Brief about the appointment of a statutory auditor of a company

According to Companies Act, 2013, All the companies whether public or private and whether having a share capital or not, are needed to maintain proper books of accounts under the vittles of section 128 of the Companies Act, 2013 and get them checked as needed under section 139 of companies act 2013. 

As per the Companies Act 2013, the vittles and rules relating to the appointment of a statutory auditor of a company are defined follows:

• Eligibility: A Individuali.e rehearsing Chartered Accountant or a establishment of chartered accountants can be appointed as the statutory auditor of a company. A Valid instrument of practice issued by the institute of Chartered Accountants of India( ICAI) must be held by the Individual auditor or the establishment. 
• Independence: The Statutory auditor must be independent and unprejudiced in carrying out their duties. They shouldn’t have any fiscal or other connections that could vitiate their independence and neutrality. 
• Rotation of Auditors: Companies are needed to rotate their Statutory auditors to insure independence & translucency to help any conflicts of interest. As per the Companies Act, the obligatory gyration of auditors applies to certain classes of companies grounded on their size, development, and other factors. The Act specifies the maximum term and cooling- off ages for auditors subject to gyration. 
• First Auditor: The appointment of statutory auditor of the company is generally done by the Board of Directors within 30 days from the date of incorporation.However, the company’s shareholders must make the appointment within 90 days at an extraordinary general meeting( EGM), If the Board fails to make the appointment within this period. 
• Subsequent Appoinment: After the first auditor, The appointment of statutory auditor of the company is done by the members of the company in their periodic general meeting( AGM). The appointment is valid until the conclusion of the coming AGM. 
• Auditor Remuneration: As per section 142 of the company act 2013 The remuneration of the auditor is fixed by the company’s Board of Directors. The remuneration must be ratified by the company’s shareholders in the general meeting. 
• Casual Vacancy: If the casual vacancy occurs due to abdication, disqualification, or any other reason, the Board of Directors should make a fresh appointment of auditor within the period of 30days.However, an extraordinary general meeting should be conducted, and the members will appoint the fresh auditor, If the Board fails to do so. 
• Intimation to Register: Once the auditor is appointed, the company must file a form ADT- 1 and suggest a similar appointment with the Registrar of Companies within 15 days of the appointment. 
• Removal of Auditor: An auditor can be removed before the expiration of their term only by a special resolution passed in a general meeting. The auditor must be given a previous notice for occasion to be heard before the resolution is passed. 
• Auditor Disqualification: As per the company act 2013 if an auditor becomes disqualified during their term, they must vacate the office and inform the company within 30 days of their factual disqualification so that company can fill the casual vacancy that passed due to their disqualification. 

Appointment of First auditor of the Company:

In Case of Companies except Government Companies 

According to the Companies Act 2013, All the Companies except Government Companies must make appointment of the first auditor of a company within 30 days from the date of enrollment of the company. Then is the process for appointing the first auditor.

 i. In case of appointment by Board of Directors (BOD) 

• Appointment in Board Meeting: The Board of Directors BOD of the company must conduct a board meeting within the period of 30 days from the day of company’s objectification. 
• Selection of Auditor: In the board meeting, the directors will elect an individual or an establishment of chartered accountants as the company’s first auditor. The named auditor must be eligible for appointment as per the criteria mentioned in Section 139 of the Companies Act 2013. 
• Conscent and Eligibility Certificate: The named auditor must be approached to gain their concurrence for appointment. They need to give an instrument of eligibility attesting that they’re eligible for appointment as per the vittles of Section 141 of the Companies Act 2013. 
• Filing with Registrar: Once the concurrence and eligibility instrument are attained from the statutory auditor, the company must file Form ADT- 1 with the Registrar of Companies (RoC) within 15 days from the date of conducting the board meeting. This form contains details similar as the auditor’s name, address, class number, and concurrence. 
• Intimation to Auditor: The company should also insinuate the auditor about their appointment and give them with a dupe of the Form ADT- 1 filed with the RoC.
• Tenure: First Auditor appointed by Board shall hold office till the conclusion of the first periodic general meeting of the Company. 

 ii. in case of Board fails to appoint First Auditor

According to Companies Act 2013, the responsibility of appointing the first statutory auditor of a company lies with the Board of Directors. Still, if the board of directors fails to make an appointment of the first statutory auditor within the period of 30 days from the date on which the company incorporated, the shareholders of the company should appoint the first statutory auditor at an extraordinary general meeting( EGM) within 90 days from the date of company objectification. 

 Process followed in case the Board of Directors fails to appoint the first auditor

Step 1: Hold an Extraordinary General Meeting (EGM): The shareholders of the company should conduct an EGM within 90 days from the date of company objectification. 

Step 2: Pass a Special Resolution: At the EGM, the shareholders need to pass a special resolution to appoint the first auditor. A special resolution requires the affirmative vote of members holding not lower than 75 of the voting rights. 

Step 3: Appoointmentb of the First Auditor: Once the special resolution is passed, the first auditor should be appointed by the shareholders. The appointed auditor will hold office until the conclusion of the first periodic general meeting( AGM) of the company. 

Appointment of First Auditor in case of Government Companies

According to the Companies Act 2013 in India, in the case of government companies, the appointment of the first statutory auditor is handled differently compared to other types of companies. In case of the government companies, the C & AG appoints the first auditor of the company. 

Here are the key points

• Section 139(7) of the Companies Act 2013: As per the section under the company act 2013 in the case of a government company, the first auditor is appointed by the C&AG within 60 days from the date of the company’s objectification. 
• Intimation to the CAG: The Board of Directors of the government company must insinuate the CAG about the objectification of the company, including the details of the first auditor appointed by the Board. There’s no need to file ADT- 1 for appointment of first auditor. 
• Auditor’s Conscent : Once the C&AG receives the suggestion, the appointed auditor must give his/ her concurrence and a instrument stating that they’re eligible for appointment as an auditor. 
• Tenure and Remuneration: The first auditor appointed by the C&AG holds office until the conclusion of the first periodic general meeting of the company. The remuneration of the first auditor is determined by the Board in discussion and recommendation with the CAG. 

In case of Failure by CAG to appoint first auditor

• Appointment: As per section 139(7) of Company Act 2013 If C&AG didn’t appoint the first auditor within the period of 60 days from the day of company objectification as per the Companies Act the Board of Directors BOD of the company is needed to appoint within the period of coming 30 days when period of 60 days expires.
• Tenure and Remuneration: The first auditor appointed by the duck holds office until the conclusion of the first periodic general meeting of the company. The remuneration of the first auditor is determined by the Board in discussion and recommendation with the CAG.

In case of Failure to appoint first auditor by CAG & Board of Directors i.e both

As per Section 139( 7) of Companies Act 2013, If the Comptroller and Auditor General( CAG) fails to appoint the first auditor as per the Companies Act within 60 days from the date of objectification, the Board of Directors of the company is empowered to make the appointment with in coming 30 days. And if Still the Board fails to appoint the first auditor also shareholders of the company have the authority to appoint the first auditor at an extraordinary general meeting( EGM) within the coming 60 days. Who shall hold office until the conclusion of the first periodic general meeting of the company. 

Appointment of Statutory auditor in the first Annual General Meeting( AGM) of the company

In Case of Company other than Government Company 

Under Companies Act, 2013, vittles relating to appointment of the statutory auditor in the first Annual General Meeting( AGM) of a company 

• Retification or appointment of Statutory auditor at AGM: The rectification or appointment of the first statutory auditor can be done by the members of the company at the first Annual general meeting( AGM). still, a new auditor should be appointed, If the appointment isn’t ratified. 
• Conscent and Eligibility Certificate: The named auditor must be approached to gain their concurrence for appointment. They need to give a instrument of eligibility attesting that they’re eligible for appointment as per the vittles of Section 141 of the Companies Act 2013. 
• Filing with Registrar: Company is needed to file form ADT- 1 with ROC with in the period of 15 days from the date on which the board meeting is conducted once the concurrence and eligibility instrument are attained from the auditor.This form contains details similar as the auditor’s name, address, class number, and concurrence.
• Intimation to Auditor: The company should also insinuate the auditor about their appointment and give them with a dupe of the Form ADT- 1 filed with the RoC. 
• Tenure: Auditor appointed at First AGM shall hold office till the conclusion of the Sixth AGM subject to the rectification of appointment at each AGM. 
• Subsequent Appointments: From the conclusion of the first AGM onwards, posterior auditors are appointed by the members of the company in the AGM. The appointment is for a term of five times, and the auditor holds office until the conclusion of the sixth AGM. 
• Casual Vacancy: If the office of the auditor becomes vacant before the conclusion of AGM, the Board of Directors must appoint another auditor in their place within 30 days from similar abdication, subject to ratification by the members at the AGM. 

In Case of Government Company

According to Companies Act 2013, posterior auditors of being government companies, the Comptroller & Auditor General shall appoint the auditor within a period of 180 days from the inception of the fiscal time and term for office of auditor shall be till the conclusion of the Annual General Meeting. 

Here are the key points

• Appointment of Statutory auditor at AGM: The company at the first periodic general meeting is needed to appoint an auditor or inspection establishment with recommendation from C & AG. who shall hold office till the conclusion of the coming periodic general meeting.
• Eligibility: The auditor must meet the eligibility criteria specified in Section 141 of the Companies Act, 2013. The criteria include qualifications, experience, and any disqualifications mentioned in the Act.
• Written Consent: The proposed posterior auditor must give spoken concurrence for their appointment, stating that they aren’t disqualified from being appointed as an auditor.
• Intimation to Registrar: The company is needed to file form ADT- 1 a notice of the posterior auditor’s appointment with the Registrar of Companies( RoC) within 15 days of the Board resolution for the posterior auditor’s appointment. This form contains information about the appointment of the auditor and their concurrence.
• Casual Vacancy: When a casual vacancy occurs due to the abdication, junking, or death of an auditor in a government company, the casual vacancy should be filed by the C&AG within the period of 30 days of similar casual vacancy.
• Filing of Casual Vacancy by boardin case of failure of appointment by C&AG: If C&AG fails to fill the casual vacancy that passed due to abdication, death or other reason within the period of 30 days when casual vacancy passed, the Board of Directors( duck) shall fill the casual vacancy within the period of coming 30 days on the recommendation of C&AG.