Page 390 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

Casual Vacancy: If the appointment is being made to fill a casual vacancy, the incoming auditor should verify
whether the Board of Directors have the powers to fill the casual vacancy and whether they have passed the
resolution filling the casual vacancy.
Resignation: If the vacancy has arisen due to the resignation of the auditor, the incoming auditor should verify
whether a proper resolution filling the vacancy has been passed at the General Meeting of the company.
Removal: If the vacancy has arisen as a result of the removal of the auditor before the expiry of their term, the
incoming auditor should verify that a special resolution has been passed at the General Meeting of the company
and that the previous approval of the Central Government has been obtained.
Documents
Company & Service Officer: A document may be served on a company or an officer thereof by sending it to
the company or the officer at the registered office of the company by registered post, speed post, courier service,
or by leaving it at its registered office, or by means of such electronic or other mode as may be prescribed.
Notice to Retiring Auditor: The notice of the resolution to the retiring auditor should be sent by Registered
A/D post as per the Department of Company Affairs circular dated 17.10.1981.
Effective Service: The incoming auditor must satisfy himself that the notice provided for in Sections 139 & 140
of Companies Act, 2013 has been effectively served on the outgoing auditor. An acknowledgement received from
the outgoing auditor would be one of the forms in which such satisfaction can be obtained.
Meeting Minutes: A copy of the relevant minutes of the general meeting where the resolution is passed, duly
verified by the Chairman of the meeting, should also be obtained by the incoming auditor for his records.
Adjourned Meeting: If the annual general meeting is adjourned without conducting any business or after
conducting business in respect of some of the items on the agenda, the retiring auditor will continue to hold the
office of auditor till the adjourned meeting is held and the business listed in the agenda of the meeting is
concluded.
Special Notice Post-Adjournment: If any annual general meeting is adjourned without appointing an auditor,
no special notice for removal or replacement of the retiring auditor received after the adjournment can be taken
note of and acted upon by the Company.

Unjustified removal of auditors
1A. ESB: The Council has established the Ethical Standards Board (ESB) to examine ethical issues and safeguard
auditor independence.
1B. Responsibilities: ESB is responsible for examining professional ethics issues, looking into auditor removal
and resignation cases, and reporting to the Council.
2A. Auditor Not Willing to Continue: If an auditor resigns or doesn't offer himself for reappointment, he must
communicate his reasons in writing to the Board of Directors and the Institute. The incoming auditor must
review this communication before accepting the appointment.
2B. Auditor Willing to Continue: If an auditor is willing but not reappointed, he must share his statement
(representation letter) with the Institute. The incoming auditor must review this statement before accepting the
appointment.
3. Review: ESB reviews the communications as discussed above and can call for information from outgoing and
incoming auditors and the company, and reports to the Council if necessary.
4. Government Removal: The same procedure applies to the removal of auditors by the government and other
statutory authorities.

(CNO-PE.1260) CLAUSE 10
Clause (10): Charges or offers to charge, accepts or offers to accept in respect of any professional employment
fees which are based on a percentage of profits or which are contingent upon the findings, or results of such
employment, except as permitted under any regulations made under this Act.
Analysis

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