Auditor Resignation/Appointment, Intimation and Related Formalities in Companies Act 2013

The Companies Act 2013 prescribes a specific procedure for auditor resignation. The Auditor is appointed in the companies under section 139 of the Companies Act, 2013. If an auditor wants to resign from his post, he must intimate the registrar of the companies or ROC in the prescribed form and manner. The intimation shall be given within 30 days from the date of resignation with a statement. You will learn more about filing this statement (Form ADT-3) in this post.

This article discusses the formalities required for auditor resignation. An auditor must also inform the reasons for the resignation to the ROC. After submitting resignation to the company, a procedure is to be carried out by the auditor. We have shared here the complete procedure and other related formalities.

Auditor Resignation and Procedure of Filing Form ADT 3

After providing a notice for resignation to the company, an auditor shall file a statement in the form of ADT-3 form. This statement shall be sent to the RoC within 30 days from the date of the resignation.

The ADT 3 Form statement shall contain the following details.

  1. Name of the auditor’s firm.
  2. Address of the resigning auditor firm.
  3. Reasons of resignation
  4. Email address of the auditor firm
  5. Resigning auditor firm’s contact numbers.
  6. Permanent account number of the auditor firm.
  7. Copy of the form ADT3 must be digitally signed by any one member of the auditor firm.

If the resigning auditor fails to intimate ROC regarding resignation within the prescribed 30 days time, he is charged penalty ranging from Rs. 50,000 to 5 lakhs.

Step-Wise Procedure for Auditor’s Resignation

The procedure for an auditor’s resignation must be followed in the below mentioned sequential form. A careful  execution of the below-mentioned steps will avoid any error in the process:

  1. First of all, the auditor has to submit the resignation letter and Form ADT3 to the company.
  2. A board of meeting shall be organized with all the directors for effecting the resignation.
  3. The company shall obtain a consent letter from the new auditor firm under section  139 and 141, Companies Act 2013.
  4. A board of meeting shall be called. All the members of the company shall be called in the meeting for filling the vacancy of the auditor.
  5.  The proposed Auditor/Auditors’ Firm is to be appointed in such meeting held.
  6. Intimate the Appointed auditor/ Auditors’ firm regarding the date of appointment.
  7. File the form ADT-1 for the appointment of the new auditor.

After the resignation of an auditor, a company has to carry out prescribed formalities/Procedures for appointing new auditor.

Documents Required for Appointment of New Auditor

When a company appoints a new auditor, following documents shall be filed by the company.

  1. Form MGT-14 with a copy of the resolution passed in the board meeting.
  2. Form ADT -1 to be filed with the ROC.

Besides the above forms, following information shall be given to the ROC.

  1. Name of the new auditor firm.
  2. Address of the new auditor firm.
  3. Email address and PAN number.
  4. Number of years for which the firm is appointed.
  5. Information of the resigning auditor firm.
  6. Date of appointment of the new auditor firm.
  7. Digitally signed Form ADT 1 (with signature of the director of the company).

The ADT-1 form shall be filed within 30 days from the date of the appointment of the new auditing firm.  Every company has to follow the prescribed rules as per Companies Act for resignation and appointment of an auditor firm.

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