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Company audit

ankita (Coaching) (73 Points)

21 August 2011

If an auditor is appointed by the BOD and if the auditor refuses to be the auditor then who can appoint the next auditor in his place?The shareholders or the central government?since this is not the case of casual vacancy and its the failure to appoint the auditor according to complilation and me the auditor can be appointed by the central gvt..But as per the module as per a similar case study the shareholders can appoint the next auditor.Please suggest which is the correct answer

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Rajiv (Director) (42 Points)
Replied 22 August 2011

An auditor can be appointed by the BOD only in case of casual vacancy, or in case of the appointment of the first auditor. The guidance note issued by ICAI clearly lays down the principle that in case an auditor does not send an intimation to the registrar within 30 days of appointment, or refuses to take up appointment, the procedure concerning his appointment cannot be said to be complete. Thus in such a situation, it can be said that no auditors has been appointed in the first place. Now in case this happens if the auditor is appointed in an AGM, then it can be said that the company has failed to appoint auditors in the AGM, and if no prior notice was given to remove the existing auditors, then it is only the Central Govt which can appoint auditors in case of such a lapse. However, any appointment by the BOD, whether to appoint the first auditors or to appoint auditors in case of a casual vacancy, if not carried out, the company can do so in the ensuing AGM. This would mean that if an auditor has not taken up appointment, or has refused appointment after being appointed by the BOD, the BOD have failed to appoint auditors, and the shareholders in the next AGM should appoint the auditor.

I have also posted this reply to my blog at empowertheloser.com. Please comment in the blog should you choose to follow this thread further, or you need a copy of the guidance not, or for more discussion or details in the matter.