Appointment of an auditor
A company appoints its auditor under section 139 of the Companies Act, 2013. Company Suggestion takes the consent, records the appointment and files Form ADT-1.
How is an auditor appointed?
The board appoints the first auditor within 30 days of incorporation. That auditor holds office until the first annual general meeting.
At the first annual general meeting the members appoint an auditor who holds office until the conclusion of the sixth annual general meeting. The company files ADT-1 within 15 days of that meeting.
The written consent of the auditor, and a certificate that the appointment is within the limits of the Act, come before the appointment.
Who must appoint an auditor?
The duty depends on the structure.
- Every company, including a private limited company, a one person company and a section 8 company, appoints an auditor.
- An LLP appoints an auditor only when turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh.
- A partnership firm and a proprietorship have no ADT-1. A tax audit under section 44AB is a separate test.
Which documents does ADT-1 need?
ADT-1 is filed with four papers.
- The auditor’s written consent
- The certificate of eligibility under section 141
- The board resolution or the ordinary resolution of the members
- The intimation sent to the auditor
What are the appointment steps?
Company Suggestion completes the appointment in four steps.
- The proposed auditor gives consent and the eligibility certificate.
- The board, or the members at a general meeting, pass the resolution.
- The company informs the auditor.
- ADT-1 is filed within 15 days.
Frequently asked questions
4 questions cover the rules that decide this registration.
Who appoints the first auditor?
The board, within 30 days of incorporation. If the board does not, the members appoint the auditor within 90 days, at an extraordinary general meeting.
For how long is the auditor appointed?
At the first annual general meeting, the auditor holds office until the conclusion of the sixth annual general meeting, a term of five years. ADT-1 is filed for that appointment.
When is ADT-1 filed?
Within 15 days of the meeting at which the auditor is appointed.
Does an LLP file ADT-1?
No. ADT-1 is a company form. An LLP appoints an auditor when turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh, under the LLP Rules.