Appointment of First Auditor: Process, Documents, Fees & Timeline

Every company has shareholders and the protection of the interests of shareholders is the ost important criterion that makes a company reliant. The protection of interest is insured by the auditor of the company. An auditor plays an important role in an organisation. Therefore, the appointment of the first auditor is required to be made within 30 days of the incorporation of the company. The auditor has many roles and responsibilities in a company. There is a process and documentation that are required for the appointment of the auditor. BizFoc can be a helping hand to make the appointment of an auditor easy and quick.

Who is an Auditor?

An auditor is any person or firm appointed by an organisation to perform its audit and check its internal control. An auditor is an independent person whose appointment is required under the provisions of the Companies Act, 2013. The purpose of the appointment of an auditor is to protect the interests of shareholders, check the accuracy of records and ensure compliance with applicable laws and regulations.

Who Appoints the First Auditor of a Company?

The appointment of first auditor of a company is done by the board of directors of the company. The board of directors is required to appoint an auditor within 30 days of the incorporation of the company by passing a board resolution. The company shall, within 15 days of the appointment of the first auditor, file Form ADT-1 with the Registrar of Companies (ROC).

Eligibility for Appointment as an Auditor

The Companies Act, 2013 places emphasis on the credibility and authenticity of the auditor. The act has also provided the eligibility criteria to be appointed as an auditor. The eligibility criteria are formed to ensure that a person with relevant expertise and knowledge handles the audit of the company. This is because an audit of a company is a tool to identify discrepancies and fraud in the company.

A person will be eligible to be appointed as an auditor if:

• (a) He is a qualified chartered accountant (CA); and
• (b) He holds the Certificate of Practice (COP)

In the case of a firm, a firm will be eligible if the majority of its members hold a Certificate of Practice (COP).

Role and Responsibilities of Auditor

The auditor has many roles and responsibilities in a company, including:

• Checking the authenticity of the financial statements
• Ensuring compliance with applicable laws, rules, and regulations
• Checking the establishment and effectiveness of the internal control
• Performing the audit function
• Learning companies' rules and policies
• Preparing audit report
• Providing unbiased and independent advice to the company to improve its operations
• Gathering, analysing, documenting, monitoring, and reporting the financial information of the company

Process for the Appointment of First Auditor

The appointment of first auditor is done by following the step-by-step process, explained below:

Step 1: Deciding the Auditor

The company should decide the auditor whose appointment should be done as the first auditor in the company. At this step, the company should consider the qualifications, experience, and eligibility of the auditor.

Step 2: Consent of the Auditor

The consent of the auditor proposed to be appointed should be obtained. This is to ensure that the auditor is aware of his appointment with the company.

Step 3: Pass a Board Resolution

After obtaining the consent of the auditor, the board of directors should hold a board meeting to finalise and approve the appointment of the auditor by passing a board resolution.

Step 4: Intimate the Auditor

The auditor should be informed of his appointment with the company. This is done by sending a letter of appointment to the auditor on the letterhead of the company.

Step 5: Filing with ROC

The company shall, within 15 days of passing the resolution, file Form ADT-1 with the Registrar of Companies (ROC) along with the requisite fee.

Fees for Appointment of First Auditor

The fees for the appointment of first auditor are:

• Fee of ADT-1

  Share Capital	Amount
  Less than ₹1,00,000/-	₹200/-
  ₹ 1,00,000/- to ₹ 4,99,999/-	₹300/-
  ₹ 5,00,000/- to ₹ 24,99,999/-	₹400/-
  ₹25,00,000/- to and above	₹500/-

• Professional fee for appointment of auditor is Rs. 999 excluding GST.

Documents for Appointment of First Auditor

The documents required for the appointment of first auditor are:

• Certificate true copy of board resolution
• Written consent of the auditor
• Appointment letter of auditor

Time Taken for Appointment of First Auditor

The appointment of the first auditor is an important requirement that every company is required to fulfill. The appointment of the first auditor can take approximately 10-15 days.

Appoint Auditor through BizFoc

BizFoc can make the process of appointment of the first auditor simple and quick. We will provide solutions for every issue that can arise during the process and help you with:

• Choosing the right auditor
• Determining the eligibility of the auditor
• Filing Form ADT-1
• Saving the cost of penalties
• Filing all the necessary documents

Conclusion

In conclusion, an auditor appointment is important for every company. The appointment of the first auditor is to be made within 30 days of the incorporation of the company. The appointment of an auditor is a crucial step in ensuring that the interests of stakeholders are protected.

The company is required to follow a procedure and file the necessary documents along with the requisite fee for the appointment of the auditor. During this process, BizFoc can make your work easy. We will take care of the compliance, eligibility, and other requirements of the first auditor of a company. Your trust is our motivation, trust us with your requirements!

Frequently Asked Questions [FAQs]