Rotation of Auditor

Is the concept of rotation of auditors applicable to every company?

No, the provisions pertaining to the Rotation of Auditors are applicable to the following companies only:

1. Every listed Company;
2. All unlisted public Companies having paid-up share capital of rupees 10 crores or more;
3. Every private company has paid-up share capital of rupees 20 crores or more;
4. All companies having public borrowings from banks, financial institutions, or public deposits of rupees 50 crores or more.

What is the term for which an Auditor can be appointed in the company?

As per Section 139(2) of the Companies Act, 2013, the aforesaid categories of Companies have to mandatorily rotate their Auditors as follows:

1. An individual can be appointed as an auditor for a term of five consecutive years;
2. An audit firm can be appointed as auditor for two terms of five consecutive years.

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