Appointment of Auditors

Who is an Auditor?

All the government and non-government organizations have to keep track of their accounts and audit reports as the financial year approaches. The financial statements of these firms need to be thoroughly analyzed and assessed before submitting them to the authorized departments. This assessment of financial documents is done by an Auditor.

Any individual trained to review and verify accounting data and recognised as a Chartered Accountant (CA) under the Chartered Accountant Act 1949 is deemed to be an auditor.

Purpose for Appointment of Auditor

The purpose of the auditors in the company is to protect the interests of the shareholders. The auditor is obligated by law to examine the accounts maintained by the directors and inform them of the true financial position of the company. Auditor gives his independent opinion to the owners or shareholders of the company to protect and keep the company in a safe financial condition.

Qualifications of an Auditor:

• A person is eligible for the appointment as an auditor only if he is a Chartered Accountant.
• A firm is eligible for the appointment as an auditor only when the majority of its partners are Chartered Accountants practicing in India.
• In the case where a limited liability partnership firm is appointed as auditor, only the partners who are Chartered Accountants will be authorized to act and sign on behalf of the firm.

Appointment of an Auditor is significant in a company that analyses and understands a company’s financial records to deliver effective analyses and relevant information. Management can use this information to evaluate the company and implement measures necessary to meet their objectives.

Duties of an Auditor

• Provide an Audit Report  
• Make Proper Enquiry  
• Assist in Branch Audit  
• Compliance With Auditing Standards  
• Reporting of Frauds  
• Provide Assistance in Investigation  
• Adhere Principles of Auditing  
• Provide Negative Opinion 

Documents required for Auditor’s appointment

• Company’s Board resolution copy
• NOC from old auditors
• A written consent from the Auditor to such appointment
• A certificate from the Auditor that he/she/it is not disqualified to be appointed as an Auditor under section 141
• Copy of the intimation sent by company to the auditor
• Name of the new auditor firm
• Address of the new auditor firm
• Email address and PAN number
• A number of years for which the firm is appointed
• Details of the resigning auditor firm
• Appointment date of the new auditor firm
• Digitally signed Form ADT-1 (along with the signature of the director of the company)