Auditor not resigning

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A company director is facing issues with their statutory auditor who is refusing to resign and demanding audit fees for the current and previous financial years. The director is seeking guidance on how to proceed, including whether the auditor can withhold services until payment is made and if legal action can be taken to recover potential MCA penalties. The discussion touches upon the process of auditor removal via special resolution and central government approval, and the potential for disciplinary action against a new auditor appointed without the current one's consent.

Mohammed Ahmed

Mohammed Ahmed (Querist)

29 November 2023 I am running a private limited company and the statutory auditor appointed 3 years back with whom I am not satisfied requested him to resign in the month of August 2023.
He immediately raised a bill for Rs.17000.00 as audit fees for the AY 2023-24 though he had not audited for the current year and sent me. I assured him that the payment would be settled once he shared the SRN number but he not only refused but also demanded the same amount for the current AY 2024-25. What should I do? Is there any guideline with the ICAI that the compliance should not be completed till payment is made? Can I move legally against the auditor and claim the MCA penalty from him?
Please guide

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 November 2023 As per sub-section (1) of section 140, the auditor appointed under section 139 may be removed from his office before the expiry of his term only by a special resolution of the company, after obtaining the previous approval of the Central Government in that behalf.

Mohammed Ahmed

Mohammed Ahmed (Querist)

30 November 2023 He says if I do that with the special resolution and appoint another auditor he will proceed with the disciplinary action against the New auditor
Please guide

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 November 2023 No disciplinary action taken in such a case. Consult the auditor to be appointed.

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