Process of Change in Auditor
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An auditor is a person authorized to review and verify the accuracy of financial statements and ensure that companies comply with tax laws. One of the major requirements after incorporation of company is to appoint a statutory auditor within 30 days to maintain compliance. The term of appointment of an Auditor can distinguish from 1 year to 5 years. In some cases, there may be a requirement to change the Auditor of a company.
As per the Companies Act, 2013 the change of auditor can be in the following cases-
- Removal of Auditor due to Resignation
- Removal of Auditor by the company
- Auditor changed or rotated Periodically
Documents Required for Change in Auditor
Name of the new auditor firm
Address of the new auditor firm
Email address and PAN number
Number of years for which the firm is appointed
Information of the resigning auditor firm
Digitally signed Form ADT 1 (with signature of the director of the company)
Form MGT-14 with a copy of resolution passed in the board meeting
Cases for Change in Auditor
|Resignation of Auditor||An Auditor can resign by submitting a resignation letter to the Board of Directors. He is required to file Form ADT-3 within a period of 30 days from the date of resignation, indicating the reasons and other facts as may be relevant with regard to the decision for resignation.|
|Removal of Auditor||An Auditor can be removed before completion of his term. This can be done by passing a special resolution, after obtaining the previous approval of the Central Government. The application for removal must be made in Form ADT-2, within 30 days of passing of special resolution by Board of Directors for removal of the Auditor. On approval, the company is required to hold an AGM within 60 days of the receipt of approval of the Central Government for passing the special resolution.|
|Change of Auditor(Periodically)||In such a case, special notice is required expressing that a retiring auditor shall not be re-appointed for a resolution at an AGM for appointing as Auditor a person other than a retiring Auditor. On the basis of special notice, the Auditor can make a representation in writing to the company, accepting the change or contesting, as the case maybe.|
Frequently asked questions
What if the Board is not able to appoint the first Auditor within 30 days of incorporation?
If the Board fails to appoint, then it shall inform the members about the same. The members shall within a period of 90 days, at an extraordinary general meeting, appoint an auditor.
What would be tenure of first auditor?
First auditor, appointed as above, shall hold the office till the conclusion of first Annual General Meeting.
Whether the form filing is required at every type of appointment of auditor?
Yes, at every type of appointment i.e. first auditor, casual vacancy or appointment at AGM,the Company shall file ADT-1 for such appointment.
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