Ad-Free CAclubindia and daily updates on your mobile. Subscribe Now!

Appointment of auditor

Dhara (Company Secretary) (298 Points)

20 April 2016

The cooling period of 5 years in case of Auditor would be applicable from the date of circular in 2014 ??? bcoz i many of my companies Auditor is appointed from the date of incorporation more then 15-16yrs. For FY 15-16 do i need to change my auditor if yes what i need to do

Reply
Follow
Share

5 Replies

Jatin Bajaj (CS) (2928 Points)
Replied 20 April 2016

First of all, we need to check that weather the Company falls under the provison of rotation of auditor or not. According to section 139(2), Read with Rule 5 of Audit and audit Rules, following are the provisons for rotation of auditors. All Listed Companies All unlisted Company with a paid up share capital of Rupees 10 Crore rupees or more All Private Companies with a Paid up capital of Rupees 20 Crore Rupees or More all Publci company and private company having paid up share capital below threshold but having borrowing from banks or public financial institutions in excess of 50 crore rupees or more. in such a case indivisual and firm canot be appointed for more than a continuous period of 5 years or 10 years as the case may be. There should be the minimum gap of 5 years for the reappointment of the same auditor of the company. But if the Company does not fall under the above criteria, then auditor can be appointed for more than a period of 1 term of 5 years or 2 terms of 5 years as the case may be.

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Dhara (Company Secretary) (298 Points)
Replied 20 April 2016

Dear Jatin,

My Company does not fall under the above criteria, and the term period of 1 term of 5 years or 2 terms of 5 years have also been over. in some of my companies same auditor is continuing its service from the date of incorporation ie from 1981. in this case term period has also been expired. Do i need to change my auditor frm this year while filing ADT 1 for the period 16-17 for Fy 15-16 ? if yes what procedure i need to follow

Jatin Bajaj (CS) (2928 Points)
Replied 20 April 2016

Dear Dhara, As per Companies Act 2013, law has provided the relaxation ( transition ) period of 3 years from date of commencement of act. you can appoint the same auditor in your company till the AGM OF SEPTEMBER 2017 , i.e. till 29th of September 2017, ( 3 years from 29/3/2014). But after September 2017. you have to mandatory change your auditor. But for this year and upto next year AGM, you can continue with the same auditor

1 Like

Dhara (Company Secretary) (298 Points)
Replied 22 April 2016

Dear Jatin,

In case of Rotation of Auditor , my company does not fall in any of the conditions mentioned u/s 139(2) of the act. so my question is can i continue the same audior for as many years i want right ? the 3years relaxation period u suggested before wont b applicable for me right? as non of the conditions are applicable for me..

Jatin Bajaj (CS) (2928 Points)
Replied 22 April 2016

Dear Dhara,

Yes, you are absolutely correct. As the provisons of Rule 5 of Audit Rules are not applicable on your Company , so you can continue to appoint same Auditor further for the Conclusion of this AGM till the Conclusion of sixth AGM and till the conclusion of every sixth AGM as rightly said under section 139(1)

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!