Appointment of the first auditor of a company

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Every company in India must have its accounts audited, from its very first year. The first auditor is appointed by the board within 30 days of incorporation under Section 139(6). They hold office until the end of the first annual general meeting.

How the appointment works

1.Get the auditor's written consent and a certificate that they are eligible under Section 141.
2.The board passes a resolution appointing them, usually at the first board meeting.
3.Send the auditor an appointment letter.

If the board fails to appoint within 30 days, it must inform the members, who appoint the auditor within 90 days at an extraordinary general meeting.

Is ADT-1 needed for the first auditor?

ADT-1 is the form used to inform the Registrar of an auditor's appointment. For the first auditor appointed by the board, filing ADT-1 is not required by the Act. Many companies file it anyway for clarity. ADT-1 is mandatory when the auditor is appointed at the AGM for a five-year term. See auditor appointment at AGM.

Who can be the auditor

A practising Chartered Accountant or a firm of Chartered Accountants.
Not a director, officer or employee of the company, or their relative or partner.
Not someone indebted to the company beyond the prescribed limit.
Not someone holding audits beyond the limit of 20 companies.

Frequently asked questions

Yes. Every company needs an audit regardless of turnover.

No. Section 144 prohibits the statutory auditor from providing accounting and bookkeeping services to the company.

This guide is general information, not legal advice. Government fees and procedures change; confirm current figures before you file.