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Appointment of the auditor is mandatory in all type of companies & Only CA is eligible to be appointed as Statutory auditors in a company.
Important highlights of appointment of Auditor
- All Company shall at the 1st Annual General Meeting appoint an Individual or firm as an Auditor who will hold office from a conclusion of this meeting until a conclusion of 6th (AGM) Annual General Meeting.
Provided that the Company shall place the matter relating to such appointment for ratification by members at every (AGM) Annual General Meeting.
Provided that before such an appointment Company should obtain the written consent from the Auditor and certificate which shall indicate the criteria as mentioned. Company shall file the said appointment with the Registrar of Companies in e-Form ADT-1 within 15 days from the date of appointment.
- Not a listed Company or the company have its place to such class of companies as may be prescribed shall appoint or re-appoint:
- An Individual as an Auditors for an exceeding a term of 5 consecutive years. &
- An Audit firm as auditor beyond two terms of five consecutive years
Provided that an Individual or audit firm who has completed their term as mentioned in the Act. It shall not be eligible for the appointment as an auditor in the same Company for 5 years from completion of such period.
Further, provided that not a single audit firm which is having a common partner to another audit firm, whose periods have expired in the company immediately preceding the financial year, shall be appointed as an auditor of the same company for a period of 5 years.
Every single Company existing on or prior to the commencement of the act, which is required to fulfill with this Section shall within the period of 3 years from the date of commencement of the said Act and shall comply with the provision of this Act.
- The provisions of this Act, members of the company may resolve to provide that:
- In an audit firm appointed by it, auditing partner & his team shall be rotated at such intermissions as may be resolved by the members.
- The audit has to be conducted by more than 1 auditor.
- The central government (C.G) may by rules and regulation as prescribed the manner wherein the companies shall rotate their auditors in fulfillment of the act.
- Nevertheless anything contained in the act, the 1st auditors of the company except the Government Company will be appointed by the Board of director from date of the registration, in case, the Board of directors to carry out the said act they shall inform to members of Company, who will within 90 days at an Extraordinary general meeting (EGM) appoint such an auditor & such other auditors shall hold the office until the conclusion of the First Annual General Meeting.
- In the event of Government Company (CA&G) Comptroller & Auditor General of India shall within 60days from date of registration appointment of the Auditor, in case they fail to do so, the Board of director shall appoint the Auditor within 30days, and if the Board of directors is also not able to perform, then the members should appoint Auditors within 60 days a tan (EGM) Extra-Ordinary General Meeting who shall hold office till conclusion of THE first annual general meeting.
- In case of the Company other than Company to be filled by the Board of Directors within 30days, but if such a casual vacancy is as a result of the resignation of an auditor, such an appointment shall be approved by a company at a general meeting convened within 3 months of the recommendation of Board.
- In case of the Company whose accounts are subject to audit by the Auditors appointed by the Comptroller and Auditor-General (CAG) of India, be filled by the Comptroller and Auditor-General of India within 30days.
- Provide if the (CA&G) Comptroller& Auditors General of India doesn’t fill such a vacancy within the said period, the Board shall fill the vacancy within the next 30 days.
- Subject to the provisions of the act & the rules made thereunder, retiring auditors can be re-appointed at an (AGM) annual general meeting,
- Where at (AGM) annual general meeting, not a single auditor is appointed or re-appointed, the current auditor will continue to be auditor of the Company.
- Whereas a Company which is required to form an Audit committee, then all the appointment including the appointment of Auditor through Casual vacancy can be made, after taking into account the recommendation of such committee.