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Appointment Of Auditor

An auditor is an individual qualified to review and verify accounting data and is recognized as a Chartered Accountant (CA) under the Chartered Accountants Act, 1949. As per the provisions of the Companies Act, 2013, every company is required to appoint an auditor.

Appointment Of Auditor- Procedure & Documents Required

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  • Submit Your Required Documents
  • Track Application Status
  • Received your Certificate

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Why Should I Use Auriga Accounting For Appointment Of Auditor ?

Auriga Accounting has a team of registration experts who can provide complete guidance to register your Appointment Of Auditor.

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Our team of experts will get in touch with you and collect all necessary documents and details

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We fill out and file your Appointment Of Auditor

Complete your Event Based Compliance

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Why Should I Use Auriga Accounting For Appointment Of Auditor ?

Auriga Accounting has a team of registration experts who can provide complete guidance to register your Appointment Of Auditor.

book appointment

Our team of experts will get in touch with you and collect all necessary documents and details

Resolve all your queries

We fill out and file your application for Event Based Compliance

Complete your Event Based Compliance

Complete Your Appointment

Overview
Advantages
Types
Documents
Guidelines
Power
Statutory
Procedure

Overview - Appointment Of Auditor

Upon a company’s incorporation, the Board of Directors must appoint the first auditor within 30 days. If the Board fails to do so, the company’s members must make the appointment within 90 days at an Extraordinary General Meeting (EGM). The first auditor serves until the conclusion of the first Annual General Meeting (AGM). For subsequent appointments, auditors are typically appointed by the Board during the first AGM and hold office until the conclusion of the sixth AGM or for a term of five years, whichever comes first. Alternatively, auditors may be appointed annually, with their term renewable at each subsequent AGM.

Advantages of Appointment Of Auditor

  • Independence & Objectivity
    • Unbiased review of financial reports
    • Reduces conflicts of interest & enhances trust
  • Better Regulatory Compliance
    • Ensures adherence to laws & accounting standards
    • Helps avoid fines, legal issues & reputational damage
  • Quality Assurance
    • Identifies financial shortcomings
    • Improves financial reporting practices
  • Stakeholder Trust
    • Increases confidence of investors, creditors & regulators
    • Enhances access to funding & business credibility

Appointment Of Auditor for Different Types of Companies

Particulars

Non-Government Company

Listed/Specified Company

Government Company

Appointment of First Auditor Post-Incorporation

The Board of Directors must appoint an auditor within 30 days of registration. If they fail, members can do so at an EGM within 90 days.

Appointed by the Board within 30 days; if delayed, members appoint at an EGM within 90 days.

Appointed by the Comptroller and Auditor General of India (CAG) within 60 days of registration. If not done, the Board of Directors must appoint within 30 days. If the Board also fails, members can appoint at an EGM within 60 days.

Appointment at First AGM

Appointed by members and holds office until the conclusion of the 6th AGM, subject to conditions set by the auditor.

Appointed by members for a maximum term of 5 or 10 consecutive years, with a mandatory cooling-off period of 5 years before reappointment.

Appointed by the CAG within 180 days from April 1.

Appointment of Subsequent Auditor

Appointed by members and holds office until the conclusion of the 6th AGM.

Appointed by members for a maximum of 5 or 10 consecutive years.

Appointed by the CAG within 180 days from April 1.

Casual Vacancy Due to Resignation or Other Reasons

Filled by members within 3 months of the Board’s recommendation; the auditor holds office until the next AGM.

Filled by members within 3 months of the Board’s recommendation; the auditor holds office until the next AGM.

Filled by the CAG within 30 days.

Required Documents for Appointment Of Auditor

When appointing a new auditor, a company must submit specific documents to comply with regulatory requirements. Below is a detailed list of the necessary filings:

  • Form MGT-14: accompanied by proof of the board meeting resolution.
  • Form ADT-1: must be submitted to the Registrar of Companies (ROC).

 

Additional Information Required for ROC Submission for Appointment Of Auditor

When filing for an auditor appointment with the Registrar of Companies (ROC), the following details must be provided:

  • Name of the New Auditor Firm: The full legal name of the appointed auditing firm.
  • Address of the New Auditor Firm: The firm’s official office address.
  • Email Address and PAN Number: Contact details and the firm’s Permanent Account Number.
  • Appointment Term: The duration for which the auditor firm is appointed.
  • Details of the Resigning Auditor Firm: Information regarding the outgoing auditor firm.
  • Appointment Date: The effective date of the new auditor’s appointment.
  • Digitally Signed Form ADT-1: This form must be digitally signed by a company director to authenticate the submission.

Guidelines for Appointment Of Auditor Across Different Types of Companies

Appointment of First Auditor After Incorporation

  • Non-Government Company: The Board appoints the first auditor within 30 days of registration. If not done, members can appoint at an EGM within 90 days.
  • Listed/Specified Company: Follows the same process as non-government companies—appointment by the Board within 30 days or by members at an EGM within 90 days.
  • Government Company: The Comptroller and Auditor General of India (CAG) appoints the auditor within 60 days. If CAG fails, the Board appoints within 30 days; otherwise, members appoint at an EGM within 60 days.

Power and Duties of Appointment Of Auditor

  1. Access to Records: Can examine books of account and vouchers.
  2. Request Information: Can call for necessary documents for audit.
  3. Loan Security: Check if company loans are properly secured and fair to the company/members.
  4. Book Entry Transactions: Ensure they are not harmful to company interests.
  5. Asset Sales: Verify if non-banking, non-investment companies are selling securities below purchase price.
  6. Loan Classification: Confirm loans and advances are not misrepresented as deposits.
  7. Personal Expenses: Ensure personal expenses are not charged to company accounts.
  8. Share Allotments: Verify if shares stated as allotted for cash have received cash and if accounts are accurate and not misleading.

When Should a Statutory Appointment Of Auditor ?

Not all annual accounts require a statutory auditor. There are two exceptions:

  1. Certain Partnerships & EEIGs – General partnerships, limited partnerships, and European Economic Interest Groupings (EEIGs) without corporate partners (i.e., all partners have unlimited liability as natural persons) do not need an auditor.
  2. Small Companies & Associations
    • Not required if not listed and not part of a group that must publish consolidated accounts.
    • Must meet small entity criteria (BCCA 1:24 for companies, 1:28 for non-profits):
      • Employees: ≤ 50 (annual average)
      • Turnover: ≤ EUR 9,000,000
      • Balance Sheet Total: ≤ EUR 4,500,000
    • If two criteria are exceeded for two consecutive years, the entity is classified as large the following year and must appoint an auditor

Procedure for Appointment Of Auditor

The appointment of a company auditor follows key steps as per the Companies Act, 2013. Below is a streamlined process:

  • Eligibility of the Auditor: Only a practicing Chartered Accountant (CA) can be appointed, as per Section 141 of the Companies Act, 2013.
  • Obtaining Consent and Certificate: The company must obtain the auditor’s written consent along with a certificate confirming eligibility and compliance with Section 141.
  • Filing of Form ADT-1: Filing Form ADT-1 with the Registrar of Companies (ROC) is optional for the first auditor but mandatory for subsequent appointments.
  • Board Resolution for Appointment: Once consent and certification are received, the Board of Directors must pass a resolution to appoint the auditor.
  • Notification to the Registrar: The company must inform the ROC of the auditor’s appointment within 15 days.
  • Tenure of the First Auditor: The first auditor holds office until the conclusion of the sixth Annual General Meeting (AGM).
  • Ratification at AGM: Annual ratification of the auditor’s appointment at every AGM is no longer required due to amendments in the Companies Act.

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