice should not be received by the company too late.
• If the representation is not informed to members because it was too late or because the company defaulted, the auditor may order the company to read it out at the meeting.

FAQ

What is the appointment of the auditor?

The Board of Directors must designate an auditor after the company is incorporated at the first annual public meeting. The Auditor’s term is normally 5 years or until the end of the 6th AGM. An Auditor can also be appointed for a one-year term that can be renewed at each annual general meeting.

 

How are auditors appointed?

The first auditor shall be chosen by the Board of Directors by approving a B/R within thirty days of the company’s incorporation or registration. In the event that the Auditor is not appointed, the Board of Directors must notify the company’s shareholders. Appointment of Company Auditor & First Auditor, Appointment of an Auditor for Different Kinds of Companies, How are auditors appointed.