Appointment of Auditor (ADT-1) – First Auditor vs Subsequent Auditor Rules Explained

INTRODUCTION

The appointment of a statutory auditor is one of the first and most important compliances after incorporating a company. Every company registered under the Companies Act, 2013 is required to appoint an eligible auditor within the prescribed timelines. Failure to comply with these provisions may result in non-compliance under the Companies Act and additional filing fees wherever applicable.

Many companies also get confused about whether Form ADT-1 is required for the appointment of the first auditor or only for subsequent auditors. Understanding the difference between these appointments, their timelines, and ROC filing requirements helps companies remain fully compliant.

‍💼 WHO IS A STATUTORY AUDITOR?

A statutory auditor is a Chartered Accountant or a firm of Chartered Accountants appointed under the Companies Act, 2013 to audit the financial statements of a company.

The auditor independently verifies the books of accounts and expresses an opinion on whether the financial statements present a true and fair view of the company’s financial position.

FIRST AUDITOR APPOINTMENT (SECTION 139(6))

For companies other than Government Companies, the first auditor is appointed by the Board of Directors.

Important timelines are:

• The Board of Directors must appoint the First Auditor within 30 days from the date of incorporation.
• If the Board fails to appoint the auditor within 30 days, the members of the company must appoint the First Auditor within the next 90 days at an Extraordinary General Meeting (EGM).
• The First Auditor holds office till the conclusion of the First Annual General Meeting (AGM).

FIRST AUDITOR IN GOVERNMENT COMPANIES

The procedure is different for Government Companies.

• The Comptroller and Auditor General of India (C&AG) appoints the First Auditor within 60 days from the date of incorporation.
• If the C&AG does not appoint the auditor within 60 days, the Board of Directors must appoint the auditor within the next 30 days.
• If the Board also fails, the shareholders must appoint the First Auditor within the next 60 days at an Extraordinary General Meeting.

SUBSEQUENT AUDITOR APPOINTMENT (SECTION 139(1))

After the First AGM, the company appoints the subsequent auditor.

Important points include:

• The subsequent auditor is appointed by the shareholders at the Annual General Meeting.
• The appointment is generally made at the First AGM.
• The auditor holds office from the conclusion of the First AGM till the conclusion of the Sixth AGM, subject to the provisions of the Companies Act.
• Before appointment, the company should obtain the auditor’s written consent along with a certificate confirming eligibility under Section 141.

WHAT IS FORM ADT-1?

Form ADT-1 is an e-form filed with the Registrar of Companies (ROC) to intimate the appointment of a statutory auditor.

The form generally contains:

Company Details

‍💼 Auditor’s Name

🆔 Membership Number

Firm Registration Number (FRN)

Date of Appointment

Period of Appointment

IS ADT-1 MANDATORY?

This is one of the most common ROC compliance queries.

• For the First Auditor appointed by the Board under Section 139(6), filing Form ADT-1 is generally not mandatory.
• For the Subsequent Auditor appointed under Section 139(1), filing Form ADT-1 with the Registrar of Companies is mandatory.

Although many companies voluntarily file ADT-1 for the first auditor as a matter of good compliance practice, the Companies Act does not specifically mandate it.

⏳ DUE DATE FOR FILING ADT-1

Where ADT-1 is applicable:

• Form ADT-1 should be filed within 15 days from the date of appointment of the auditor.

Timely filing helps avoid additional filing fees and ensures proper ROC compliance.

DOCUMENTS REQUIRED FOR ADT-1

Before filing Form ADT-1, the following documents should generally be kept ready:

Certified copy of the Board Resolution or Ordinary Resolution

Auditor’s Written Consent

Eligibility Certificate under Section 141

🆔 Membership Number and Firm Registration Number (FRN)

Appointment Letter issued to the Auditor

COMMON MISTAKES TO AVOID

Companies often face compliance issues due to simple mistakes such as:

• Missing the 30-day timeline for appointing the First Auditor.
• Assuming ADT-1 is mandatory in every auditor appointment.
• Appointing an auditor without obtaining written consent.
• Filing ADT-1 after the prescribed due date.
• Mentioning incorrect Membership Number or FRN in the ROC form.

PRACTICAL COMPLIANCE TIMELINE

Company Incorporated

⬇️

Within 30 Days

Board appoints the First Auditor.

⬇️

If Board Fails

Shareholders appoint the First Auditor within the next 90 Days through an EGM.

⬇️

First AGM

Shareholders appoint the Subsequent Auditor.

⬇️

Within 15 Days

File Form ADT-1 with the ROC wherever applicable.

Following this simple timeline helps companies complete auditor-related compliances without delay.

CONCLUSION

The appointment of a statutory auditor is one of the earliest legal responsibilities of every company under the Companies Act, 2013. While the procedure for appointing the First Auditor differs from that of the Subsequent Auditor, companies should carefully follow the prescribed timelines, obtain the necessary declarations, and file Form ADT-1 wherever applicable.

Proper compliance at the initial stage not only avoids unnecessary penalties but also ensures smooth statutory audit and corporate governance throughout the life of the company.

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