REMOVAL AND RESIGNATION OF AUDITOR

In this post we will discuss resignation and removal of auditor of a company.

REMOVAL:

The auditor may be removed from his office before expiry of his term only by special resolution after approval from central government. The auditor concern shall be given opportunity of being heard. [Section 140(1) of the Companies Act 2013 discussed earlier here]

The application to the Central Government for removal of auditor shall be made in Form ADT – 2 and shall be accompanied with fees as provided for this purpose under the Companies (Registration Offices and Fees) Rules, 2014. [Rule 7(1) of the Companies (Audit and Auditors) Rules 2014]

The application shall be made to the Central Government within thirty days of the resolution passed by the Board. [Rule 7(2) of the Companies (Audit and Auditors) Rules 2014]

The company shall hold the general meeting within sixty days of receipt of approval of the Central Government for passing the special resolution. [Rule 7 (3) of the Companies (Audit and Auditors) Rules 2014]

Form ADT – 2:

Form ADT – 2 require following information:

• Details of the application clearly indicating the grounds for seeking removal of auditor
• Whether the accounts have been qualified during last three years (if yes, give details)
• Details of opportunity given to auditor concerned for being heard
• Whether any civil or criminal proceedings are pending between the company and the concerned officers. Yes / No. If yes, give complete details.
• Date of appointment of the concerned auditor and SRN of notice of his appointment and period for which the auditor was appointed.
• Whether any special notice has been received for removal of auditors. Yes or No. If yes, the date of receipt of notice and the percentage of capital held by the members giving such notice or percentage of the number of members in case of company limited by members.
• Whether all due audit fee has been paid to the concerned auditors. If no mention the amount of arrears.
• Details of other services been rendered by such auditors to the company.
• Pendency of Audit i.e, number of financial years for which audit is pending.
• Stage of accounts of the company for each of such financial year i.e, yet to be approved by the Board or approved by the Board but yet to be handed over to auditors or approved by the Board, handed over to auditors but audit not yet completed or audit completed, draft report not yet given by the auditors.
• Whether there is any dispute with regard to the Books of Accounts in the possession of auditors but not delivered back to the company. Yes or No.

RESIGNATION:

The auditor who resigns from the company shall file, within a period of thirty days from his resignation a statement with the company and the Registrar indicating the reason and other facts as may be relevant with regard to his resignation. [Section 140(2) of the Companies Act 2013 discussed earlier here]

For the purposes of sub-section (2) of section 140, when an auditor has resigned from the company, he shall file a statement in Form ADT – 3. [Rule 8 of the Companies (Audit and Auditors) Rules 2014]

Form ADT – 3:

Form ADT – 3 require following information:

1. Category of Auditor Individual Firm
   1. Income Tax PAN of auditor or auditor’s firm
   2. Name of the auditor or auditor’s firm
   3. Membership Number of auditor or auditor’s firm’s registration number
   4. Address of the auditor or auditor’s firm
   5. City
   6. State
   7. Pin code
   8. Email id of the auditor or auditor’s firm
2. Reasons for resignation
3. Whether letter of resignation is attached Yes/No
4. Any other facts relevant to the resignation

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