An Auditor is a specific person who has a job to audit the financial statements of the Company according to the provision of law and audit standards that essential in India. After introducing the new Company Act, 2013, the requirements for the appointment of the auditor has changed. Moreover, there has become alteration in provision for the selection of Statutory Audit.

Under the company Act, 2013, the auditors have a responsibility to evaluate the validity and reliability of the financial statements. It also includes the inspection of documents, voucher and other records of the Company to ensure that entities are showing the clear and clean picture of the business. However, Statutory auditor is essential for the Company.

 The purpose for Appointment of Auditor:

The primary purpose of the Company to gain the interests of shareholders. The auditor has the responsibility to examine the financial documents of directors of the Company then inform all the details to the correct financial position of the Company. Hence, the auditor always will be in favour of maintaining a safe economic environment and provide an independent opinion to the owners and shareholders.

Procedure for Appointment of Auditors:

First Auditor For Non-Government Company:
The first auditor of Company will appoint within 30 days of incorporation by board directors under section 139(6) in case of other than government company. If any reasons board fails for the appointment of the first auditor, then EGM will call within 90 days. However, the procedure of appointing the first auditor must strict and 90 days should start from the incorporation rather than the expiry of 30 days.

First Auditor For Government Company:
The auditor will appoint by the Comptroller and Auditor-General of India within the 60 days from the incorporation day of Company. If in any case, they could not nominate the auditor within the given time frame, then the Board of Directors would appoint the auditor within the next 30 days. Moreover, if Boards does not nominate the auditor, then members of the Company took charge of the appointment of the auditor within 60 days in general meeting.

Subsequent Auditor of Company:
Every Company will appoint an individual or firm as an auditor of the Company at the first annual general meeting. The auditor will hold the office from the day of that meeting until the result of its sixth annual public meeting. The appointment will change at every sixth yearly meeting of the Company.

 Tenure of Auditors:
The following companies will not appoint or reappoint of an auditor.

Individual auditor for more than five consecutive years
Audit firm as auditor for more than two terms of five consecutive years
All Unlisted public companies have a share capital of ten crores or more.
All private Company have a share capital of twenty crores or more.
The companies have a share capital of below threshold limit.
 

Auditor Appoint In Casual Vacancy:
The following procedure requires in case of casual vacancy.

Whether the auditor is eligible or not for this post
Sign on consent certificate from auditor.
The audit committee will proceed under Section 177.
Call a Board Meeting
Appointment of an auditor in casual vacancy would prove during the board meeting.
The auditor should file ADT-1 with ROC.
 

ADT-1 Require for Appointment of Auditor:
It is optional to file ADT-1 with ROC for the appointment of the first auditor of the Company. But in case of selection subsequent auditor, it is mandatory to file an ADT-1 within the 15 days of incorporation of Company.

Frequently Asked Questions (FAQ):

Q1- Whether the form filling for appointments of an auditor?

Yes, the form filling procedure requires for the appointment of an auditor, including the first auditor or casual vacancy.

Q2- What will be the tenure of an auditor appointed in a casual vacancy?

The auditor will hold the office till the next Annual General Meeting.

Q3- Is First Auditor removed by the Directors or not?

No, the Board of Directors can never remove the first auditor in any case.

Q4- What are the types of casual vacancy?

Two types of casual vacancy are:

Due to Resignation of Auditor
Due to Any other Reasons
Q5- Can a Company appoint an auditor for less than five years under the Companies Act, 2013?

No, Company can never appoint any auditor for less than five years, according to Section 139(2).

Drafted By:
CS.A.Maniraj.,B.Com.,ACS.,CA(Fin), Independent Director 
Certified CSR Professional., Certified GST Professional.