AUDIT & AUDITORS (Section 139 – 148). The Auditor should be appointed for the period of 5 Years...
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Transcript of AUDIT & AUDITORS (Section 139 – 148). The Auditor should be appointed for the period of 5 Years...
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CHAPTER - X
AUDIT & AUDITORS
(Section 139 – 148)
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The Auditor should be appointed for the period of 5 Years at a time and will be eligible for reappointment and condition of rotation of auditor is not applicable in the following cases :
a) all private limited companies having paid up share capital of Rs. 20 Crore or Less
AND b) all unlisted public companies having paid up share
capital of Rs. 10 Crore or LessAND
c) all Unlisted Public Companies & Private Companies having public borrowings from financial institutions, banks or public deposits of Rs. 50 crores or less.
Applicability :
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APPOINTMENT OF AUDITORS (S.139): PARTICULARS UNLISTED PRIVATE &
PUBLIC COMPANIES
FIRST AUDITORi)Appointed by Board of Directors within 30
days from Date of IncorporationOr
By Members at EGM(within 90 days in case Board fails to appoint)
ii) Hold office till the conclusion of 1st AGM
Auditor at first AGM
BY MEMBERS(To hold office till conclusion of 6th AGM subject to
ratification by members at every AGM)
Subsequent Auditors BY MEMBERS(To hold office till conclusion of 6th Meeting, subject
to ratification by members at every AGM)
CASUAL VACANCY1. Due to
ResignationBY MEMBERS
within 3 months of recommendation of Board & Hold Office till next AGM
2. Due to other reasons
BY BOARDWithin 30 days
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APPOINTMENT OF AUDITORS (S.139): PARTICULARS NON – GOVERNMENT COMPANY
LISTED / SUCH OTHER CLASS/ SPECIFIED
FIRST AUDITOR i)Appointed by Board of Directors within 30 days from Date of Incorporation
OrBy Members at EGM
(within 90 days in case Board fails to appoint)ii) Hold office till the conclusion of 1st AGM
Auditor at first AGM BY MEMBERS(for Maximum one term of 5/ 10 consecutive
years)Cooling Period of 5 Years before next
Appointment
Subsequent Auditors BY MEMBERS(for Maximum one term of 5/10 consecutive
years)
CASUAL VACANCY1. Due to Resignation BY MEMBERS
within 3 months of recommendation of Board & Hold Office till the next AGM
2. Due to other reasons
BY BOARDWithin 30 days
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1. Auditor is eligible for appointment and is not disqualified for appointment under the Act.
2. Proposed appointment is as per the term provided under the Act
3. Proposed appointment is within the limits laid down by or under the authority of the Act
4. list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct
Content of certificate ( BY AUDITOR):
File notice of appointment of auditor with the Registrar of Companies within 15 days in Form
ADT-1.
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Illustration 1:- Number of consecutive years for which an individual auditor has been functioning as auditor in the same company [in the first AGM held after the commencement of provisions of section 139(2)]
Maximum number of consecutive years for which he may be appointed in the same company (including transitional period)
Aggregate period which the auditor would complete in the same company in view of column I and II
I II III
5 years (or more than 5 years)
3 years 8 years or more
4 years 3 years 7 years
3 years 3 years 6 years
2 years 3 years 5 years
1 year 4 years 5 years
Rotation of individual auditor:
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Rotation of audit firm: Illustration 2:- Number of consecutive years for which an audit firm has been functioning as auditor in the same company [in the first AGM held after the commencement of provisions of section 139(2)]
Maximum number of consecutive years for which the firm may be appointed in the same company (including transitional period)
Aggregate period which the firm would complete in the same company in view of column I and II
I II III10 years (or more than 10
years)3 years 13 years or more
9 years 3 years 12 years8 years 3 years 11 years7 years 3 years 10 years6 years 4 years 10 years5 years 5 years 10 years4 years 6 years 10 years3 years 7 years 10 years2 years 8 years 10 years1 year 9 years 10 years
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Removal of the auditor :
Conduct Board Meeting and pass Resolution for Removal
Make application to Central Govt. in Form ADT- 2 + Fees( Within 30 days From Board Resolution)
After Receipt of Approval From Central Govt. hold General Meeting (within 60 Days from Approval)
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Resignation of Auditor On resignation, an auditor shall file a
statement (indicating reasons & facts) in Form ADT-3 with ROC in 30 days from date of resignation.
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additional CONTENTS OF AUDITOR’S REPORT
Report on the accounts of any branch office of the company audited is
considered.
The observations or comments of the auditors on financial transactions
Any director is disqualified from being appointed as a director under sub-section (2) of section 164;
whether the company has disclosed the impact, if any, of pending litigations on its financial position in its financial statement;
whether the company has made provision, as required under any law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts;
whether there has been any delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the company.
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Auditor Shall not render following services DIRECTLY or INDIRECTLY to the COMPANY/IT’S HOLDING / IT’S SUBSIDIARY: -
Accounting and book keeping services; Internal audit; Design and implementation of any financial information system; Actuarial services; Investment advisory services; Investment banking services; Rendering of outsourced financial services; Management services; and Any other kind of services as may be prescribed:
AUDITOR NOT TO RENDER CERTAIN SERVICES (S. 144):