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Mandatory Appointment of Auditor After Company Incorporation

  • March 07, 2022
  • Registrationwala
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You can't just start your business without some regulatory considerations when starting a company. One of the major requirements you must fulfill beforehand is appointing an auditor. 

An Auditor is a financial professional who not only oversees your business transactions but traces all the standard operating procedures of the company. His job is to ensure that all the wheels that support your enterprise are running correctly. 

And that's why the Ministry of Corporate Affairs of India has made it mandatory for any new company to appoint an auditor.

In this article, we will look at the process and the significance of appointing an auditor in your company.

Significance of an Appointment of an Auditor

The amendments to the Indian Companies Act 2013 have ensured new responsibilities and powers in appointment and compliance by the auditors. The basic rule that has come to power is the minimum term of five years in office with approval by the members at an annual general meeting. All the auditors who are working presently can continue to complete the tenure as per the general body's decision. The committee will make all work recommendations if amendments have to be made.

Most companies follow the procedure of rotating the auditors every year. And the audit firm itself can be changed as per company needs. There's no restriction in having the auditors rotated. All auditors are required to comply with the process standards. They also have the privilege to make records of all the subdivisions and subsidiaries of the company. Auditors can work with any form of business entity.

Many of the skilled auditors of private companies assure the proper formulation of perfect accounting rules to verify the business's economic status. They verify the accuracy of the company's financial records and ensure the legal certainty of all operational procedures. Also, there should be proper communication on the declarations and document dispatches financial statements to shareholders at appropriate times. As in the case o a private company, they are liable to core resources such as revenue officers and the company shareholders.

Of late, a business has reduced overhead expenses for better financial planning and enterprise management. Hence it is good to have the best auditors for your company who would take your profit scales to sky level. Most auditors are well trained for such scenarios for maximizing profits. Their specific aim is to ensure the real benefits are reaped through the audit process. Within thirty days of finding fraudulent activities, auditors are expected to report the same to the Central Government. If this is not done, auditors themselves will be liable for the fining process.

Having a clear audit plan helps to fully ascertain the business of the company being audited and the operating environment. Audit planning also assures that a proper process is established and identifies the business's core audit risks. This would act as a lead to auditors for ensuring proper assessment is done.

Process of Hiring an Auditor for Your Company

 

Here is the procedure to hire an auditor:

  1. Conduct a thorough interview
  2. Make sure that the person understands the requirement of your business
  3. Inform the Ministry of Corporate Affairs about the appointment

Conclusion

To sum it up, if you want to keep your company in top shape and gain traction for your business, you must appoint an auditor at the time when you make online company registration in india.


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