LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

First time audit for new company

Sarvesh (Others) (24 Points)

29 May 2015

Dear Fellows
Here is my question, a company registered under company act 1956 in February 2014 with an authorized capital of 1 lakh rupees. Due to their financial reason they do not appoint an auditor/ CA/CS and having only strength of 2 perons as an employee( Both are directors). They have managed their account book and Minute book properly. The company is running under loss. Now they want to do audit process. Now I have some issues in my mind,

have they made a mistake by not appointing an auditor.
If yes, are they going to pay a heavy fine.

After that please give us any suggestion for betterment.

Reply
Follow
Share

1 Replies

Ritesh (students) (41 Points)
Replied 29 May 2015

Originally posted by : Sarvesh
	Dear Fellows Here is my question, a company registered under company act 1956 in February 2014 with an authorized capital of 1 lakh rupees. Due to their financial reason they do not appoint an auditor/ CA/CS and having only strength of 2 perons as an employee( Both are directors). They have managed their account book and Minute book properly. The company is running under loss. Now they want to do audit process. Now I have some issues in my mind, have they made a mistake by not appointing an auditor. If yes, are they going to pay a heavy fine. After that please give us any suggestion for betterment.

APPOINTMENT OF FIRST AUDITOR As per section 139(6) the first auditor of the company shall be appointed by the Board within 30 days of Incorporation. In case of Board’s failure, an EGM shall be called within 90 days to appoint the first auditor. The law is silent regarding from when this time limit of 90 days be reckoned, it is better to take a stricter view and interpret that the 90 days limit starts from Incorporation rather than expiry of 30 days(i.e. failure of Board) from it. Tenure: – Till conclusion of 1st annual general meeting. Remuneration: – As per proviso to section 142(1) remuneration of the first auditor can be decided by the Board.