A Casual Vacancy gets created in the office of Auditor due to many reasons, some of which is Death and Disqualification by the Auditor. When an existing Auditor resigns, company has to fill the vacancy so created by appointing a new Auditor.
- Any casual vacancy in the office of an auditor caused by Death or Disqualification shall be filled by the Board of Directors within thirty days. [Section 139(8)]
- Every Company which is required to constitute an Audit Committee shall take the recommendations from the Committee for filing the casual vacancy. [Section 139(11)]
- The Auditor shall also have to indicate/declare in the certificate as mentioned-above that it satisfies the criteria provided in section 141 of the Companies Act, 2013. [Section 141 read with Rule 4 & 10 of the Companies (Audit and Auditors) Rules, 2014]
- Consider the Qualifications and Experience of the Proposed Auditor. If a company has Audit Committee, then the committee otherwise the Board will consider the qualification and experience of the proposed Auditor. They will also consider any order or pending proceeding relating to professional matters of conduct against the proposed auditor before the Institute of Chartered Accountants of India or any competent authority or any Court. [Section 139(11) and Rule 3 (1) of the Companies (Audit and Auditors) Rules, 2014]
Following Procedure is to be followed
- Obtain written consent and Certificate from the Proposed Auditor [Section 139(1) & Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014]
Company shall receive before such appointment is made, the written consent of the auditor to such appointment and a certificate from him or it that the appointment, if made, shall be in accordance with the conditions. The Auditor shall submit a certificate
- that the individual or the firm, as the case may be, is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder
- that the proposed appointment is as per the term provided under the Act
- that the proposed appointment is within the limits laid down by or under the authority of the Act
- that the list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct.
- Obtain recommendations from the Audit Committee [Section 139 (11), 177]
Where a Company is required to constitute an Audit Committee under section 177, shall receive a recommendation from the committee for the appointment and remuneration of the Auditor. [For convening meeting of Audit Committee, Refer the Procedure for Conducting Audit Committee Meeting].
- Convene a Meeting of Board of Directors [Section 173 & Secretarial Standard-1 (SS-1)]
- Issue Notice of Board Meeting to all the Directors of Company at their addresses registered with the Company, at least 7 days before the date of Board Meeting. A shorter notice can be issued in case of urgent business.
- Attach Agenda, Notes to Agenda and Draft Resolution with the Notice.
- Hold a meeting of Board of Directors and pass a Board Resolution to consider the appointment of Auditor to fill a casual vacancy in the office of Auditor, on the recommendation of the Audit Committee, where company is required to constitute such committee.
- To authorize CS or CFO or any director to intimate ROC about the newly appointed Auditor.
- Listed Company shall submit disclosure of the appointment of Auditor to the Stock Exchange within 24 hours from the conclusion of the Board Meeting and same shall be posted on the website of the company within 2 working days. [Regulation 30 and 46(3) of the SEBI (LODR) Regulations, 2015]
- Prepare and Circulate Draft Minutes within 15 days from the conclusion of the Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the Directors for their comments. [Refer the Procedure for Preparation and Signing of Minutes of Board Meeting]
- Filing Notice of Appointment with ROC
The Company shall inform the Auditor so appointed about the appointment and file a notice of such appointment with the Registrar in E-Form ADT-1 within 15 days of the general meeting. [Section 139(1) and Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014] along with the following attachments
- Certified true copy of the Board Resolution passed in the Board Meeting
- Intimation/Offer Letter given by the Company to the Auditor
- Consent Letter given by the Auditor to the Company
- Certificate given by the Auditor to the Company.