Procedure For Appointment of Auditor under Companies
Act 2013
The manner and the procedure of selection of auditors has been specified under rule 3 of Companies
(Audit and Auditors) Rules, 2014.
(Audit and Auditors) Rules, 2014.
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Consideration of Qualification and experience for the appointment as auditors by the Audit Committee/Board:
In the case of a company
that has constituted an Audit Committee under section 177, the audit committee and in
other case; the Board shall take into consideration, the qualifications and experience of the person
proposed to be considered for appointment as an auditor and whether these are commensurate with the size and requirements of the company.
While considering the appointment, the Board or audit committee
shall have due regard to:
that has constituted an Audit Committee under section 177, the audit committee and in
other case; the Board shall take into consideration, the qualifications and experience of the person
proposed to be considered for appointment as an auditor and whether these are commensurate with the size and requirements of the company.
While considering the appointment, the Board or audit committee
shall have due regard to:
(a) Any order of professional misconduct passed against
the proposed auditor
; and
the proposed auditor
; and
(b) Any proceedings of professional misconduct pending against the proposed auditor
before the Institute
of Chartered Accountants of India or the National Financial Reporting Authority
or Tribunal or any Court of law. [Rule
3(1)]
before the Institute
of Chartered Accountants of India or the National Financial Reporting Authority
or Tribunal or any Court of law. [Rule
3(1)]
Following procedure is required for Appointment of
Auditor
1. The qualification and experience of the individual or the firm proposed to be appointed
as auditor shall
be considered by –
as auditor shall
be considered by –
(a)
The
Board; or
The
Board; or
(b) The audit
committee, in case the company
is required to constitute an Audit committee.
committee, in case the company
is required to constitute an Audit committee.
2. While considering the appointment, the Board/Audit Committee shall have due regard to-
(a)
Any order
of professional misconduct passed against the proposed auditor;
and
Any order
of professional misconduct passed against the proposed auditor;
and
(b) Any proceedings of professional misconduct pending against the proposed auditor.
3. The Board/Audit Committee may call for such other
information from the
proposed auditor
as it may deem fit.
information from the
proposed auditor
as it may deem fit.
4. In
case the company is not required to constitute the Audit committee, the Board
shall consider and recommend an individual or a firm as auditor
to the members in the AGM for appointment.
case the company is not required to constitute the Audit committee, the Board
shall consider and recommend an individual or a firm as auditor
to the members in the AGM for appointment.
5. In case the company
is required to constitute the Audit Committee, following procedure shall
be adopted:
is required to constitute the Audit Committee, following procedure shall
be adopted:
(a) The audit committee shall recommend the name of an individual or a firm as auditor
to the Board for
consideration.
to the Board for
consideration.
(b) If the Board agrees
with the recommendation of the audit committee, it shall further
recommend such individual or such firm as auditor
to the members in the AGM for appointment.
with the recommendation of the audit committee, it shall further
recommend such individual or such firm as auditor
to the members in the AGM for appointment.
(c) If
the Board disagrees with the recommendation of the audit committee, it shall
refer back the recommendation to the audit committee
for reconsideration citing reasons for such disagreement.
the Board disagrees with the recommendation of the audit committee, it shall
refer back the recommendation to the audit committee
for reconsideration citing reasons for such disagreement.
(d) If the audit committee, after considering the reasons given
by the Board, decides not to reconsider its original recommendation, and the Board continues to disagree with the recommendations of the audit committee, the Board shall –
by the Board, decides not to reconsider its original recommendation, and the Board continues to disagree with the recommendations of the audit committee, the Board shall –
(i) record reasons
for its disagreement with the committee
for its disagreement with the committee
(ii) send its own recommendation for consideration of the members
in the AGM;
in the AGM;
(e) If the audit committee, after considering the reasons given by the Board, decides
not to reconsider its
original recommendation and the Board agrees with the recommendations of the
audit committee, the Board shall recommend the name of the individual or the
firm as recommended by the Audit Committee to the members in the AGM for the appointment.
not to reconsider its
original recommendation and the Board agrees with the recommendations of the
audit committee, the Board shall recommend the name of the individual or the
firm as recommended by the Audit Committee to the members in the AGM for the appointment.
(f) The appointment will be considered at the duly convened annual
general meeting of the company
and the necessary resolution be passed.
general meeting of the company
and the necessary resolution be passed.
6. In the case of listed
company, the copies of notices and copy of proceedings of annual general
meeting be forwarded promptly.
company, the copies of notices and copy of proceedings of annual general
meeting be forwarded promptly.
7. The auditor
must be intimated of his appointment and a certified copy of the resolution of appointment must be sent to the auditor.
must be intimated of his appointment and a certified copy of the resolution of appointment must be sent to the auditor.
8. Then,
company is required to file a notice about the appointment of auditor(s) with
the Registrar in form
ADT-1 along with filing fees and necessary enclosures within 15 Days of
the meeting.
company is required to file a notice about the appointment of auditor(s) with
the Registrar in form
ADT-1 along with filing fees and necessary enclosures within 15 Days of
the meeting.
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