ROTATION OF STATUTORY AUDITORS

2011 views 2 replies
User Avatar

Finance Manager
24 Points Posted on 04 December 2024

Dear Professionals,

 

Please clarify.

A private limited company appointed an audit firm from 2014. The paid up capital is Rs 5 crores and Turnover is Rs 14 crores. The borrowings of the company exceeds Rs 50 crores on October 2024. Please suggest can the firm continue as statutory auditors upto 2025 since the borrowings trigger on october? Can the same audit firm be appointed as Statutory auditors for other term of five years from 2025? or new auditor to be appointed due to increase in borrowings.

Thanks in advance.

0 Reply Share Follow
On 04 December 2024 at 13:23 Report
Replies (2)
Quick Summary
This discussion clarifies the rules around the rotation of statutory auditors for private limited companies. Even though an audit firm was appointed in 2014, the company's borrowings exceeding £50 crores in October 2024 triggers a mandatory rotation requirement under the Companies Act, 2013. Consequently, the current audit firm cannot be re-appointed for another five-year term starting in 2025, and a new auditor must be appointed for the subsequent financial year.

User Avatar

Master in Accounts & high court Advocate
9620 Points Posted on 04 December 2024

The Companies Act, 2013, and the Companies (Audit and Auditors) Rules, 2014, govern the appointment and rotation of statutory auditors. Eligibility and Rotation

1. *Eligibility*: The audit firm can continue as statutory auditors until the end of their term (2014-2025), provided they meet the eligibility criteria under the Companies Act, 2013. 

2. *Rotation*: Since the company's borrowings exceeded ₹50 crores in October 2024, the rotation requirement under the Companies Act, 2013, is triggered. 

The audit firm cannot be re-appointed for another term of five years from 2025.

Appointment of New Auditor 

1. *New Auditor*: The company must appoint a new auditor for a term of five years, starting from 2025. 

2. *Transition*: The existing audit firm will continue until the end of their term (2025). The new auditor will take over from the next financial year (2025-2026). Key Takeaways - The audit firm can continue until the end of their term (2025). -

 Due to the increase in borrowings, the company must appoint a new auditor for a term of five years, starting from 2025. -

The new auditor will take over from the next financial year (2025-2026). 

Reply
On 04 December 2024 at 15:08
User Avatar

Master in Accounts & high court Advocate
9620 Points Posted on 04 December 2024

The Companies Act, 2013, and the Companies (Audit and Auditors) Rules, 2014, govern the appointment and rotation of statutory auditors. Eligibility and Rotation

1. *Eligibility*: The audit firm can continue as statutory auditors until the end of their term (2014-2025), provided they meet the eligibility criteria under the Companies Act, 2013. 

2. *Rotation*: Since the company's borrowings exceeded ₹50 crores in October 2024, the rotation requirement under the Companies Act, 2013, is triggered. 

The audit firm cannot be re-appointed for another term of five years from 2025.

Appointment of New Auditor 

1. *New Auditor*: The company must appoint a new auditor for a term of five years, starting from 2025. 

2. *Transition*: The existing audit firm will continue until the end of their term (2025). The new auditor will take over from the next financial year (2025-2026). Key Takeaways - The audit firm can continue until the end of their term (2025). -

 Due to the increase in borrowings, the company must appoint a new auditor for a term of five years, starting from 2025. -

The new auditor will take over from the next financial year (2025-2026). 

Reply
On 04 December 2024 at 15:10

Join CAclubindia WhatsApp Finance Community & stay updated with the latest TAX news, compliance alerts and important updates all in one place!

Leave a Reply

Post Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Topics :

  1. Category B/D pop up after the file is e verified
  2. Section 56(2)(x)(xi) applicability to compensation
  3. How to claim exempt income u/s 10(26) in ITR-1 of
  4. 63053900 tax rate
  5. Clubbing of deceased's income
  6. Which ITR to use
  7. Sovereign gold bond capital gain
  8. In TDS section no column for relationship in itr
  9. Query related to agricultural income of Trust
  10. Full & Final Settlement — what changed u

More recent discussions | Post

Related Topics :

Loading

Latest Job Openings

View all
Company
06 July 2026
Accountant

Agarwal Anoop and Associates

Noida

CA Final

View Details
Company
22 July 2026
Senior Chartered Accountant

SKSS

Patna

CA

View Details
Company
23 July 2026
Senior Accountant

Felicity Adobe LLP

Bengaluru

CA Inter

View Details
Company
Featured 18 July 2026
Senior Manager- Finance & Accounts

apricus india

Ahmedabad

CA

View Details
Company
ARTICLESHIP 14 July 2026
Article Assistants

R Shyam and Associates

New Delhi

CA Final

View Details
Company
ARTICLESHIP 27 June 2026
CA Articled Trainee And Paid Assistant

SKAA & Associates

New Delhi

CA Inter

View Details
Company
23 July 2026
Semi qualified CA

Garg Bros & Associate CA

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 30 June 2026
2 posts Article assistant and Articleship completed students

Chirag N Shah & Associates

Mumbai

CA Inter

View Details