Statutory and ethical duties of an auditor being appointed

This query is : Resolved

Jatin Khanna (Querist)
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14 February 2009 Hi,
Would like to know the Statutory and ethical obligation of an auditor being appointed other than the retiring auditor of a public as well as aprivate company

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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17 February 2009 Do you asking about the Auditors duties in respect of last auditors or in ralation of company. Please clarify.

Jatin Khanna

Jatin Khanna (Querist)
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01 March 2009 I am actually asking about duties of auditors in respect of last audiotrs irrespective of wether it is a company or a partnership firm

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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25 July 2025 Got it! You want to know the **statutory and ethical duties of an incoming auditor**—specifically their duties related to the **previous auditor**, whether for a company or a partnership.

Here’s a clear breakdown:

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### **Statutory Duties of Incoming Auditor (Company context)**

1. **Obtain consent and eligibility**

* Before appointment, the auditor must give written consent and confirm eligibility under Companies Act provisions (e.g., not disqualified).

2. **Communication with outgoing auditor (Section 139(2) of Companies Act, 2013)**

* The incoming auditor **shall communicate with the outgoing auditor** to:

* Obtain information about the company’s accounts.
* Understand any matters that the outgoing auditor considers necessary to bring to the notice of the incoming auditor.
* Inquire about any disagreements with the management, frauds, or other issues.
* This duty ensures continuity and transparency.

3. **Duty to examine financial records honestly**

* Incoming auditor must perform the audit according to auditing standards, ensuring fair presentation.

4. **Filing of necessary forms with Registrar of Companies (ROC)**

* E.g., filing Form ADT-1 for appointment.

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### **Ethical Duties of Incoming Auditor**

1. **Integrity and Objectivity**

* Maintain independence and avoid conflicts of interest related to outgoing auditor or management.

2. **Confidentiality**

* Respect confidentiality of information obtained from the company and outgoing auditor.

3. **Professional Skepticism and Due Diligence**

* Be alert to potential issues flagged by outgoing auditor.
* Assess risks and exercise professional judgment carefully.

4. **Professional Competence**

* Ensure the auditor is competent to take up the engagement.

5. **Communication**

* Maintain clear and timely communication with all relevant parties.

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### **Duties towards Outgoing Auditor**

* The incoming auditor **should formally request** the outgoing auditor for any relevant information, explanations, or clarifications.
* If the outgoing auditor refuses to cooperate, the incoming auditor should document the efforts and consider impact on audit scope.
* Any **disagreements or issues** raised by outgoing auditor must be carefully evaluated.
* These duties are important for **audit quality and transparency**.

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### Summary:

| **Aspect** | **Incoming Auditor Duties** |
| ------------------------ | --------------------------------------------------------------- |
| Statutory | Consent, communication with outgoing auditor, filing forms |
| Ethical | Integrity, confidentiality, professional skepticism, competence |
| Towards outgoing auditor | Obtain relevant info, assess disagreements, document efforts |

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**If you want, I can help draft a checklist or communication letter template to outgoing auditors. Would that be helpful?**

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