Appointment of Auditor

FAQs on the appointment of Auditor under the Companies Act, 2013 (Government & Other than Government Company)

First Auditors:

When do I appoint the first Auditor of the Company and how?

Type of Company	Appointment by C&AG	Appointment by Board of Directors	Appointment of Members of the Company
Government Company	Within 60 days from the date of registration of the Company	If C&AG fails, then the appointment shall be made, within the next 30 days	If Board also gets fails then the appointment shall be made, within 60 days at an EGM
Other than the Government Company	Not Applicable	Within 30 days from the date of registration of the Company	If Board fails, then the appointment shall be made Within the next 90 days at an EGM

• E-form ADT-1 is required to be filed within 15 days from the date of appointment.
• Following documents are to be attached along with ADT-1:
• Written consent from Auditor;
• Certificate from the Auditor that he is not disqualified to be appointed;
• Copy of the Board Resolution

What would be the tenure of the first auditor?

The First auditor, appointed as above, shall hold the office till the conclusion of the first Annual General Meeting.

What would be the tenure other than the first auditor?

The tenure of an auditor may be decided by the company at the time of appointment of the auditor the tenure cannot be more than five years and the auditor can be reappointed number of times.

 Provided that

• in case of listed company or
• unlisted public companies having paid-up share capital of rupees 10 crores or more; or
• All private companies having paid-up share capital of rupees 20 crores or more; or
• all companies having public borrowings of rupees 50 crores or more.

the above-mentioned companies can appoint an individual as an auditor for a period, of not more than 5 years and an audit firm for not more than two tenures of five years each.

After completion of the aforesaid term, the auditor cannot be re-appointed as auditor of the same company for a period of five years.

Ratification shall be done at every Annual General Meeting. 

Whether e-form ADT-1 is required to be filed for ratification of the appointment of an auditor?

• There is no need to file ADT-1 at the time of ratification.

Note:

As per the Companies Amendment Bill, 2016, the concept of ratification has been withdrawn. If it is approved, there will be no need to ratify the appointment of an auditor at every AGM by the members.

Can we appoint an Auditor for a term which is less than 5 years?

• Yes, an auditor can be appointed for a term that is less than five years.

How to make the appointment of subsequent Auditors in government Companies?

• In respect of a financial year, the appointment to be made, within a period of one hundred and eighty days from the commencement of the financial year, who shall hold office till the conclusion of the annual general meeting.