Company Auditor
Indian Companies Act 1956 made it compulsory for every company to get its books of accounts and Balance Sheet audited, for this purpose an auditor must be appointed, the auditor so appointed must be a member of ICAI, and he should also fulfill the qualification norms laid down by the companies act,1956,for Auditors Qualification and disqualification pls refer to our previous discussion
Appointment of
an Auditor
In any company, whether it is private
or public, there must be an auditor or auditors. There are two terms regarding
the appointment of an auditor;
(i)
Appointment of first auditor
(ii)
Re-appointment
I.
Appointment of the first Auditor: appointment of first
auditor may be in the following manners;
(i)
Board of Directros: the first auditor(s) a newly
established or a floated company, is appointed by the Board of Directors within
one month of the registration of the company, the auditor so appointed shall
hold office till the conclusion of the first Annual General Meeting.
(ii)
General Meetings: Following are the provisions
regarding appointment of auditor(s) in Annual General Meetings.
(a)
If the Board of Directors fails to appoint the auditor(s),
the company shall appoint the first auditor in general meetings.
(b)
Every company shall, in each general meeting, appoint an
auditor(s) to hold office from the conclusion of that meeting until the
conclusion of next annual general meetings.
(c)
The company shall within seven days of appointment has to
inform every auditor so appointed.
(d)
An auditor so appointed shall within 30 of the receipt from
the company of the intimation of his appointment, inform the registrar in
writing that he has accepted or refused his appointment.
(iii)
Central Government: if company fails to appoint the
auditor in annual general meeting, the central government may appoint a person
to fill the vacancy.
The company shall within 7 (seven) days of the central government powers,
give notice of the fact to the government regarding compliance.
(iv)
Special resolution (Sec 224(a)): This section has been introduced by
the Company Amendment Act 1974, to specify the cases in which the auditor(s)
may be appointed by special resolution. An auditor may be appointed by special
resolution in case of a company in which not less than 25% of the subscribed
share capital is held, whether individually or in any combination, by
(a) A public financial
institution or Government Company or any state government.
(b) Any financial or other institution established
by any Act or in which a state government holds not less than 51% of the
subscribed capital.
(c) A nationalized bank or an
insurance company carrying on general insurance business.
2. Re-appointment of Auditor;
Sec
224(2) provides cases of compulsory re appointments of auditors, at any annual
general meeting retiring auditor (appointment by any authority whether it is
shareholders in AGM, Board of Directors or Central Government) shall be
re-appointed unless;
(
(a) He is not qualified for re-appointment
(b) He has given a notice in writing of his unwillingness to be re-appointment.
(c) A resolution has been passed at the meeting, appointing somebody instead of him or providing expressly that he shall not be re-appointed.
(d) When a notice has been given of intended resolution to appoint some person in place of retiring auditor and by reason death, incapability, insanity or disqualification of that person or of all those persons as the cases may be, resolution cannot be proceeded with.
(a) He is not qualified for re-appointment
(b) He has given a notice in writing of his unwillingness to be re-appointment.
(c) A resolution has been passed at the meeting, appointing somebody instead of him or providing expressly that he shall not be re-appointed.
(d) When a notice has been given of intended resolution to appoint some person in place of retiring auditor and by reason death, incapability, insanity or disqualification of that person or of all those persons as the cases may be, resolution cannot be proceeded with.
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