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Appointment of Company Auditor
The appointment of company auditor is mandated under Section 139 of the Companies Act, 2013. According to this section:
- Every company must appoint an individual or a firm as an auditor at its first Annual General Meeting (AGM).
- The appointed auditor will hold office from the conclusion of that meeting until the conclusion of its sixth AGM.
- You can renew the appointment at subsequent AGMs.
First Auditor Appointment
You need to appoint the first auditor within 30 days from the date of incorporation. If the Board of Directors fails to do so, the shareholders must appoint an auditor within 90 days at an Extraordinary General Meeting (EGM). This first auditor will hold office until the conclusion of the first AGM.
Procedure for Appointment of Auditor
The procedure for appointment of auditor involves several key steps:
- Consent from Auditor: Before making an appointment, it is necessary to obtain written consent from the proposed auditor confirming their willingness to act in that capacity./li>
- Eligibility Certificate: The proposed auditor must provide a certificate indicating that they meet all eligibility criteria as per Section 141 of the Companies Act.
- Filing with Registrar: After obtaining consent as well as eligibility certification, you must file Form
ADT-1 with the Registrar of Companies (ROC) within 30 days of appointment.
Passing a Resolution: The appointment must be ratified by passing an ordinary resolution during the AGM.
Notification: The company must inform the appointed auditor about their appointment as well as file notice with ROC.
Role of Auditors in Company Law
Auditors play a crucial role in maintaining transparency as well as accountability within companies. Their responsibilities include:
- Conducting thorough audits to verify financial records.
- Providing independent opinions on financial statements.
- Ensuring compliance with accounting standards and also legal requirements.
- Reporting any discrepancies or issues to stakeholders.
