The first auditor of a company, other than a Government company, shall be appointed by the Board of Directors at the board meeting within thirty days from the date of registration of the company.
In the case of failure of the Board to appoint such auditor, it shall inform the members of the company, who shall within ninety days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.
The first auditor shall be appointed by the Comptroller and Auditor-General of India within sixty days from the date of incorporation of the company.
In case the Comptroller and Auditor-General of India does not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next thirty days; and in the case of failure of the Board to appoint such auditor within the next thirty days, it shall inform the members of the company who shall appoint such auditor within the sixty days at an extraordinary general meeting, who shall hold office till the conclusion of the first annual general meeting.
Every company shall, at the first annual general meeting, appoint an individual or a firm of chartered accountants as a statutory auditor, who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting.
Any casual vacancy in the office of an auditor shall be filled by the Board of Directors within thirty days. But if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within three months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual general meeting;
In the case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled by the Comptroller and Auditor-General of India within thirty days and if CAG does not fill the vacancy within the said period, the Board of Directors shall fill the vacancy within next thirty days.
Board of Director of the company shall appoint internal Auditor who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company.The internal auditor may or may not be an employee of the company.
The following class of companies shall be required to appoint an internal auditor which may be either an individual or a partnership firm or a body corporate, namely:-
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WMC can help you for resignation/appointment of Auditor. The average time taken to draft and file documents for resignation/appointment of Auditor is about 2 - 3 working days, subject to government processing time and client document submission. Get a free consultation for resignation/appointment of Auditor by scheduling an appointment with a WMC Advisor.
Utilization of power, fuel, water, steam and electricity and that of material, labour and other costs like overheads allocated to the service department.
Maintenance of employment and attendance records, overtime and idle time records, allocation of wages and salaries among various departments and those connected with the capital work.
The overheads like production, administration, selling and distribution should be allocated on a reasonable basis. The cost auditor ensures a fair and equitable distribution of overheads between various departments, reconciliation of the cost records with that of financial records, overhead recovery rates, and basis for allocation of cost between fixed and variable.
Maintenance of fixed assets registers with quantitative details, situation, method of calculating depreciation, allocation of depreciation in respect of the common assets.
Daily production reports, summaries from daily to monthly, monthly to yearly and comparison with past records and budgeted targets including abnormal losses, work in-progress, etc.
Maintenance of records viz., job cards, work order, cost ledger, etc. and their valuation method.
Inventory records for stock – both finished and unfinished products, spares and stores, tools, machinery spares, etc, their values, issue procedure and balances.
Plant utilization and capacity utilization are not considered in detail in financial audit. Under this category the cost auditor’s examination covers the following aspects – total available hours, standards hours, planned hours, and actual hours worked. Practical capacity, standard capacity, expected capacity, and actual capacity utilized.
Besides, the cost auditor’s examination covers various other aspects viz., royalty payments, company policies with regard to inventory management, productivity, internal control, internal audit, cost reduction, export performance, bottlenecks in the production process, inter-company transactions, etc.
Section 148 of the Companies Act 2013, the Company engaged in the production of the goods or providing services, having an overall turnover from all its products and services of rupees thirty five crore or more during the immediately preceding financial year, shall include cost records for such products or services in their books of account.
The Company shall within thirty days from the date of receipt of a copy of the cost audit report prepared in pursuance of a direction under sub-section (2) furnish the Central Government with such report along with full information and explanation on every reservation or qualification contained therein.
If, after considering the cost audit report and the information and explanation furnished by the company to the Central Government is of the opinion that any further information or explanation is necessary, it may call for such further information and explanation and the company shall furnish the same within such time as may be specified by that Government.
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WMC can help you for resignation/appointment of Auditor. The average time taken to draft and file documents for resignation/appointment of Auditor is about 2 - 3 working days, subject to government processing time and client document submission. Get a free consultation for resignation/appointment of Auditor by scheduling an appointment with a WMC Advisor.
Companies required conducting secretarial audit
shall appoint secretarial Auditor for conducting secretarial Audit of the Company.
A Secretarial Audit has to be conducted by a practising Company Secretary in respect of the secretarial and other records of the company.
The Company shall annex secretarial audit report in the Form MR-3 with its Board’s report made in terms of sub-section (3) of section 134.
The Board of Directors, in their report made in terms of sub-section (3) of section 134, shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his secretarial audit report.
It shall be the duty of the company to give all assistance and facilities to the company secretary in practice, for auditing the secretarial and related records of the company.
Companies required conducting secretarial audit
The Company shall file MGT-14 within 30 days to ROC from the passing of Board resolution.
WMC is leading consultancy services platform in India, offering a various kind of services like to start a business and manage business such as Incorporation of Company, LLP, Registration of Partnership Firm etc. and trademark filing, Corporate Compliances, tax registration, tax filing and GST registration and their filing.
WMC can help you for resignation/appointment of Auditor. The average time taken to draft and file documents for resignation/appointment of Auditor is about 2 - 3 working days, subject to government processing time and client document submission. Get a free consultation for resignation/appointment of Auditor by scheduling an appointment with a WMC Advisor.
