As per section 142 of the Act, the remuneration of the auditor of a company shall be fixed in its
general meeting or in such manner as may be determined therein. However, board may fix
remuneration of the first auditor appointed by it.
Further, the remuneration, in addition to the fee payable to an auditor, include the expenses, if
any, incurred by the auditor in connection with the audit of the company and any facility extended
to him but does not include any remuneration paid to him for any other service rendered by himat the request of the company. Therefore, it has been clarified that the remuneration to Auditor
shall also include any facility provided to him.


Section 139 of the Companies Act, 2013 contains
provisions regarding Appointment of Auditors. Discussion
on appointment of auditors may be grouped under two
broad headings-
I Appointment of First Auditors.
II Appointment of Subsequent Auditors.

Appointment of First Auditor -Appointment of First Auditors in the case of a company, other than a Government
Company: As per Section 139(6), the first auditor of a company, other than a Government
company, shall be appointed by the Board of Directors within 30 days from the date of
registration of the company.
In the case of failure of the Board to appoint the auditor, it shall inform the members of the
company.
The members of the company shall within 90 days at an extraordinary general meeting appoint
the auditor. Appointed auditor shall hold office till the conclusion of the first annual general
meeting.Appointment of First Auditors in the case of Government Company: A “Government
company” is a company in which not less than 51% of the paid-up share capital is held by the
Central Government or by any State Government or Governments or partly by the Central
Government and partly by one or more State Governments, and includes a company which is a
subsidiary company of such a Government company.
Section 139(7) provides that in the case of a Government company or any other company
owned or controlled, directly or indirectly, by the Central Government, or by any State
Government, or Governments, or partly by the Central Government and partly by one or more
State Governments, the first auditor shall be appointed by the Comptroller and Auditor-General
of India within 60 days from the date of registration of the company.
In case the Comptroller and Auditor-General of India does not appoint such auditor within the
above said period, the Board of Directors of the company shall appoint such auditor within the
next 30 days. Further, in the case of failure of the Board to appoint such auditor within next 30
days, it shall inform the members of the company who shall appoint such auditor within 60 days
at an extraordinary general meeting. Auditors shall hold office till the conclusion of the first
annual general meeting.Appointment of Subsequent Auditor/Reappointment of Auditor

Appointment of Subsequent Auditors in case of Non Government Companies:
Section 139(1) of the Companies Act, 2013 provides that every company shall, at the first
annual general meeting appoint an individual or a firm as an auditor who shall hold office fromthe conclusion of that meeting till the conclusion of its sixth annual general meeting and
thereafter till the conclusion of every sixth meeting.
The following points need to be noted in this regard-
(i) Before such appointment is made, the written consent of the auditor to such appointment,
and a certificate from him or it that the appointment, if made, shall be in accordance with
the conditions as may be prescribed, shall be obtained from the auditor.
(ii) The certificate shall also indicate whether the auditor satisfies the criteria provided in
section 141.
(iii) The company shall inform the auditor concerned of his or its appointment, and also file a
notice of such appointment with the Registrar within 15 days of the meeting in which the
auditor is appointed.
Appointment of Subsequent Auditors in case of Government Companies: As per
section 139(5), in the case of a Government company or any other company owned or
controlled, directly or indirectly, by the Central Government, or by any State Government or
Governments, or partly by the Central Government and partly by one or more State
Governments, the Comptroller and Auditor-General of India shall, in respect of a financial year,
appoint an auditor duly qualified to be appointed as an auditor of companies under this Act,
within a period of 180 days from the commencement of the financial year, who shall hold office
till the conclusion of the annual general meeting.

Filling of a Casual Vacancy
As per Section 139(8), any casual vacancy in the office of an auditor shall-
(i) In the case of a company other than a company whose accounts are subject to audit
by an auditor appointed by the Comptroller and Auditor-General of India, be filled by
the Board of Directors within 30 days.
If such casual vacancy is as a result of the resignation of an auditor, such appointment
shall also be approved by the company at a general meeting convened within three months
of the recommendation of the Board and he shall hold the office till the conclusion of the
next annual general meeting.
(ii) In the case of a company whose accounts are subject to audit by an auditor
appointed by the Comptroller and Auditor-General of India, be filled by the Comptroller
and Auditor-General of India within 30 days.
It may be noted that in case the Comptroller and Auditor-General of India does not fill the vacancy
within the said period the Board of Directors shall fill the vacancy within next 30 days.Casual Vacancy by Resignation: As per section 140(2) the auditor who has
resigned from the company shall file within a period of 30 days from the date of resignation, a
statement in the prescribed Form ADT–3 (as per Rule 8 of CAAR) with the company and the
Registrar, and in case of the companies referred to in section 139(5) i.e. Government company,
the auditor shall also file such statement with the Comptroller and Auditor-General of India,
indicating the reasons and other facts as may be relevant with regard to his resignation. In case
of failure the auditor shall be punishable with fine which shall not be less than fifty thousand
rupees or the remuneration of the auditor, whichever is less but which may extend to five lakh rupees as per section 140(3).

Other Important Provisions Regarding Appointment of Auditors
(1) A retiring auditor may be re-appointed at an annual general meeting, if-
(a) he is not disqualified for re-appointment;
(b) he has not given the company a notice in writing of his unwillingness to be re-
appointed; and
(c) a special resolution has not been passed at that meeting appointing some other
auditor or providing expressly that he shall not be re-appointed.
(2) Where at any annual general meeting, no auditor is appointed or re-appointed, the existing
auditor shall continue to be the auditor of the company