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Auditor rotation

Sony Ahuja (PCS) (57 Points)

03 November 2014

If a Company has appointed an Auditor in the year 1997 then, till when can the Auditor continue to be the Auditor of the Company as per the New Act?

Company - Private Company

Auditor - Auditors' Firm

Appointed for a period of 1 year in each AGM since 1997

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4 Replies

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 03 November 2014

As per the new act, audit firm shall not be appointed or reappointed as auditor for more than 2 terms of 5 consecutive years..i.e same audit firm can be an auditor of same company upto 10 years. In ur case, its alrdy been reached more than 10 years. Even if that audit firm appointed in each AGM since 1997. .it wl consider as 10 years or more number of consecutive years for which an audit firm has been functioning as auditor in the same company. So, in ur case, now company have 3 years time to comply with the new provision from the date of commencement of new act.

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Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 03 November 2014

So, present audit firm can continue as an auditor for next 3 years, since there is a "3 years time limit to comply with the new provisions from the date of commencement of new act".

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Aatish Gupta (iuohihih) (41 Points)
Replied 03 November 2014

According to me the provision of rotation is not applicable if the share cap of your company does not exceed 20 crores or the public deposits does not exceed 50 crores.

sanjaykumarpathak (CA-final) (28 Points)
Replied 03 November 2014

As per sec 139(2) of co act-13 listed co & "other class of co" shall not appoint or reappoint-

i An individual as auditor for more than one term of five years,

ii An audit firm as an auditor for more than two terms of five consecutive years

"other class of co" means- All unlisted co having paid up share cap 10 cr or more

All private co having having paid up cap 20 cr or more

All co having public borrowing or deposit 50 cr or more.

Every co existing on or before the commencement of sec139(2) of the act which is required to comply with the said provision shall comply with the requirements of this subsection within three year from the date of commencement of this provision.