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Who is an Auditor?

All the government and non-government organizations have to keep track of their accounts and audit reports as the financial year approaches. The financial statements of these firms need to be thoroughly analyzed and assessed before submitting them to the authorized departments. This assessment of financial documents is done by an Auditor.

Any individual trained to review and verify accounting data and recognised as a Chartered Accountant (CA) under the Chartered Accountant Act 1949 is deemed to be an auditor.

Qualifications of an Auditor:

• A person is eligible for the appointment as an auditor only if he is a Chartered Accountant.
• A firm is eligible for the appointment as an auditor only when the majority of its partners are Chartered Accountants practicing in India.
• In the case where a limited liability partnership firm is appointed as auditor, only the partners who are Chartered Accountants will be authorized to act and sign on behalf of the firm.

Failure to Appoint Auditor:

In case of failure of the Board of Directors to appoint an Auditor, within 30 days of incorporation of the company, then the Board should inform the members of the company about the failure to appoint Auditor. The members can then within 90 days at an extraordinary general meeting, appoint an auditor and the auditor would hold office till the conclusion of the first annual general meeting.

If in case, at any annual general meeting, no auditor is appointed or re-appointed, then the existing auditor of the company would continue to be the auditor of the company.

Appointment of an Auditor is significant in a company that analyses and understands a company’s financial records to deliver effective analyses and relevant information. Management can use this information to evaluate the company and implement measures necessary to meet their objectives.

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