ADT-3 - Re- Submission Remark

[Kapil Dudeja]

Dear Members,

I've Submitted ADT-3 for auditor resignation last month (Auditor resigned in March 2018) & received following remarks from the concerned ROC:-

furnish the following information/explanation/details:-

(a)  Why the above resignation may not be treated as

against professional ethics (as resignation submitted after acceptance of      appointment) and the matter may not

be referred to the ICAI for examination?

(b) Whether you have received proper co-operation from the Company during

the course of audit or not?

(c) Whether there is any issue as regards your remuneration for discharging your duty as

auditor?

(d) Whether have you observed any violation/non-compliance of the Act for which the Company has been

insisting for avoidance on your part or the company has not provided relevant information/ explanation as required

for the purpose of audit?

(e) Whether there is any threat from working of the company to industry or public at large?

Any also faced this kind of re-submission remarks?

What reply should be given to ROC?

ADT-3 Filed late inadvertently.

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Regards -
Kapil Dudeja

[zeeshan]

The provisions relating to removal of the auditor of an Indian company are primarily governed by Section 140 of the Act. According to Section 140(1) of the Act, an auditor of an Indian company can be removed before the expiry of its term, subject to the shareholders of the company approving such removal by way of a special resolution, and after obtaining the approval of the Central Government. The Act also necessitates the auditor to be given a reasonable opportunity of being heard before such removal. 

The aforesaid provision essentially subjects any removal of the auditor of an Indian company to the prior approval of the Central Government. Other than the foregoing, there are no other provisions under the Act which specifically permit an Indian company to remove its auditor. 

Section 140(1) of the Act appears to prescribe a process where the Board proactively proposes to remove an auditor. In such a situation, it is reasonable to require the company to provide a hearing to the concerned auditor, and subject such removal to the special resolution of the shareholders and Central Government. Such a strict process would stand justified to ensure independence of the auditors and ensure that their removal is subject to a certain degree of checks and balances.

For removal of auditor before expiry of the term, the company is required to pass a board resolution and file for approval of central government approval in that behalf followed by special resolution at Extra-ordinary General Meeting. 

The removal of Auditor should be on valid grounds. Some of the grounds for auditor removal:

- Loss of confidence

- Delay in completion of audit

- Lack of infrastructure

- Inexpertise

CS Zeeshan Yusuf

[Kapil Dudeja]

Dear Sir,

Thanks for replying. I would like to clarify that the aforesaid case is of resignation of the auditor. Company has not removed the Auditor. 

Auditor himself resigns from the company in the month of March but ADT-3 filed in October 2018.

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Regards -
CS Kapil Dudeja
# +91-9911554710

[Animesh Jha]

due to Preoccupation in other assignments.

Regards,  

Animesh Kumar Jha Team Gupta Sachdeva & Co. Chartered Accountants 0612 -2229000  |+91-7352709000 | +91- 9263667007 |  connec...@guptasachdeva.com  |  www.guptasachdeva.com |  Registered office:103, Jagat Trade Centre,Fraser Road,Patna - 800001

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[Kapil Dudeja]

Dear Animesh Sir,

Resigning auditor has given this reason only i.e pre-occupation of work in other assignments & that is why is not able to continue the work. But I failed to understand why ROC has asked so many details & what should be the auditor response in this case?

[Pcs_sandip Lathiya]

Because

Now Roc is on Good Track and  this is a good Resubmission raise by  Roc.

and its Appreciable also.

Because Without Resignee someone how are you appoint someone in his /her chair.

[CS Sahil Mahajan]

Dear sandeep ji

Can u please clarify us filing of ADT 3 is a proof of resignation by Auditor?  Once auditor tendered his resignation and handed over NOC to other Auditor then the company has full right to appoint another auditor by filing ADT 1. As we know,  ADT 3 has to file by auditor not company.

Remarks given by ROC is totally insane 

[Kapil Dudeja]

I feel ROC should act as registering authority in case of ADT-3. Auditor don't want to continue due to reasons better known to him. 

[CS V Kartik]

I also had this confusion but later on I got it clarified from a senior auditor known to me that before filing ADT-1 it's advisable to file ADT-3 by the resigning auditor. System also asks for SRN of ADT-1 of the resigning auditor. Otherwise system will show 2 auditors holding office at the same time. Hence it's advisable to go by this sequence.

[Lakshminarayana Panda]

Dear Sir

These are valid points raised by the RoC. Please handle tactfully. When the ground of resignation was pre-occupation , why the Auditor had accepted the appointment and resigning now ? It is a waring that we should handle every thing seriously. Auditor is the only body who give proper and fair status of Company to the stakeholders. Each and every stakeholder is affected by his act. He will just say I am pre-occupied and want to go !!. No , it should not be like that.

Yes, in explanation you may mention that - The company has sought more time and attention . Now I am not in a position to spare more time and man-power for this Company.  Therefore the resignation. 

[Kapil Dudeja]

Dear sir,

In the aforesaid case we have filed ADT-3 Only & till now ADT-1 is pending for filing. Auditor don't have spare time & manpower for the Company that is why he resigned & ROC sent it for re-submission.

On Sat 3 Nov, 2018, 8:54 PM CS V Kartik, <karv...@gmail.com> wrote:

I also had this confusion but later on I got it clarified from a senior auditor known to me that before filing ADT-1 it's advisable to file ADT-3 by the resigning auditor. System also asks for SRN of ADT-1 of the resigning auditor. Otherwise system will show 2 auditors holding office at the same time. Hence it's advisable to go by this sequence.