Every company is registered under Companies Act 2013 and as per sec 139, every private limited company is required to appoint an auditor within 30 days of incorporation.
Due to the regulation of government and accordance with law, once in a year, every company requires having their accounts audited by the auditor. This audit is known as 'Statutory Audit.'
As per Section 139 of Companies Act 2013, Appointment of an Auditor is mandatory under law. An auditor can only be a Chartered Accountant who holds the COP(Certificate Of Practice). Once an auditor is appointed, he/she shall be the auditor for the tenure of 5 years.
Tax audit is also required in private limited company, but only those companies who have crossed the turnover of Rs. 1 Crore.
True and Fair view of the Financial Statements, other books and records are to be disclosed by the Auditors report.
The auditor can be removed for 2 reasons.
1. Resign on his own
2. End of the tenure period
Auditor has to give proper notice, in which he/she needs to describe the proper reason for ceasing to hold the office. The notice should be given at least 14 days prior to the end of the tenure to appoint a new auditor at the Private Limited Company's registered office.
Section 140 of Companies Act 2013 states that Every Auditor will be rotated after 5 consecutive years from the date of auditor appointment.
The auditor will be rotated after passing the special resolution in a General Meeting. Central Government approval will be required to rotate the auditor.
If any provision of section 139 to section 146 is contravened then:
Minimum Rs. 25000 which may extent to Rs.500000
Every Officer in Company
Minimum Rs. 10000 which may extent to Rs.100000 or Imprisonment of 1 year or both
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