Appointment of First Auditor refers to an event where a company appoints an individual or a firm as an auditor in the first board meeting held within 30 days from the date of incorporation to hold office till the conclusion of the first AGM of the company. Further, when the first AGM of the Company is held, then the appointment of an auditor is initiated for a period of 5 years until the conclusion of the sixth AGM. The statutory auditor verifies the books of accounts and is registered with the company under the Companies Act, 2013, which is known as a statutory audit or company audit.
Before such appointment, written consent of the auditor and a certificate from him confirming that the appointment is as per the terms of the Companies Act and he satisfies the criteria provided in section 141 will be required. Form ADT 1 is required to be filed with MCA within 15 days from the date of such appointment.
According to section 139 (1) of the Companies Act, 2013, the appointment of the statutory auditor should be informed through a notice to the registrar of companies. This needs to be done within 15 days from the date of the appointment of auditor.
By appointing a statutory auditor for conducting a thorough audit of the books of accounts, the credibility and authenticity of the business improves. As the books of accounts are being verified by a registered auditor, it helps the business to avail loans faster and raise funds better.
Appointment of statutory auditor assures that all the statutory requirements of the books of accounts are met. The management can be rest assured that they have performed their statutory as well as non-statutory duties such as corporate governance.
By conducting a statutory audit, the auditor gives feedback on the internal control of the organisation. This helps the company to reduce the risks and improve the performance of the company.
Auditor through his audit process provides a true and fair view of the business and financial position of the Company to the internal management as well as outsiders such as potential investors.
The firm or the individual which is required to be appointed as the auditor is required to be identified.
The company circulates the letter to the auditor for receiving the letter of consent to be appointed as auditor.
Preparation of documents for the appointment of the auditor as required for filing.
Form ADT 1 for the appointment of an auditor is required to be filed within 15 days of passing resolution.
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A person who is a chartered accountant or a firm with a majority of partners practising in India can be appointed as the auditor of a company. A limited liability partnership can be appointed as the auditor of the company, but only chartered accountant partners will be authorised to act and sign on behalf of the firm.
Appointment of First Auditor of the company is done either in the first board meeting that has to take place within 30 days of incorporation, or if the appointment could not take place in the board meeting, then a general meeting needs to be held within 90 days of incorporation to hold office till the conclusion of the first AGM. Further, at the first annual general meeting, an auditor who shall hold office from the conclusion of that meeting until the conclusion of its sixth annual general meeting is appointed.
Yes, in case of casual vacancy auditor appointment can be done by the board of directors within thirty days only if casual vacancy is not a result of the resignation of an auditor. If that is the case, then the appointment will also have to be approved by the company at a general meeting held within three months of the board recommendation.
Yes, the auditor can be removed prior to the expiry of his term only via a special resolution of the company. This can only be done after securing prior written approval of the Central Government.
The first auditor of the company is appointed to hold office up to the conclusion of the first annual general meeting of the company as per section 139 (6) of the Companies Act.
No, it is not mandatory to file any form with the ROC on the appointment of the first auditor.
In case of a casual vacancy, the board of directors will make a recommendation in the board meeting within 30 days of the resignation. The recommendation requires the approval of the members within three months from the date of the board meeting.
No, the director does not have the power to remove the auditor.