Compliances

Is it Mandatory to File ADT 1 for Auditor’s Appointment?

calendar09 Feb, 2022
timeReading Time: 4 Minutes
File ADT 1

Each business entity is expected to perform the audit regularly, quarterly, or monthly, half-yearly or annually through the appointed Auditor. The Company must complete a financial balance audit to check the Company’s work process. This blog will pen down what is ADT-1 and when necessary to file ADT 1.

What is Form ADT 1?

ADT-1 form is filed to inform the Registrar of Companies about the appointment of its Auditor every year in a specified manner. According to section 139(1) of the Companies Act, 2013, when a company appoints an auditor, the Company must file ADT 1 to inform the ROC about the appointment, and it must be filed within 15 days of its general meeting or first board meeting.

ADT 1 is an intimation filed by every Company with the ROC at the MCA portal about the appointment of the Company’s Auditor. After the annual general meeting, ADT 1 is required to be filed with ROC every year as a notice of appointment of the Auditor.

Purpose of the appointment of the Auditor-

The Purpose of appointing the auditors in the Company is to protect the shareholders’ interests. The Auditor is obliged by the law to review the Company’s accounts and notify them of the Company’s actual financial status. Also, the Auditor gives its independent opinion to the Company’s owners or shareholders to ensure that the Company is safe and stable.

When to file an ADT 1?

ADT-1 Form must be filed with the ROC within 15 days of the AGM in which the Auditor was appointed or reappointed. Supposing, if the Company’s AGM was held on 30th August 2021, the Company must file the Form ADT 1 on the MCA portal[1] by 14th September 2021.

ADT-1 ought to be filed within 15 days of duration from the Company’s first board meeting in case of new company incorporation. The first board meeting shall be held within 30 days of incorporation wherein the Board of directors appoints the Auditor of the Company.

Important points to be considered while filing ADT 1

  • Filing of Form ADT 1 is the Company’s sole responsibility, and it is not a responsibility of an auditor to file the Form.
  • It is mandatory to file Form ADT-1 by all the companies be its listed, public, private, unlisted, or any other company,
  • If in the case of casual vacancy in a company, then also Company needs to file Form ADT-1 for the appointment of the Auditor.
  • However, it is not necessary to file Form ADT 1, at the time of the appointment of first Auditor of the Company. But, it is recommended to file Form ADT-1.

Appointment of First Auditor-

As per the Provision of the Companies Act, its Board of directors that names the first Auditor within 30 days from the incorporation’s date.

However, if the Board does not appoint the Auditor, the Member shall appoint an auditor at the Extra-Ordinary General Meeting within 90 days. An auditor would retain the office till the end of the first Annual General Meeting. It is the Company’s responsibility to file the ADT 1 with the ROC along with the requisite fees.

In the case of government companies, the CAAG (i.e. Comptroller & Auditor-General of India) shall appoint the first Auditor within the duration of sixty days from the date of its incorporation. If the Auditor General of India fails to nominate such an auditor within the stipulated time, the Auditor is appointed by the BODs within the next thirty days. The First Auditor appointed by the BOD shall hold office till the end of the First Annual General Assembly.

Subsequent Appointment of Auditor

The subsequent Auditor to be appointed shall remain in the office until the end of the sixth Annual General Meeting.

Tenure of Auditor’s

The Company shall nominate or reappoint: –

  • In case of an individual, an auditor for not more than a period of five years in a consecutive; and
  • In the case of Auditor firm for not more than two terms of 5 consecutive years as an auditor:

Appointment an Auditor other than Retiring Auditor –

After the expiry of tenure of Existing Auditor, A company can appoint any Individual or Firm other than Retiring Auditor, if-

  • In case of an individual auditor has completed his one term of five consecutive years, he shall not be eligible for re-appointment as an auditor in the same Company for five years from the completion of his appointment period.
  • In case of an audit firm that has completed its two terms of five consecutive years, shall lose its candidature for re-appointment in the same organization for five years from the expiry of such period.

Steps required for such appointment-

  1. Special Notice is a mandate for a resolution at an AGM appointing a person other than a retiring auditor as Auditor.
  2. The Auditor shall also have to declare in the certificate that the individual/firm meets the criteria cited under section 141 of the Companies Act, 2013.
  3. The Qualifications and Experience of the Proposed Auditor shall be considered

Process for appointing the Auditor other than the retiring Auditor by a special Notice-

  1. Send a special notice to the members of the Company.
  2. Convene a general meeting
  3. File form MFT-14 with the ROC for passing of Special resolution.
  4. Once the appointment of Auditor is made, the Company shall inform the Auditor about the appointment and file a notice of such appointment to the ROC in E-form ADT 1 within 15 days of the AGM.

Note-A company shall file the necessary forms to the ROC along with the requisite attachments.

What documents are required to be attached with the ADT-1 Form?

Below-mentioned documents must be attached to Form ADT 1-

  1. Auditor’s written approval
  2. Copy of Board resolution or a resolution passed in Annual General Meeting
  3. A declaration from the Auditor stating that they or the firm is not disqualified or ineligible to be appointed as an Auditor.
  4. Copy of Company’s disclosure to the Auditor.

E-filing of Form ADT 1 with MCA E-filing

Form ADT 1 can be filed digitally & can be downloaded from the Ministry of Corporate Affairs. Also, the e-form is approved automatically.

After the successful filing of the E-Form, the respective Authority sends an acknowledgment email to the registered email address.

Conclusion

Form ADT 1 is mandatory when it comes to the appointment of an auditor in your Company. Companies are required to file Form ADT-1 within the 15-day period. Except in the case of appointment of the first Auditor, Every Company must file Form ADT-1 with the Registrar of Companies to notify them of the appointment of an auditor.

Read our Article:Appointment and Removal of Auditor in a Privately-held Organization

Priyanka Bajpayee

A Company Secretary together with PG in international Business, she has gained significant experience as legal content writer. She has keen interest in doing research and writing on legal and financial subject matters. She also holds work experience in legal compliances.

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