Resignation of Statutory Auditor
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Introduction
Content is missing. “According to the Companies Act 2013, the phrase “resignation of an auditor” refers to the procedure by which an auditor who has been appointed by a company makes the decision to end their engagement with the company and to stop serving as the company’s auditor. Resignation of Auditor creates a casual vacancy. Therefore, the appointment of an auditor in case of casual vacancy is mandatory.
A company may appoint either an individual or a firm as its auditor. The appointed auditor must provide written consent for their appointment. Subsequently, the company is required to file a notice of the auditor’s appointment with the Registrar of Companies (ROC) within fifteen days of the appointment.
Resignation Under Companies Act, 2013
- Intimation to the Company: In the event that an auditor wishes to leave from their position with the Company, they are required to submit a written notice of resignation to the board of directors. The notice ought to contain an explanation of the reasons for the resignation in addition to any additional information that may be pertinent.
- Filing with the Registrar: The company is required to file a notice of the auditor’s resignation with the Registrar of Companies (RoC) using the relevant form within thirty days of the auditor’s resignation. This notification must be filed within thirty days of the auditor’s resignation. Form ADT-3 is the document that is typically utilised for communication of this kind.
- Board Meeting: As soon as the board of directors of the Company is notified that the auditor has resigned from their position, they are required to call a meeting of the board in order to acknowledge the resignation and discuss the possibility of hiring a new auditor to replace the position. The board ought to see to it that a replacement auditor is selected and appointed within a month of the previous one’s resignation.
- Auditor Rights: The departing auditor has the right to attend the general meeting of the company and present an explanation of the circumstances surrounding their departure, if they so want to do so. This right is reserved for the auditor. Additionally, the auditor may submit a written representation in order for it to be read aloud during the meeting.
- Communication with the RoC : It is the responsibility of the company to tell the RoC about the appointment of the new auditor within 15 days of the appointment using the proper form.
Process for Appointment of New Auditor during Casual Vacancy
- Meeting of the Board of Directors: The company’s board of directors is required to call a meeting of the board of directors in order to consider and approve the appointment of a new auditor to replace the casual vacancy.
- Auditor Selection: The board of directors will conduct an investigation and choose an appropriate auditor to fill the casual vacancy in the position. They might take into consideration auditors who meet the standards of the Companies Act 2013 in terms of their eligibility and qualifications.
- Consent and Eligibility: In order to be eligible to serve as the company’s auditor, the appointed auditor is required to offer their written consent. In addition to this, they need to meet the eligibility requirements laid out in Section 141 of the Companies Act of 2013, which contains prerequisites, a list of things that disqualify someone from serving, and rules regarding independence.
- General Meeting of Members: The Company shall convene a General Meeting of members within three months for confirming the appointment of proposed auditor by way of ordinary resolution.
- Intimation to the Registrar: Within 15 days following the approval of appointment in General Meetings, the company is required to file with the Registrar of Companies (RoC) a notice informing the RoC of the appointment of the new auditor. Form ADT-1 is the one you need to fill out for this particular endeavour.
- Tenure of Office: The auditor who is chosen to replace the casual vacancy will remain in office until the conclusion of the next annual general meeting (AGM) of the company. This is the length of time for which they will be in office.
- Report of the Auditor: The newly appointed auditor has been given the responsibility of compiling and issuing the auditor’s report for the financial statements of the company throughout their time as auditors.
What is included in this
FAQs
The answer is yes; an auditor has the legal right to quit from their position at any moment by submitting a resignation letter to the board of directors of the company.
The auditor’s notice of resignation ought to include an explanation of why the auditor is resigning in addition to any other pertinent information.
The notice of the auditor’s resignation needs to be filed with the RoC by the company, and the company should utilise Form ADT-3 to do so.
The exiting auditor does, in fact, have the option to provide the board of directors of the Company with a statement in which they clarify any concerns or reservations they may have with the operations of the company.
The board of directors of the company is required to hold a board meeting within the first thirty days following the auditor’s resignation in order to discuss the possibility of selecting a new auditor to fill the vacancy.
The organisation is obligated to inform the RoC about the appointment of a new auditor no later than 15 calendar days after the auditor has been appointed, utilising the correct notification form.
A casual vacancy is a vacancy in the position of the company’s auditor that arises during the tenure of the previous auditor owing to resignation, disqualification, death, infirmity, or any other reason. This vacancy can be filled by a member of the board of directors or by a member of the audit committee.
The board of directors has the authority to choose any qualified auditor to fill the position of casual auditor vacancy. Section 141 of the Companies Act of 2013 lays forth the qualifications that must be met by the auditor in order to qualify for the position.
The board of directors is accountable for conducting an investigation and choosing an appropriate auditor to replace the casual gap in the position. They might think about using auditors who meet the standards of the Companies Act 2013 in terms of their qualifications and eligibility.
The newly appointed auditor does, in fact, have to give their written consent to the company before they can begin working there as the auditor. They should also verify that they are eligible to participate and that they comply with the applicable provisions of the Act.
Within 15 calendar days after the new auditor’s appointment, the firm is required to provide the RoC with a notice announcing the appointment of the new auditor. Form ADT-1 is typically utilised when accomplishing this goal.
The auditor who is selected to fill the casual vacancy shall remain in office until the end of the company’s subsequent annual general meeting (AGM).
The appointment of the new auditor to replace the casual vacancy can, in fact, be regularised at the AGM, or another auditor could be appointed for a longer term.
As per Section 140(1) of the Companies Act, 2013, the auditor appointed by a company can be removed from his/her office before the expiry of the term only by passing a special resolution and after obtaining the previous approval of the Central Government in that behalf.
