Sign of auditor & consequences

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CS Vishal Mehta (Querist)
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08 August 2013 In Private Limited Companies or Public Limited Companies, Statutory Auditor who is appointed in an AGM dated 29.09.2012 signs Balance Sheet for 31.03.2013

now my question is dat,

1: what are the consequences, if he doesn't sign the same ??

2: can another auditor sign Balance Sheet for 31.03.2013, by showing his backdated appointment on 29.09.2012 ??

Form 23B of 31.03.2013 is yet to file

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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10 August 2013 sir,

As per sec 224(1A) of Companies Act, 1956 Form 23B is to be submitted to the ROC within 30 days of appointment of Auditors.

The provisions in respect of this Form are as under –

a) Under this the Auditors are required to annually file and sent intimation to the Registrars regarding their appointment and reappointment in the Company online.

b) The Auditors are required to digitally sign the Form 23B and intimate the Registrar for the same.

c) The Auditors are also required to receive intimation in the form of draft letter of his appointment or reappointment by the Companies concerned and the same should be attached with Form 23B which is to be filed with the ROC.

d) SRN (Service Request Number) of Form-23B which is filed with the ROC is mandatory required to be mentioned in FORM-23AC for filing the Balance Sheet.

please must see following link:

https://www.caclubindia.com/experts/signing-of-balance-sheet--868335.asp

eminent expert also invited ....

CS Vishal Mehta

CS Vishal Mehta (Querist)
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10 August 2013 Ramesh Ji

we have filed Annual Report of 31.03.2012 with the ROC, in its notice, we proposed appointment of XYZ & Associates, CA firm, for auditor of 2012-13, its form 23B for 310313 is yet to file

now XYZ & Associates is not willing to sign, hence, Company appoints PQR & Associates, CA firm

SO can PQR & Associates file form 23B for 31.03.2013 with late penalty fees and show his appointment ??? if so, then what will be the consequence of proposed appointment of XYZ & Associates which Company has shown in the notice of AGM for 31.03.2012 ???

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2025 Thanks for raising this nuanced issue—it's a classic compliance situation involving auditor appointment, Form 23B, and balance sheet signing under the Companies Act, 1956 (as applicable to your 2012–13 financials).

Let’s break your queries into direct, clear responses:

🔹 Q1: What happens if the appointed auditor (XYZ & Associates) doesn't sign the balance sheet?

✅ Legal Position:
Under Section 224(1) of the Companies Act, 1956, the auditor appointed in the AGM (dated 29.09.2012) is statutorily bound to audit and sign the financial statements for FY 2012–13 (ending 31.03.2013).
If XYZ & Associates refuse to sign the financials without valid reason, it's considered professional misconduct under Clause 9 of Part I of the Second Schedule of the Chartered Accountants Act, 1949.
⚠️ Consequences:
Company may be unable to file Form 23AC (Balance Sheet) without Form 23B’s SRN.
Auditor (XYZ) may face disciplinary action by ICAI for dereliction of duty.
MCA may issue notices for non-compliance with auditor appointment/reporting.
🔹 Q2: Can another auditor (PQR & Associates) be appointed retrospectively (backdated) and sign the balance sheet for FY 2012–13?

❌ Generally, NO. You cannot backdate an auditor’s appointment just because the earlier auditor refuses to sign.
✅ What You Can Do:
Properly remove/resign the originally appointed auditor (XYZ & Associates):
If they refuse to act, get a formal resignation.
If not, initiate removal under Section 224(7) of the Companies Act, 1956 (requires Central Government approval if initiated mid-year).
Appoint new auditor (PQR) in EGM, not backdated.
File Form 23B for PQR’s appointment with late fees, reflecting the correct actual appointment date, not backdated.
PQR can audit and sign financials only if:
Their appointment is valid and
XYZ has formally resigned or been removed through proper process.
🔹 Q3: What about the AGM notice where XYZ & Associates were proposed for appointment?

✔️ That’s fine. A proposal in an AGM notice doesn’t bind the company forever. What matters is whether the appointment was made, accepted, and Form 23B filed.
Since Form 23B was never filed by XYZ, their appointment is not validated under law.
However, if XYZ accepted the appointment in writing and simply didn’t file Form 23B, they are considered appointed, and failure is on their part.
🛠️ Practical Steps You Can Take Now:

If XYZ Has NOT Accepted Appointment:
Appoint PQR & Associates in an EGM with proper Board/Shareholder resolutions.
File Form 23B (late) for PQR with penalty.
Have them sign the audit report.
If XYZ HAS Accepted Appointment But Refuses to Sign:
Ask for written resignation from XYZ.
File Form 23B showing PQR's appointment post-resignation.
If XYZ refuses resignation, approach Regional Director (RD) for removal (a bit complex/time-consuming).
🧾 Summary Chart:

Scenario Action Needed Can PQR Sign?
XYZ accepted appointment but refuses to sign Get resignation or go for removal via RD ✅ If appointed properly post-resignation
XYZ did not accept (no communication) Appoint PQR via EGM ✅ Yes
XYZ accepted but failed to file Form 23B XYZ still considered valid auditor ❌ No, unless removed properly

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