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Ex-auditor not signing adt-3 form. what alternative action?

Learner (Digital Assistant) (70 Points)

18 May 2016

Hello,

The auditor of my pvt ltd co. is not signing the form ADT-3, citing flimsy reasons. What action should I take in order to appoint a new auditor in his place? We want to hire a new auditor for FY 2015-16.The auditor in question signed-off on the audit report for FY 2014-15. I have with me a letter from the ex-auditor, dated 03.09.2014, which says that he consents to his reappointment for the period ending 31.03.2019.

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12 Replies

Ram Kumar (188 Points)
Replied 18 May 2016

Hello Dear,

As per Rule 8 of the Companies (Audit and Auditors) Rules, 2014, ADT-3 needs to be filed by the auditor it is the responsibility if the auditor to file ADT-3, if not its attracts penal provisions to the auditor.

And in case of appointment appoint new auditor and file ADT-1 in this form SRN of the relavent form place quote Z88888888.

Regards,

and also wait for other professionals views.

2 Like

Learner (Digital Assistant) (70 Points)
Replied 18 May 2016

Ram Kumar,

Thank you for your response. It is heartening to note that, for once, if the auditor falls short in fulfilling his/her obligations, it is the auditor who is penalized, and not the client company.

If it is possible, I would like to have a link/.pdf to the appropriate notification that explicitly says that it is the auditor's responsibility to file ADT-3. It will certainly help if the penal provisions are laid out in detail. This will enable me to show to the auditor, so that he can do the needful.

I also invite inputs from other members on this issue.

I am aware of the need to file ADT-1 for new auditor appointment; however, I request you to elaborate on the string of characters - "Z88888888". Thanks.

Originally posted by : Ram Kumar
	Hello Dear, As per Rule 8 of the Companies (Audit and Auditors) Rules, 2014, ADT-3 needs to be filed by the auditor it is the responsibility if the auditor to file ADT-3, if not its attracts penal provisions to the auditor. And in case of appointment appoint new auditor and file ADT-1 in this form SRN of the relavent form place quote Z88888888. Regards, and also wait for other professionals views.

Ram Kumar (188 Points)
Replied 18 May 2016

Dear Leaner,

Please find the attached. Z8888888 This code is to fill the mandatory field thats all.

Attached File : 1546062 20160518143704 mca notification.pdf downloaded: 1489 times

2 Like

Learner (Digital Assistant) (70 Points)
Replied 18 May 2016

Ram Kumar,

The notification clarifies a lot of doubts. Thank you very much for your timely guidance.

Ram Kumar (188 Points)
Replied 18 May 2016

Welcome Learner

1 Like

Learner (Digital Assistant) (70 Points)
Replied 18 May 2016

Ram Kumar,

The document provided by you has four types of ADTs:

1. ADT-1 for fresh appointment,

2. ADT-2 for removing an auditor _before_ expiry of the term,

3. ADT-3 for voluntary resignation by auditor, and

4. ADT-4 when auditor is suspected of fraud.

In my case, the auditor's term has already expired. So, should I go in for ADT-2 (even though his term has expired), or try and persuade him to file ADT-3 and save us all the trouble by making him go through ADT-4?

Learner (Digital Assistant) (70 Points)
Replied 31 May 2016

Originally posted by : Ram Kumar
	Hello Dear, As per Rule 8 of the Companies (Audit and Auditors) Rules, 2014, ADT-3 needs to be filed by the auditor it is the responsibility if the auditor to file ADT-3, if not its attracts penal provisions to the auditor. And in case of appointment appoint new auditor and file ADT-1 in this form SRN of the relavent form place quote Z88888888. Regards, and also wait for other professionals views.

Hello all,

@ Ram Kumar: As of writing this, 13 days have passed and still the (ex) auditor has not responded to my mails and phone calls to file ADT-3. Agreed, it is the responsibility of the auditor to file ADT-3. But what if he/she does not file ADT-3? Who in the governmental machinery should I contact for redressal?

Any advice on this matter shall be most appreciated.

Thank you very much in advance for all your help.

Pratik Shah (Practising Company Secretary) (4432 Points)
Replied 01 June 2016

Your ex-auditor is required to file ADT-3 only when they have given a resignation (and not in any other case). Did Auditor has issued resignation letter? If yes, then you are not required to worry, it is their responsibility to file ADT-3. If they haven't given resignation, then no need to file ADT-3.

2 Like

Learner (Digital Assistant) (70 Points)
Replied 02 June 2016

Originally posted by : Pratik Shah
	Your ex-auditor is required to file ADT-3 only when they have given a resignation (and not in any other case). Did Auditor has issued resignation letter? If yes, then you are not required to worry, it is their responsibility to file ADT-3. If they haven't given resignation, then no need to file ADT-3.

Hello,

@ Pratik Shah: The (now ex-) auditor couriered to me two letters, both on his letterhead. In the first, he expressed inability to continue to function as auditor, citing health reasons. This letter is dated 30 June 2016. In the second letter, he has given his consent to be appointed as auditor till the conclusion of the Company's AGM to be held for the year ending 31.03.2019. The first letter is invalid for obvious reasons. The second letter is invalid because it should have been dated 03 September 2015 or later. For, on the financial document, he himself attested the date to be 03 September 2015.

According to the CS, only the auditor can file Form ADT-3. If the CS cannot sign, and the auditor is unwilling to sign, then what is the mechanism for redressal? Can we appoint a new auditor using ADT-1 even if the ex-auditor's Form ADT-3 is not forthcoming?

Thank you for your help.

Pratik Shah (Practising Company Secretary) (4432 Points)
Replied 02 June 2016

I am not really very sure about your entire query. I am bit confused now.

However, it is obvious that you can appoint new auditor using ADT-1 if an Auditor has shown his unwilingness to act as Auditor for the remaining period of his term, irrespective of whether he has filed ADT-3 or not (it is Auditor's responsibility to file ADT-3).

1 Like

Learner (Digital Assistant) (70 Points)
Replied 02 June 2016

Originally posted by : Pratik Shah
	I am not really very sure about your entire query. I am bit confused now. However, it is obvious that you can appoint new auditor using ADT-1 if an Auditor has shown his unwilingness to act as Auditor for the remaining period of his term, irrespective of whether he has filed ADT-3 or not (it is Auditor's responsibility to file ADT-3).

Hello Prateek,

So, since the auditor's term is over, I do not have to wait for him to file ADT-3. He may take his own sweet time to file the form. I am free to appoint another auditor. Re ADT-1, do I ask the new appointee to file ADT-1 himself/herself? Thanks for the clarification.

Partha Das (2 Points)
Replied 30 July 2021

Dear all my question is that if one auditor issued resignation letter before its term but not filing ADT3 after many requesting many time how can a company appoint a new auditor.

Read more at: https://www.caclubindia.com/forum/ex-auditor-not-signing-adt-3-form-what-alternative-action--359530.asp