Skip to main content

Appointment of an Auditor

A. Appointment of Auditor in case of Sole proprietor:

The appointment of the Auditor in the case of a Sole trader is done by the owner of the business. In the case of sole traders, the auditor generally acts as an accountant who also prepares accounts besides checking their accuracy. As He is appointed by an individual he must get clear instructions from his client in writing as to what he is expected to do. His work and its scope will depend upon the agreement with his client since the appointment of an auditor are not under any statute, therefore the rights and the duties will depend upon the agreement.

B. Appointment of Auditor in case of partnership:


The Auditor of a partnership firm is made by the mutual consent of all the partner's Appointment of Companies Auditors: The provisions regarding appointment of the auditor are contained in section 139 of Companies Act 2013


1. Appointment of auditor by members [sec 139(1)]:


  • A company shall appoint an individual or a firm as an Auditor at the first annual general meeting and each subsequent sixth annual general meeting.

  • Such auditors shall hold office till the conclusion of the sixth annual general meeting.

  • Such appointments shall be placed before the members at each annual general meeting for ratification.


2. Period for which the appointment is made [sec 139(2)]:


  • An individual can be appointed for a term of no more than five years.

  • An audit firm can be appointed for a consecutive term not more than two terms

of five years.

  • An individual or a firm that has completed its term shall not be eligible for

reappointment as an auditor in the same company for five years from the completion of the term.


3. Appointment of auditor of Government companies (sec 139 (5)):


The comptroller and Auditor general shall in respect of financial year appoint an auditor duly qualified within 180 days from the commencement of financial year who shall hold office till the conclusion of annual general meeting.


4. Appointment of First Auditor by Board of Directors [sec 139 (6)]:


The first auditor of a company other than a government company shall be appointed by the board of directors within 30 days of registration of the company. If the board fails to appoint the first auditor it shall inform the members of the company who shall appoint an auditor within 90 days at the extraordinary general meeting who shall hold the office till the conclusion of the first annual general meeting.


5. Appointment of First Auditor of Government Company [sec 139 (7)]:


The first Auditor of a Government Company shall be appointed by Comptroller and Auditor general within 60 days of registration of the company. In case of its failure to appoint the first auditor, then the board of directors shall appoint an auditor within the next 30 days. The company shall inform the members if the board fails to appoint the first auditor who shall appoint the auditor within 60 days at an extraordinary general meeting who shall hold the office till the conclusion of the first general meeting.


6. Casual vacancy of an Auditor [sec 139 (8)]:


  • The casual vacancy of auditor, except in case of Government Company, shall be

filled by the board of directors within 30 days but if it arises as a result of the resignation of the auditor it shall be approved by the company at a general meeting convened within 3 months of recommendation of the board. Such an auditor shall hold office till the conclusion of the next annual general meeting.

  • Casual vacancy in case of Government Company shall be filled by Comptroller

and Auditor General within 30 days if he fails to fill the vacancy, the board shall

fill the vacancy within the next 30 days.


C. Reappointment of a retiring auditor [sec 139 (9)]:


Such an auditor can be reappointed at annual general meetings if.

  • He is not disqualified for reappointment.
  • He has not given notice to the company of his unwillingness.
  • A special resolution has not been passed at the annual general meeting appointing some other person or providing expressly that he shall not be reappointed.


All the above is subject to the provisions of sec 139 (1)
Labels:

Comments

Post a Comment

Popular posts from this blog

Banking system of India - Theory

#Reserve Bank of India is the central bank of the country and regulates the banking system of India. The structure of the banking system of India can be broadly divided into scheduled banks, non-scheduled banks and development banks. Banks that are included in the second schedule of the Reserve Bank of India Act, 1934 are considered to be Scheduled banks .  All scheduled banks enjoy the following facilities: Such a bank becomes eligible for debts/loans on bank rate from the RBI Such a bank automatically acquires the membership of a clearing house. All banks which are not included in the second section of the Reserve Bank of India Act, 1934 are Non-scheduled Banks. They are not eligible to borrow from the RBI for normal banking purposes except for emergencies. Scheduled banks are further divided into commercial and cooperative banks. 1.Commercial Banks The institutions that accept deposits from the general public and advance loans with the purpose of earning profits are known as C...
Post a Comment
Read more

Difference between Vouching , Verification and Valuation

  Difference between Vouching , Verification and Valuation  Vouching Verification Valuation Meaning Vouching is a process of comparing the entries in the books of accounts with the bonafide vouchers Verification is a process which proves the existence, ownership and title to the assets Valuation is a process which certifies the correct value of the assets and liabilities at the date of balance sheet. Subject Matter Vouching is made of the entries recorded in the books of original entry and their posting in the ledger Verification on the other hand is made of assets and liabilities appearing in the balance sheet at the end of the year Valuation is also made of assets and liabilities appearing in the balance sheet at the end of the year By whom Vouching is done by the senior auditor and audit clerks. Verification on the other hand is done by the auditor himself or his associates Verification on the other hand is done by the auditor himself or his associates When Vouching is done...
Post a Comment
Read more

Basic Principles Governing an Audit

  SA- 200 describes the nine basic principles that govern the procedure of auditing. It lists out the roles and responsibilities of the auditor and his general code of conduct during an audit.  1] Integrity, Independence and Objectivity The auditor has to be honest while auditing, he cannot be favoring the organization. He must remain objective throughout the whole process, his integrity must not allow any malpractice.  Another important principle is independence. So the auditor cannot have any interest in the organization he is auditing, which allows him to be independent and impartial at all times. 2] Confidentiality The auditor has access to a lot of sensitive financial information of the organization. It is important that he respect the confidential nature of such information and documents. He cannot disclose any sensitive information to any third party unless it is a requirement by law. And he must also be very careful with documents, certificates etc. that the organ...
Post a Comment
Read more