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Appointment of First Auditor of Company
The board of directors of the company is obligated to find a suitable Chartered Accountant who is in full-time practice as a CA and is eligible to take a fresh assignment of statutory audit for the company. Please note that a CA is not eligible for audit of your company if he is also providing his services for the purpose of accounting, consulting, or GST Return filing. In other words, to become an auditor of your company the CA must be an independent person and not involved in day-to-day accounting, tax, or any other manner.
We maintain a pool of experienced and independent chartered accountants who are eligible to conduct an audit of the company under Section 139 of the Companies Act. You may avail our consulting service to find a suitable auditor in compliance with Section 139 to 148 of the Act. We shall be working closely with the Board of Directors of the company in the appointment of first auditor of the company.
Points to Note on First Auditor Appointment
Registration Process for Appointment of First Auditor
Frequently Asked Questions
Section 144 clearly lays down certain restrictions on the auditors to ensure independence and integrity on the part of auditor while discharging their responsibility as an auditor of the company. The law prescribes that an auditor must not engage in providing below services to the company or its holding company, whether directly or indirectly
- Accounting and bookkeeping services;
- Internal Audit;
- Design and Implementation of any financial information system;
- Actuarial Service
- Investment Advisory Services
- Investment Banking Services
- Rendering of outsourced financial services;
- Management Services; and
In other words, a statutory auditor must not do anything for the company other than the audit of the finalised final accounts of the company. The company is under responsibility to prepare the books of account and draft the balance sheet, profit and loss account, other financial reports and give to auditor for expression of his opinion and Audit Report.
The form ADT-1 is the prescribed e-form through which a company has to file an intimation to the ROC about appointment of the auditor with prescribed fee. The filing of ADT-1 is mandatory if the auditor is appointed by the General Meeting, however in case the appointment is through board of directors meeting the filing of ADT-1 is not necessary.
The form ADT-1 has to be filed within 15 Days of the appointment of the auditor.
Yes, the general fee as prescribed under the rules are also applicable for filing the form ADT-1 and the fee is based on the authorised capital of the company. Below is the list of the filing fee for the declaration for the certificate of commencement of business.
|SI. No||Authorised Capital (INR)||INR|
|1.||Less than 1,00,000||200|
|2.||1,00,000 to 4,99,999||300|
|3.||5,00,000 to 24,99,999||400|
|4.||25,00,000 to 99,99,999||500|
|5.||1,00,00,000 or more||600|
Yes, you have the option of filing the intimation of auditor appointment in form ADT-1 even if the due date is missed, however with an additional fee to be paid based on the delay of the number of days from the due date. Below table is for reference to calculate additional fee.
|SI. No||Delay||Additional Fee as times of Normal filing fee|
|1.||Delay up to 30 Days||2 Times|
|2.||More than 30 days and up to 60 days||4 Times|
|3.||More than 60 days and up to 90 days||6 Times|
|4.||More than 90 days and up to 180 days||10 Times|
|5.||More than 180 days||12 Times|
for any contravention of the provisions of section 139 to 146 there is severe punishment prescribed in section 147 of the Companies Act, 2013 which is as under
- The company is liable to minimum penalty of Rs. 25,000, which may extend to Rs. 5,00,000
- Every officer of the company is liable to punishment in the form of imprisonment for a term of up to one year and a fine ranging from Rs. 10,000 to Rs. 1,00,000/- or with both
- In case an auditor has contravened any provision then he is liable to punishment which shall be minimum of Rs. 25,000 and may go upto Rs. 5,00,000. However in case of any wilful contravention the punishment may include imprisonment of two years.
Following are the documents which need to be prepared for appointment of the auditor of the company
- Consent of the Auditor
- Minutes of the Board Meeting
- Extract of the Resolutions Passed at the Board Meeting
- Letter to auditor of his appointment
An auditor is appointed to do audit of the financial statements of a company on completion of the same the auditor has to issue an Audit Report expressing his independent opinion on the financial statements prepared by the company, whether or not it reflects true and fair view of the books of account and affairs of the company. The appointment of the auditor has to be done to meet the compliance requirements as prescribed under section 139 to 148.
The ADT-1 is the statutory form which is filed with the ROC for the purpose of intimation of the appointment of the auditor of the company in general meeting. In case of the first auditor the appointment is done by the board of directors, hence the requirement of filing ADT-1 is not necessary, However as a matter of caution, you may choose to file ADT-1 as the law on this subject matter is not express.