# Appointment of Auditors [Section 139]
The appointment process differs between Government companies (controlled by Government) and non-Government companies.
## (A) First Auditor
### Non-Government Company [Section 139(6)]
| Step | Authority | Timeline |
|---|---|---|
| 1 | BOD appoints | Within 30 days from date of registration |
| 2 | If BOD fails → inform members; members appoint at EGM | Within next 90 days |
| Tenure | First auditor holds office until conclusion of 1st AGM |
### Government Company [Section 139(7)]
| Step | Authority | Timeline |
|---|---|---|
| 1 | CAG appoints | Within 60 days from date of registration |
| 2 | If CAG fails → BOD appoints | Within next 30 days |
| 3 | If BOD fails → inform members; members appoint at EGM | Within next 60 days |
| Tenure | First auditor holds office until conclusion of 1st AGM |
## (B) Subsequent Auditor
### Non-Government Company
- BOD recommends name to members.
- Members appoint by passing an Ordinary Resolution (OR) at the AGM.
- Term: From conclusion of 1st AGM to conclusion of 6th AGM (i.e., 5 years).
### Government Company
- CAG appoints the subsequent auditor within 180 days from commencement of the FY.
- Auditor holds office till conclusion of the next AGM (i.e., 1-year term).
## (C) Casual Vacancy
A casual vacancy is one arising other than by expiry of term (e.g., death, resignation, disqualification).
### Non-Government Company
- BOD fills the casual vacancy within 30 days.
- Auditor holds office until conclusion of next AGM.
- If vacancy arose due to resignation, appointment must also be approved by members via OR at a general meeting convened within 3 months of BOD's recommendation.
### Government Company
- CAG fills casual vacancy within 30 days.
- If CAG fails → BOD fills within next 30 days.
- Auditor holds office till conclusion of next AGM.
## (D) Recommendation Process for Subsequent Auditor
### Where Audit Committee Is Required (Section 177)
1. Audit Committee recommends name to BOD.
2. If BOD agrees → recommends to members for appointment at AGM.
3. If BOD disagrees → refers back to Audit Committee with reasons.
4. If Audit Committee does not reconsider, BOD records its reasons and sends its own recommendation to members.
### Where Audit Committee Is Not Required
- BOD itself recommends name to members for appointment at AGM.
## (E) Companies Required to Constitute Audit Committee [Section 177]
- Listed public company, AND
- Unlisted public company having (as on date of last audited FS):
- Paid-up capital ≥ ₹ 10 crores, OR
- Turnover ≥ ₹ 100 crores, OR
- Aggregate outstanding loan, borrowing, debenture & deposit > ₹ 50 crores.
Exit clause: A company is exempted from constituting the Audit Committee if it was earlier required but ceases to fulfil the conditions for 3 consecutive years.
## (F) Conditions Before Appointment
Before appointing an auditor:
1. Obtain written consent from the auditor.
2. Obtain a certificate from auditor stating:
- He is eligible & not disqualified (criteria under Section 141 satisfied),
- Appointment is within the prescribed limits (e.g., 20-company ceiling),
- Appointment is as per terms under the Act,
- List of proceedings against the auditor/firm/partner for professional matters of conduct is disclosed and is true & correct.
## (G) Filing Requirements
- Company shall inform the auditor about appointment.
- File Form ADT-1 with ROC within 15 days of the meeting where the auditor was appointed.