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resignation of auditor_typical scenario

Mayuri Lal (officer CS) (748 Points)

08 February 2011

Dear Members,

Can anybody please tell the procedure of appointment of an auditor in a public company when the Statutory auditors are RESIGNING.

Actually it is not as simple as it looks like. The facts are such that we did the annual filing for the year ending 31.03.2010 and filed Directors Report for the same. and IN THE DIRECTORS REPORT WE HAV REAPPOINTED THE STATUTORY AUDITORS FOR THE 2010-11.

BUT , now the statutory auditor is goint to resign now and this is happening now when the Directors Report has been filed appointin him in 2010-2011.

So now what will be the procedure and under what section it will fall..

Please guide me

Regards,

Mayuri Lal

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11 Replies

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 08 February 2011

Call an EGM and appoint a new auditor in place of the resigned auditor. No need to worry about having filed directors report with the resigning auditor's name.

The fact is that the resigning auditor was reappointed in the AGM as stated in the Directors' Report but due to his resignation we are appointing a new auditor in his place.

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nidhigoel89 (Company Secretary ) (594 Points)
Replied 08 February 2011

Hello!

As far as my understanding, if u shows an auditor appointment in DR for 2010 and afterwards he resigns so i dnt think that it has any major issues in that. U can show it as causal vacancy caused by auditor and consequently filled that vacancy in EGM by passing the necessary resolution.

And by the statement u written

IN THE DIRECTORS REPORT WE HAV REAPPOINTED THE STATUTORY AUDITORS FOR THE 2010-11.

If u mentioned that a person is appointed as auditor for the next year, it means at the time of AGM ur auditor has consented to be appointed as Auditor for next year, and if later on he resigned then it doesnt effect the the prior filing.

Further u can refer Sec 224......Any further views are welcomed....

Regards

Nidhi

Mayuri Lal (officer CS) (748 Points)
Replied 08 February 2011

Further i wud like to give the exact statement given in the D.R 2010

DABC, Chartered Accountants, the retiring auditors of Company holds office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from DABC& Co, Chartered Accountants to the effect that their appointment as auditors, if made, would be within the limits u/s 224 (1-B) of the Companies Act, 1956.

Mayuri Lal (officer CS) (748 Points)
Replied 08 February 2011

STILL UR ANSWER WILL BE THE SAME??

nidhigoel89 (Company Secretary ) (594 Points)
Replied 08 February 2011

Hello!

This the common/standard statement we write in DR. And u cannt restrict the right of auditor to resign by mentioning this thing. A auditor is free to resign at any time whenever he want. And it would be consider as casual vacancy caused by auditor.

STILL MY ANSWER WOULD REMAIN SAME

Regards

Nidhi

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Mayuri Lal (officer CS) (748 Points)
Replied 08 February 2011

N ALSOO TELL EM THAT IF FORM 23B WAS FILED BY DABC & CO. FOR THE YEAR 2010-11 AND AFTER FILEING THE fORM FOR 2010-2011, DABC & CO. RESGNS THEN?????

pLEASE TELL ME WAT TO DO IN THIS PARTICULAR SCENARIAOO

nidhigoel89 (Company Secretary ) (594 Points)
Replied 08 February 2011

Hello!

Just hold EGM pass resolution for appointment of new auditor becoz of the resignation of prior auditor.......and whosoever would be ur new auditor has the responsibility to file form 23b for appointment of auditor in ur co..............Just have resignation of prior auditor, notice explanatory statement of EGM for ur future reference and records...Thats It

Regards

Nidhi

Mayuri Lal (officer CS) (748 Points)
Replied 08 February 2011

THANKS NEETU & JAYSHREE

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 09 February 2011

Fully agree with Nidhi.

cs ashwini kumar (Company Secretary in Practice) (173 Points)
Replied 09 February 2011

Thanks to Ms. Jaishree and Ms. Nidhi,

Good reply.

Best Regards

CS Ashwini Kumar

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Sudhir Garg (Service) (236 Points)
Replied 09 February 2011

I too agree with the solution you advised.

Is it still mandatory to have CG previous approval to remove the auditors (not the first auditors) even members have unanimously agreed to remove?? If yes, Does not this provision is meaningless empowering auditors unnecessarily and ignoring shareholders benefit in context of small closely held pvt company??

Regards- Sudhir