Resignation of an auditor
Who is an auditor?
- Pursuant to the Companies Act, 2013, it is obligatory for a company to appoint an auditor.
- A company's auditor is a practising Chartered Accountant, appointed for preparing and maintaining the company's audit reports.
- For the Government Company or Institution, it is obligatory for its auditor to file the report to the Comptroller and Auditor General of India in compliance with all due procedures.
- Each such report is an extremely important document for the company.
- The appointment of the auditor must be done during the first annual general meeting of the company.
Resignation of an auditor
- Section 140(2) of the Companies Act 2013 states the provisions for the formal resignation of the company's auditor.
- It states for any formal resignation by the company's auditor, it is obligatory to file a statement of resignation in compliance with all the rules to the registrar.
- In case of failure to do so, it is obligatory to pay a fine of ? 50,000 or a sum equivalent to his pay, whichever amount is lesser.
- In case of persistent non-compliance, the auditor is bound to pay an additional penalty of ?500 per day of continuing failure with the maximum amount not exceeding ?500000.
- There are clear procedures and rules specified for the filing of a statement of resignation or the resignation application by the company's auditor.
- In accordance with the rules stipulated, it is obligatory for the company's auditor to duly file the application Form ADT-3, post resigning to the registrar.
- It is mandatory to file Form ADT-3 on the Website of the Ministry of Corporate Affairs or physically file to the Registrar's office.
- Also, the company is bound to organise the board meeting and appoint a new auditor, in compliance with the stipulations of the Companies Act-2013.
- Until the completion of the next general meeting to appoint a new auditor, the company also has the liberty to appoint a casual auditor.
- In the event of a government firm or an institution, the onus lies on the Comptroller and Auditor General of India to appoint an auditor.
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