Company registered in India is required to appoint an individual or a audit firm as it’s first auditor after its incorporation. Accounts of the company’s are required to be audited by such first auditor.
At the year end, financial statements along with the auditor’s report are to be filled with register of companies (ROC) within 30 days after completion of annual general meeting.
According to the companies act 2013, only a chartered accountant in practice can be appointed as first auditor of the company. No other persons can be appointed as an auditor of the company.
Appointment Procedure of first auditor
Section 139(6) of the companies act 2013, deals with the appointment of first auditor of a company that is registered in India. Here are the procedures that the company needs to follow for appointment of the first auditor;
- Within 30 days from the date of incorporation, the company needs to convey a board meeting by giving notice to all of its directors. Date of incorporation is the date that is mentioned in the certificate of incorporation.
- In addition to other matters the company should also decide to pass a resolution for appointment of first auditor of the company to hold office till the conclusion of the first annual general meeting.
- Before the appointment, company needs to obtain a written certificate from the first auditor to the effect that the appointment if made will be in accordance to the limits specified in the companies act 2013.
- After the decision of board of directors, the auditor needs to be intimated within 7 days from the date of appointment.
While appointing the first auditor, company’s resolution for appointment of first auditor should also contain the chartered accountant firm’s registration number. This has been decided by the council of ICAI at its 292nd meeting held on 13.01.2010.
In case board of directors failed to appoint the first auditor within 30 days of incorporation then the company needs to convey a extraordinary general meeting by issuing notice to all the members in writing. Such members within 90 days from the date of failure to appoint shall appoint the first auditor in extraordinary general meeting.
The first auditor as appointed by the company will hold office till the conclusion of the first annual general meeting.
As per the new companies act 2013, company is required to inform registrar of companies (ROC) in writing that auditor has been appointed by filling form ADT1 within 15 days from the meeting date in which auditor has been appointed.
However, such requirement is not applicable to the first auditors as these provisions are applicable to the auditors appointed under section 139(1) of the companies act 2013 and first auditors are appointed under section 139(6) of the companies act 2013. This means, filling of form ADT1 is not required for first auditor under companies act 2013.
While filing AOC-4, you are not required to mention the SRN of Form ADT-1 as its not filed with ROC. However, if you don’t mentioned a number then AOC-4 will not be accepted online. For this reason, you need to enter the SRN ‘Z99999999’ to process AOC-4.
SRN ‘Z99999999’ has to be used in cases where intimation of appointment of auditor is not required under section 139(5)/ (6)/ (7) of the Companies Act, 2013.
Note: Above provisions are applicable only to companies which are not government company.