Information by Auditor to Registrar [Form-23B]

Introduction:

Company Law provides for notification to the Registrar of Companies of the appointment of a statutory auditor at the Annual General Meeting by shareholders. This is an annual intimation that was present in the previous Companies Act, 1956, and is still present in the current  Act. [1]However, the regulators made a few adjustments to the Intimation procedure, dates for filing intimations, and who is responsible to file such intimations with the Registrar of Companies under the Companies Act, 2013. It’s worth noting that section 139 of the Companies Act of 2013 governs the appointment of statutory auditors.

The Ministry of Corporate Affairs has decided to charge auditors for such notices and to levy a penalty if Form 23B is not filled in a timely manner. On the other hand, they have made it mandatory to include the Service Request Number (SRN) of Form No. 23B in Form 23AC so that they may ensure that the intimation from auditors is filled out; otherwise, the company would be unable to upload its balance sheet form. Now, based on my understanding and consideration of the consequences, I believe that during the review of the E Form 23AC, the SRN of Form 23B will be verified, and if an invalid SRN is discovered, the system will generate an error, and the form will be unable to be finalized.[2]

Companies Act of 2013: Appointment of Auditors

According to section 139 of the Companies Act, 2013, every company must appoint an auditor at its first Annual General Meeting, who will serve from the conclusion of that meeting until the conclusion of its sixth annual general meeting, and then until the conclusion of every sixth meeting thereafter. Furthermore, it shall be the Company’s responsibility to present the topic of such nomination to the members for ratification at each Annual General Meeting.

Before being appointed, the Auditor must provide the Company with written authorization for the appointment, as well as a certificate stating that the appointment, if made, will be in conformity with the stipulated requirements.[3]

Form ADT-1 must be Completed and Submitted

A company auditor was required to complete Form 23B immediately after obtaining the appointment letter from the concerned company prior to the formation of the Companies Act 2013. The E-form 23B must be submitted within 30 days of receiving the appointment letter. The procedure and responsibilities for filing auditor appointments with the registrar of companies have altered since the adoption of the Companies Act 2013.

A company must notify the auditor of the appointment and file a notice of such appointment with the registrar of companies within 15 days of the meeting in which the auditor is appointed, according to Section 139(1) of the new companies act 2013. An auditor was required to file Form 23B with the ROC, together with a filing fee of Rs. 300, under the Companies Act of 1956. The auditor’s responsibility for filing new form ADT-1 has now been transferred to the corporation. The former deadline for filing Form 23B was 30 days, but the new Companies Act of 2013 reduced it to 15 days from the date of the meeting at which the auditor was chosen.

Information to ROC about statutory Auditor Appointment [4]

The Auditor was required to file form 23B with the ROC regarding his appointment as Statutory Auditor under the Companies Act, 1956, whereas the Company is required to file form ADT.1 through E-form GLN 2 with the ROC on the appointment of Statutory Auditor under the Companies Act, 2013. The following is a full analysis:

Under the old Companies Act of 1956

• Notification of the date and time of the appointment

A corporation is required to give intimation of appointment to every auditor(s) so appointed within seven days of the appointment as required by section 224(1) of the Companies Act, 1956. (1). A responsible person of the company may give the intimation in the form of a letter on the company’s letterhead.

• The auditor has a legal obligation to notify the Registrar.

Every auditor appointed by a company’s Annual General Meeting under section 224(1) must notify the Registrar in writing whether he has accepted or refused the position [Section 224(1B)]. Within thirty days of the date of appointment at the AGM, the information must be provided in e-Form 23B.

Position under Companies Act, 2013

The Company is required to advise the auditor involved of his or her appointment and to file a notice of such appointment with the Registrar within fifteen days of the meeting at which the auditor is appointed under the Companies Act, 2013. As a result, under section 139(1) and Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014, the Company must notify the Registrar of Companies of the appointment of an Auditor at the Annual General Meeting within 15 days after the appointment by filing form ADT.1.

Notification to the ROC in the event that a First Auditor is appointed under the Companies Act, 2013

 It’s worth noting that the company is only required to give notice of appointment to the Registrar in Form No. ADT.1 via E-form GLN.2 in the case of auditors appointed under section 139(1). As a result, if a company’s Board of Directors appoints initial auditors pursuant to section 139(6), the company is not required to notify the Registrar.

Auditors are required to provide certain information[5]

The information that must be gathered from an auditor is as follows:

1. Auditor classification (Individual or Firm)
2. Auditor’s permanent account number in the income tax system FRN/number of auditors
3. Auditor’s mailing address and email address
4. The number of financial years is mentioned in the period of account for which it was designated.
5. Dates of Appointment and Annual General Meeting
6. Previous appointments of the auditor or the auditor’s firm, or a member of the same company’s previous appointments.
7. Additional information about the part-time position
8. ADT-3’s SRN
9. The auditor’s membership number/FRN has been vacated.
10. The date of the ad hoc vacancy
11. The cause for the ad hoc vacancy

Documents Required

Form ADT-1 must be attached to the following documents.

• Copy of the Board of Directors’ Resolution
• The auditor’s written permission to make such an appointment is required.
• A certificate from the auditor declaring that the person is not barred from serving as an auditor under Section 141.
• A copy of the notification that the corporation sends to the auditor

Appointment of an Auditor Procedure[6]

An Auditor of a Company can only be a practicing Chartered Accountant. Before appointing an auditor to a company, the auditor’s written consent must be obtained, as well as a certificate from the Auditor stating that the appointment, if made, will be in accordance with the Auditor’s conditions and that the Auditor meets the criteria set forth in Section 141 of the Companies Act, 2013. (Provision relating to audit and auditor).

ADT-1 is an optional file for the first auditor’s appointment process. The Board of Directors of the Company can then execute a resolution to appoint the Auditor once the permission of an Auditor has been acquired. The auditor’s appointment must be reported to the Registrar of Companies within fifteen days of his or her appointment. From the conclusion of that meeting until the conclusion of the company’s sixth annual general meeting, the first auditor can serve. The corporation should, however, put the question of an auditor’s appointment up for ratification by members at each annual general meeting.

Additional Auditors

The appointment of auditors (other than the first auditors) must be made by the company’s members in a general meeting. The auditor appointed at the general meeting takes office immediately after the meeting, with the meeting where the appointment was made counting as the first meeting. However, if a casual vacancy in the office of an auditor arises as a result of registration, the consent of members must be acquired within three months of the Board’s recommendation date. The auditor in question may serve until the end of the next annual general meeting.[7]

Failure to Appoint Auditor

If the Board of Directors fails to appoint an Auditor within 30 days of the company’s establishment, the Board should notify the members of the company about the failure to appoint an Auditor. Members can then appoint an auditor at an extraordinary general meeting within 90 days, and the auditor will serve until the end of the first annual general meeting.

If no auditor is chosen or re-appointed at another annual general meeting, the current auditor of the company will continue to be the auditor of the company.

Additional Fee (Form 23B)

Within 30 days of receiving notification from the company, every statutory auditor nominated by the company in the Annual General Meeting under section 224(1) of the Act[8], in form 23B must inform the concerned Registrar of Companies whether he has accepted the appointment or not. The Ministry of Corporate Affairs has decided to charge auditors for such notices and to levy a penalty if Form 23B is not filled in a timely manner.[9]

Conclusion

An impartial person engaged by the company to offer an opinion on whether the financial statements generated by the company are free of major misstatements, fraud, or error and in compliance with the Accounting Standards is known as an auditor. It is vital to understand that the Company is responsible for maintaining a book of accounts and preparing financial statements. The Company’s Auditor is unable to keep the Company’s Book of Accounts or compile financial statements since doing so would jeopardize his or her independence.

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References:

[1] The Companies Act, 2013

[2] https://taxguru-in.cdn.ampproject.org/v/s/taxguru.in/company-law/change-filling-form-23b-overview.html?amp_js_v=a6&amp_gsa=1&amp&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16280471601912&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Ftaxguru.in%2Fcompany-law%2Fchange-filling-form-23b-overview.html

[3] https://www.indiafilings.com/learn/appointment-of-auditor/

[4] https://taxguru-in.cdn.ampproject.org/v/s/taxguru.in/company-law/intimation-roc-auditor-appointment-form-adt.html?amp_js_v=a6&amp_gsa=1&amp&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16280471601912&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Ftaxguru.in%2Fcompany-law%2Fintimation-roc-auditor-appointment-form-adt.html

[5] https://www.indiafilings.com/learn/form-adt-1/

[6] https://enterslice-com.cdn.ampproject.org/v/s/enterslice.com/learning/appointment-auditor-co-operative-society/?amp_js_v=a6&amp_gsa=1&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16280473371980&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Fenterslice.com%2Flearning%2Fappointment-auditor-co-operative-society%2F

[7] Companies Act By Avatar Singh

[8] The Companies Act, 1956

[9] https://taxmantra.com/form-23b-additional-fee/