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Auditing is essential to any business and crucial for newly incorporated companies. Private Limited companies are incorporated under the Companies Act 2013, which mandates every company to appoint an auditor within 30 days of incorporation. The object of an audit is to ensure that the company’s financial statements are accurate, reliable, and free from material misstatements. In this article, we will discuss the appointment of an auditor for a newly incorporated Private Limited Company.
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Under section 139 (1) of the Companies Act 2013, only a Chartered Accountant or a firm of Chartered Accountants can be appointed as an auditor of a company. The auditor should be independent and unbiased and not have any conflict of interest with the company. The members should approve the appointment of an auditor in a general meeting.
The procedure for the appointment of an auditor for a newly incorporated Private Limited Company is as follows:
After the appointment of an auditor to provide independent opinions on their financial statements, ensuring they are accurate and free from material misstatements. In private limited companies, the auditor’s role is significant as they are critical in maintaining transparency and accountability.
In conclusion, auditors play a crucial role in private limited companies by ensuring that the financial statements are accurate and free from material misstatements. They have certain rights, such as access to information and premises, obtaining explanations and reporting their findings. They also have specific duties, including conducting an audit, maintaining professional scepticism, following auditing standards, reporting to shareholders, providing a management letter, and maintaining confidentiality. By fulfilling these rights and duties, auditors can help maintain transparency and accountability in private limited companies. The appointment of an auditor is a vital process for a newly incorporated private limited company. The company must appoint a chartered accountant in practice as its first auditor within 30 days of its incorporation. The procedure for auditor appointment includes holding the first board meeting, intimating the auditor, obtaining the auditor’s consent, filing Form ADT-1, and holding the first AGM. Following these procedures, a newly incorporated private limited company can appoint an auditor and ensure compliance with the Companies Act 2013.
Also Read: Private Limited Company Incorporation in India
Minakshi Bindhani has completed LL.M. with a specialization in Criminal Law from Madhusudan Law University, Cuttack, Odisha. She is more inclined toward legal research and writing and have prior experience in Civil and Criminal litigation and content writing.
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