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Auditor’s Appointment in case of Resignation

Auditor appointment 


Under section 130 of the companies act 2013, the auditor is appointed in every company and he/she can resign as per their wish after the appointment. However in a case of resignation the auditor must inform the registrar of companies within 30 days of the resignation by filing a statement.
Under section 139 of the act, he must inform the information and the reasons for the resignation of the comptroller and auditor general of India.

Filing of ADT 3 form

When the auditor had decided to resign he should give his resignation letter to the company and should file a statement of form ADT 3 with the registrar of companies within 30 days of the resignation. The below details are mentioned in the form:
  1. Name of the resigning auditor firm
  2. Address of the resigning auditor firm
  3. The contact number of resigning auditor firm.
  4. PAN no. of resigning auditor firm.
  5. Reasons for resignation
  6. Email ID of the resigning auditor firm.
  7. Digitally signed a copy of the form ADT 3 by one of the members of the resigning auditor firm.

Penalties:

If the auditor fails to comply with the provisions of the act and fails to inform ROC about the resignation with the prescribed period of time then a penalty from 50,000 to 5,00,000 can be imposed on him.

The sequence of events:

  1. Firstly the company should obtain the resignation letter and form ADT 3 from the auditor as per the provisions of the act.
  2. A board meeting should be called by all the directors for the discussion about the resignation.
  3. Under section 139 and 141 of the companies act of 2013 obtain consent letter from the new auditor firm for the company.
  4. For filling the casual vacancy of the auditor, call a board meeting with all the members of the company.
  5. Once the meeting for the appointment is conducted appoint the new auditor firm.
  6. Inform the new auditor firm about the appointment and the date of joining.
  7. For new auditor appointment file ADT 1.

Documents to be filed by the company for the appointment of new auditor.

  1. Form MGT 14- In this form copy of the resolution passed in the meeting needs to be attached.
  2. Form ADT 1- Within 30 days of the appointment of the new auditor firm the company must file form ADT 1 with the registrar of the company. In this form below mentioned details are given:
1)  Name of the newly appointed firm.
2) Address of the newly appointed firm.
3) Email and PAN details.
4) A total number of financial year for which the firm is appointed.
5) Information of resigned audit firm.
6) Date of appointment.
7) Digitally signed Form ADT 1 by the director if the company
This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.

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