Appointment of First Auditor (Form ADT-1)

Appointment Of First Auditor Of The Company

Appointing an auditor is a must to keep your finances honest and legal. An auditor checks your books, spots issues, and builds trust with investors or banks. The Companies Act, 2013, lays out clear rules for this, covering the first auditor (right after its incorporation) and ongoing ones. 

Why Appoint an Auditor?

An Auditors ensure your accounts are accurate, helping avoid fraud and comply with applicable Company Law and tax laws. Only a Qualified Chartered Accountant (CA) or a firm where the majority of partners are Qualified Chartered Accountants (CAs) can be appointed as Auditors.

Section 139 of the Companies Act, 2013 says that every Company shall appoint its first auditor within a period not exceeding 90 days and thereafter file a Return of the Auditor’s Appointment in Form ADT-1 within 15 days of such appointment.

Process of First Auditor’s Appointment

1. The Board shall appoint the first auditor of the Company within 30 days of the incorporation of the Company. The said appointment shall be done through a duly passed Board resolution in the Board Meeting.
2. However, if the Board is unable to appoint the auditor within that time frame, the appointment shall be made by the members of the incorporation of the Company in an Extraordinary General Meeting (EGM).
3. A Return of the Auditor’s Appointment in Form ADT-1 within 15 days of such appointment.
4. The First Auditor shall hold office until the conclusion of the First Annual General Meeting of the Company.

Note: In the case of Government Companies, the Comptroller and Auditor General appoints the first auditor within 180 days of incorporation.

Documentation Required