For a private limited company which has to comply with the requirement of rotation of auditors, has to appoint the auditor for two years for the year 2016-17 & 2017-18. The proposed auditor are audited the accounts of the company for last five years. Can we appoint them for a term of 2 years instead of 139(1) requirement of 5 years ?
First, the requirement of 5 years is mentioned in 139(2) and I assume that the company can call AGM(because it is generally called within 6 months from the end of FY).
The company can appoint the auditor (who audited for last 5 years) for 2016-17 only because - 1. As per 3rd proviso to 139(2), transitional period of 3 years is provided to comply with the requirement of 139(2) i.e. upto 31.03.2017
2. As per Rule 6(3) of Audit and Auditors Rules, the period for which the individual has held office as auditor prior to the commencement of the Act shall be taken into account for calculating the period of five consecutive years.
For 2017-18, new auditor has to be appointed.
Leave a Reply
Your are not logged in . Please login to post replies
CAclubindia
