Resignation Of Auditor

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Resignation Of Auditor


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ABOUT Resignation Of Auditor

An audit means an examination of the financial reports which include a balance sheet, statement of changes in equity, income statements, cash flow statements, and notes providing a summary regarding significant accounting policies and such other explanatory notes which are required to be presented in the annual report of the Company, by an independent individual or an organization. Here we will discuss Auditor Removal Procedure as per Companies Act 2013.

The main objective of the audit is to provide a true and fair view of the Financial Information presented in Annual report thereby reflecting the financial position of the Organization of the Financial Year.

An auditor is an independent person who is qualified to conduct an audit. From an accounting point of view, an auditor is an independent person who evaluates the authenticity and reliability of the company’s financial statements. The auditors are required to follow the auditing standards which are set by a governing body.

Disqualifications

  • Any person who is an officer or an employee of the company
  • Any person whose relative is a director of the company or who is a position of key managerial personnel in the company.
  • Any person convicted by the court of any offense involving fraud and a tenure of ten years has not elapsed from the date of his conviction.

Process

The procedure for an auditor’s resignation must be followed in the below mentioned sequential form. A careful execution of the below-mentioned steps will avoid any error in the process

  • First of all, the auditor has to submit the resignation letter and Form ADT3 to the company.
  • A board of meeting shall be organized with all the directors for effecting the resignation.
  • The company shall obtain a consent letter from the new auditor firm under section 139 and 141, Companies Act 2013.
  • A board of meeting shall be called. All the members of the company shall be called in the meeting for filling the vacancy of the auditor.
  • The proposed Auditor/Auditors’ Firm is to be appointed in such meeting held.
  • Intimate the Appointed auditor/ Auditors’ firm regarding the date of appointment.

File the form ADT-1 for the appointment of the new auditor.
After the resignation of an auditor, a company has to carry out prescribed formalities/ Procedures for appointing new auditor.

Frequently Asked Questions

We have appointed the Auditor of the company for a term of 5 years. However, some differences have crept in and we want to remove the existing auditor? He is not resigning, nor giving audit report, what to do?

  • The only mechanism for removal of a Statutory Auditor appointed under the Act before expiry of the term, requires the prior approval of the Central Government (at present, the powers have been delegated to the jurisdictional Regional Director).
  • Special resolution of the company passed by the members is also required.
  • Auditor should be given suitable opportunity to make representation
  • MGT-14 to be filed w.r.t Special Resolution
  • File application in form ADT-2 alongwith the grounds of removal and other details, for Central Government approval.
  • INC-28 is to be filed within 30 days alongwith the copy of Central Govt. approval.

As per Section 139(8): If Casual Vacancy Arise due to Resignation of Auditor then: By Board of Directors in the Board Meeting within 30 days of Resignation and required approval of Members (Through General Meeting) with in 3 month from the date of intimation to shareholders by the Board of Directors. Auditor appointed due to casual vacancy will hold office till conclusion of next Annual General Meeting.

As per Section- 140(2): The auditor who has RESIGNED From the company shall file within a period of 30 days from the date of resignation, a Statement in the Form No. ADT-3 (Attached in GNL-2) with the ROC, indicating the reasons and other facts as may be relevant.

The company will File Notice of such appointment with ROC in Form- ADT-1 . Information require to be mention in Form ADT-3.

Category of Auditor Individual/ Firm: Income Tax PAN of auditor or auditor’s firm Name of the auditor or auditor’s firm Membership Number of auditor or auditor’s firm’s registration number Address of the auditor or auditor’s firm City State Pin code Email id of the auditor or auditor’s firm

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