- Auditor’s Appointment, Removal, Resignation Action Points
- Depreciation – Action Points
- Auditor’s Reporting Action Points
- CA – Compliance and Advisory Action Points All companies (Imp to Pvt Companies)
- CA – Compliance and Advisory Action Points Listed Companies
Appointment of Subsequent Auditor
Though the auditor will be appointed for five years, the matter relating to such appointment will be placed for ratification at each AGM.
If no auditor is appointed/re-appointed at the AGM, the existing auditor will continue to be the auditor of the company. [224(3) has therefore been removed. No Power to the CG now]
Rule 10.3 says For the purposes of this rule, it is hereby clarified that, if the appointment is not ratified by the members of the company, the Board of Directors shall appoint another individual or firm as its auditor or auditors
ROTATION RULE – Transitional Period of 3 Years OR Remaining period of Block of 5 yrs/ 10 yrs as the case maybe Whichever is LONGER
Number of consecutive years for which an individual auditor has been functioning as auditor in the same company [in the first AGM held after the commencement of provisions of section 139(2)]
Maximum number of consecutive years for which he may be appointed in the same company (including transitional period)
Aggregate period which the auditor would complete in the same company in view of column I and II
I II III
5 years (or more than 5 years) 3 years 8 years or more
4 years 3 years 7 years
3 years 3 years 6 years
2 years 3 years 5 years
1 year 4 years 5 years
The auditor appointed under rule 3 shall submit a certificate that –
(a) the individual or the firm, as the case may be, is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder;
(b) the proposed appointment is as per the term provided under the Act;
(c) the proposed appointment is within the limits laid down by or under the authority of the Act;
(d) the list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct
Prohibited Services
Under the Companies Act 2013, an auditor will be allowed to provide only such other services to the company as are approved by its board or audit committee, However, the auditor is not aIlowed to render the following services either directly or indirectly to the company, its holding or subsidiary company:
- Accounting and book keeping services
- Internal audit
- Design and implementation of any financial information system
- Actuarial services
- Investment advisory services
- Investment banking services
- Rendering of outsourced financial services
- Management services
- Any other kind of services as may be prescribed
2. In case of an audit firm, the above restrictions also apply to rendering of service by:
- Audit firm itself
- All of its partners Its parent,
- subsidiary or associate entity Any other entity in which the firm or any of its partner has significant influence/ control, or
- whose name/trade mark/brand is used by the firm or any of its partners
FOR FURTHER ACTION POINTS DOWNLOAD THE PDF & WATCH VIDEO CLASS OF THE PUNARVAS JAYAKUMAR (PJ)
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