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Sahil asked 1 month ago

Sir, 
Please consider this example and kindly quote relevant provisions-
A firm was appointed as auditor in FY 00-01,  its first term terminated after 3 consecutive FYs in FY 03-04.
It was again appointed in FY 07-08 (  after 4 years gap). What is maximum tenure the firm can serve this time? 
A) Till FY 07-08 i. e. 10th consecutive year from date of initial appointment ( 2 years period not seved in first term considered as served); or
B) Till FY 11-12. 5 consecutive years for 2nd term. 

1 Answers
RaviRavi Staff answered 1 month ago

First of all i am assuming that current law and requirements are applicable, Because new companies act requirements with respect to audit are applicable from 1st April 2014, you have used old dates only for discussion i think.
Important Concept 1
Auditors are appointed for term of 5 AGMs / FYs, if auditor discontinues because of any reason then he is out of office of auditor and that term will be considered as over. Now he cannot be appointed for remaining term as appointments are to be made for 5 AGMs. So if its a firm, they can be appointed again for 5 AGMs.
Important Concept 2
If any auditor is on break, i.e not doing audit of any company for continuous period of 5 years because of any reason, it will be assumed that he has fulfilled condition of rotation that means, he has served cooling period, he will not have to undergo cooling separately, that mean firm will get limit of 2 terms of 5 years. 
Case Discussion
So in your example once 1st term is terminated, its over we cannot use remaining 2 years as appointments are to be done for standard 5 AGMs. You cannot appoint for 3 years. Now there is gap of 4 years only, so limit is not renewed. He can be appointed for 5 years from FY 07-08

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