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Appointment of Auditor - Online Process

An auditor is person who review and verify all the financial documents of a company. The main duty of an auditor is that whether the financial statements of a company follow Generally Accepted Accounting Principles (GAAP). Every company shall requires to appoint an individual auditor or audit firm as first auditor and subsequent auditor. The auditor of a company protects the interest of shareholders. Every company needs to appoint an auditor as per the provisions of Companies Act, 2013.

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    Appointment of Auditor

    All companies registered in India are required to appoint an auditor who audited all the books of accounts of a company each year. Form ADT-1 is required to be filed at the time of appointment of auditor as per Companies Act, 2013. This form is uploaded on Ministry of Corporate Affairs (MCA) portal. The auditor is compel by law to examine the books of accounts maintained by the director and inform them about the true financial position of a company.

    appointment of auditor
    Appointment of first auditor

    Every company shall appoint first auditor who hold the office till the conclusion of first annual general meeting. This appointment is classified below for Government or Non-Government Company:

    • In Government company:

    The first auditor is appointed by Comptroller and Auditor General of India (C&AG) in case of Government Company. The time-period for the appointment of first auditor is 180 days from the commencement of every financial year.

    • In Non-Government Company:

    The first auditor is appointed by Board of Directors (BOD) within 30 days of incorporation of a company. If Board of Directors is not liable in appointment then they informs the members about their failure and after that members shall appoint first director within 90 days from the date when BOD informs the members about their failure.

    Appointment of Subsequent Auditor

    Every company shall appoint subsequent auditor who hold the office from the date of first annual general meeting till the conclusion of sixth annual general meeting. This appointment is classified below for Government or Non- Government Company:

    1. In Government Company:
      The subsequent auditor is appointed by C&AG within 180 days from the commencement of every financial year who shall hold the office till the conclusion of sixth annual general meeting.
    1. In Non- Government Company:
      The appointment of subsequent auditor is done by the members of a company who shall hold office till the conclusion of sixth annual general meeting. He shall be appointed in first annual general meeting.

    Before the appointment of subsequent auditor, company shall take written consent from the auditor and containing a certificate.

    Manner of auditors appointment

    The manner of auditors’ appointment typically depends on the type of audit and the legal and regulatory requirements in a specific jurisdiction. Here are some common ways auditors are appointed:

    Appointment by Shareholders:

    In many publicly traded companies, shareholders have the authority to appoint auditors during the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM). Shareholders may vote on the appointment of auditors or reappointment of existing auditors.

    Appointment by the Board of Directors:

    In some cases, especially in smaller private companies, the board of directors may appoint auditors. This is more common when there are no specific legal requirements for shareholder involvement in the appointment process.

    Appointment by Regulatory Authorities:

    In certain industries or jurisdictions, regulatory authorities may have the power to appoint auditors or require specific audit firms to conduct audits to ensure compliance with industry or regulatory standards.

    Rotation Requirements:

    Some countries and regulatory bodies have imposed mandatory audit firm rotation requirements. This means that companies are required to change their audit firm after a certain number of years, typically to maintain auditor independence and objectivity.

    Tendering Process:

    In some cases, companies may use a competitive tendering process to select their auditors. They invite audit firms to submit proposals, and a selection committee reviews these proposals before making a final appointment.

    Audit Committee Involvement:

    Many companies have audit committees composed of board members who oversee the audit process. The audit committee may recommend auditors to the board, shareholders, or regulatory authorities.

    Regulatory Compliance:

    Companies are often required to comply with specific regulations and standards regarding auditor appointment. These regulations may dictate the qualifications and independence requirements of auditors.

    Special Purpose Audits:

    For specific audits, such as forensic audits or internal audits, auditors may be appointed based on the needs of the organization or the situation at hand.

    Appointment in Government Entities:

    In government entities and public institutions, auditors are often appointed through a competitive process or by government officials responsible for financial oversight.

    Auditor Independence Checks:

    Before appointment, auditors are typically required to undergo a process to ensure their independence and integrity. This may involve disclosing any potential conflicts of interest.

    Casual Vacancy


    In Government Company:

    All casual vacancies shall be filled by the Comptroller and Auditor General of India (C&AG) within 30 days of such casual vacancy. However, in case C&AG not fill the vacancy within such time period, then BOD shall fill the vacancy within next 30 days.


    In Non- Government Company:

    All casual vacancy shall be filled by the Board of Directors within 30 days of such casual vacancy. If such casual vacancy is due to resignation, then BOD will recommend and final appointment will be made by the members within 3 months of such recommendation.

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