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      How to appoint/ change Statutory Auditors of the Company?

      August 17, 2020

      Every company (including OPC) needs to appoint a Chartered Accountant or Firm of Chartered Accountant as its Statutory Auditors & get the books of the Company Audited every year. On formation of the Company, auditor needs to be appointed within 1 month by the Board. Every company is required to prepare the Financial Statements (FS) every year and need to present it to the Auditors for issuing Audit Report. Even if there is no activity or turnover in the company, preparation of FS & its audit is mandatory.  The appointment of auditor is to be done for 5 years.  Act specifies eligibility criterias for selection of auditors or firm of Auditors. Auditors in the appointment process needs to confirm their eligibility and needs to provide their consent.

      Listed Company & certain specified Companies are required follow the governance principal of rotation of Auditors after a period of 10 years.

      Auditor could resign before completion of his tenure. Company could also with shareholders’ approval and by following a process and approval of MCA Regional Director can remove auditors and appoint new auditors in their place.  Companies Act casts specific duties and responsibilities on the Auditors. Auditors have specified powers and rights in respect of books of accounts, records, accounting policies, disclosures etc.  Auditors have duty to report incidences of Frauds in the Company. 

      Placing of Audited FS in the AGM for shareholders’ approval is mandatory requirement.   

      Appointment/ ceasing/ removal of auditors needs filing of returns/ intimation with MCA in specified forms.

      Company is required to provide invitation to auditors for attending every annual general meeting. For Listed & specified companies Auditors usually interact with Audit Committee headed by ID.

      To access solutions to your auditor related questions or compliances around the Auditors appointment/ resignation/ ceasing, connect to our Biz Smart Executive