APPOINTMENT

AND REMOVAL
OF AUDITOR
Name:
Class: Div: Subject:
Shagun Sanjay
T.Y.Bcom A Audit
Tatiya
INTRODUCTION
 What Is an Auditor?

An auditor is a person authorized to review and verify the accuracy of financial records and
ensure that companies comply with tax laws. They protect businesses from fraud, point out
discrepancies in accounting methods and, on occasion, work on a consultancy basis, helping
organizations to spot ways to boost operational efficiency. Auditors work in various capacities
within different industries.
 Auditors assess financial operations and ensure that organizations are run efficiently. They
are tasked with tracking cash flow from beginning to end and verifying that an
organization’s funds are properly accounted for.
 definition

An auditor is an individual who examines the accuracy of recorded business transactions. Auditors are
needed in order to verify that processes are functioning as planned, and that the financial statements
produced by an organization fairly reflect its operational and financial results. They are primarily
engaged in audits, which verify an entity’s financial records and their presentation in related financial
report
PURPOSE OF AN AUDITOR IN
A COMPANY

An Auditor’s role in a company is to safeguard the interest of shareholders in a company. The auditor is

required by law to analyze the accounts kept by the directors and to tell them of the company’s true
financial status. The auditor will reveal the true financial position of a company, which will help
investors, shareholders, and stakeholders of a company, along with that it will help directors in making
future decisions related to the company.
APPOINTMENT OF AN
AUDITOR IN A COMPANY
From the conclusion of
that meeting until the
conclusion of the
company’s sixth AGM
(Annual General Meeting),
the first auditor can serve.
The corporation should,
The First Auditor of a Once the authorization of however, put the question
business other than a an Auditor has been of an auditor’s
government business must The 90-day limit begins on obtained, the Board of appointment up for
be appointed by the Board the day of incorporation Directors of the Company ratification by members at
within 30 days of its rather than the expiration can execute a resolution to each Annual General
incorporation of the 30-day period. appoint the Auditor. Meeting (AGM).

According to section 139 Form ADT needs to file at The auditor’s appointment
of Companies Act, 2013. the time of the First must be reported to the
In the event that the Board Auditor Appointment in a Registrar of Companies
fails, an EGM company. within 15 days of her or
(Extraordinary General his appointment.
Meeting) must be called
within 90 days to appoint
the First Auditor.
DIFFERENT TYPES OF
AUDITORS APPOINTED IN A
COMPANY
• First Auditor
• Internal Auditor
• Subsequent Appointment of Auditor
• Secretarial Auditor
• Cost Auditor
 Procedure for
appointment of
first auditor
The auditor in this position will serve until the end of the first Annual General Meeting. The company must submit
Form ADT-1 to the Registrar of Companies, together with the requisite payments. 

If it is a Public Listed Company, then, in that case, the first auditor will be appointed by the auditor general of India and
comptroller within 60 days of the Company’s incorporation date

And if the Comptroller General of India does not appoint such auditor within the said period of time, the Company’s
Board of Directors shall appoint such auditor within the next thirty days.

And if the Board fails to appoint such auditor within the next thirty days, the Company shall be dissolved.

The First Auditor will hold the position until the First Annual General Meeting concludes.
APPOINTMENT OF AUDITOR
OTHER THAN FIRST AUDITOR
The auditor
The auditor However, if a casual appointed in the
appointed at the vacancy in the office meeting will
general meeting of an auditor arises continue his or her
The members of the
takes office as a result of work till the next
company must
immediately after the registration, the Annual General
appoint auditors
meeting, and the consent of members Meeting. It is
(other than the first
existing meeting will must be acquired required for the
auditors) in a general
be considered as the within three months Company to file
meeting.
first auditor meeting of the Board’s ADT-1 within 15
for the newly recommendation days of appointing
appointed auditor. date. the subsequent
auditor.
DOCUMENTS REQUIRED FOR
APPOINTMENT OF NEW
AUDITOR
 Following are the forms that need to be filed by the company at the time of appointing an auditor for a company

At the time of the First Auditor Appointment, submit Form MGT-14 together with proof of the resolution.
Form ADT-1 needs to be filed with the ROC (Registrar of Companies)
 In addition to the foregoing forms, the ROC requires the following information

The new auditing firm’s name.

The new auditing firm’s address.
PAN Number and email addres.
The length of time for which the firm has been hired.
Information about the resigned auditing firm.
The new auditor firm’s appointment date.
Form ADT-1, digitally signed (along with the signature of the director of the company).
CONCLUSION
The Auditor is appointed in the companies under section 139 of the Companies Act, 2013. The provisions governing the
appointment of an auditor for a Public Business are more strict than those governing the appointment of an auditor for a
Private Firm. A listed business, for example, cannot select an individual as an auditor for more than five years in a row. In
addition, an audit firm cannot serve as the auditor of a publicly listed company for more than two terms, that is five
consecutive years.
Removal of an auditor
AUDITOR REMOVAL
PROCEDURE
Section 140 of the Companies Act, 2013 provides for Removal of
Auditors. The procedure for removal of Auditor in a Private
Limited Company and a Public Limited Company are one and the
same.

An Auditor may be removed under the following scenarios:

a. Before expiry of the term
b. After expiry of the term
REMOVAL BEFORE EXPIRY OF
THE TERM
A general meeting (EGM) is
A special resolution & prior required to be held by the
approval of Central company within 60 days of
Government is required to be receipt of Central
obtained for removing an Government’s approval for
auditor from the office before the passing of Special
the expiry of his term. Resolution.

The application for Central The section also provides

Government approval for that, the auditor must be
removal of auditors is to be given a reasonable
made in Form ADT-2, within opportunity of being heard at
30 days of the passing of the the meeting.
Board Resolution.
REMOVAL AFTER EXPIRY OF
THE TERM
The Company may not reappoint the Retiring Auditor at its AGM if such auditor has served consecutively for a term of 5 years
or 10 years, as provided by Section 139 and may appoint another entity to act as its auditor.

In such cases, a Notice is required to be sent for considering the Resolution for an appointment at the AGM for-

appointment of a person to act as an auditor other than the auditor who is retiring;

expressly stating that the retiring auditor is not eligible for re-appointment.
• The company is also required to send the copy of a notice to the retiring auditor.
• The Retiring auditors are eligible for making a Representation.
• Where the retiring auditor makes a representation in writing and requested the company to notify the same to its members of the company, the company
shall state the fact in the notice given to members that representation has been made by the retiring auditor.
• A copy of the representation made will be sent to all those who are entitled to receive the notice of the meeting. In Case, the Company is unable to send the
same, then the auditor’s representation may be read out at the meeting.
• Where the representation is not sent as mentioned above, a copy of the same shall be filed with the ROC.
FORMS INVOLVED IN
AUDITOR REMOVAL
PROCEDURE
MGT-
14;

ADT-2;

RD-1.
CONCLUSION

An auditor when appointed by a company is

appointed for a period o 5 years however
sometimes the Board management may remove
the auditor. The provisions regarding the
auditor removal is provided under Companies
Act of 2013.
THANK YOU