Appointing an auditor in accordance with the Companies Act, 2013 involves a systematic process to ensure transparency, accountability, and compliance. Here’s the procedure for appointing an auditor under the Companies Act, 2013 in India:
Eligibility Criteria: Ensure that the proposed auditor meets the eligibility criteria set out in the Companies Act, 2013, and any other relevant regulations.
First Auditor Appointment: For a newly incorporated company, the first auditor is appointed by the Board of Directors within 30 days from the date of incorporation. If the Board fails to appoint, the shareholders must do so within 90 days in an extraordinary general meeting.
Subsequent Auditor Appointments: For subsequent years, auditors are appointed at the Annual General Meeting (AGM). The first AGM is held within 9 months from the close of the financial year, and subsequent AGMs are held within 6 months from the close of the financial year.
Tenure of Auditor: The tenure of an auditor is generally 5 consecutive years, after which the company must rotate auditors. An auditor can be reappointed after a cooling-off period of 5 years.
Mandatory Rotation: Companies are required to rotate their auditors every years. An individual auditor can serve a maximum of two consecutive terms of years each. An audit firm can serve two consecutive terms of years each, with a cooling-off period of years.
Consent and Eligibility Certificate: Before being appointed, the proposed auditor must provide written consent and an eligibility certificate confirming their eligibility as per the Companies Act, 2013.
Intimation to Registrar: The company must file Form ADT-1 with the Registrar of Companies (RoC) within 15 days of auditor appointment.
Resolution for Appointment: A resolution for auditor appointment, including the terms of appointment, remuneration, and other relevant details, is passed by shareholders in the AGM.
Informing Auditor: Inform the appointed auditor about their appointment and provide them with necessary information about the company’s financial records, books, and operations.
Auditor’s Report: The auditor prepares the auditor’s report based on their examination of the company’s financial statements.
Filing Auditor’s Report: The auditor’s report is attached to the company’s financial statements and filed with the RoC along with the company’s annual return.
Compliance with Auditing Standards: The auditor must adhere to auditing standards, prepare the audit report in accordance with relevant rules, and express their opinion on the financial statements.
