Statutory auditor: appointment, term and role in a company
A statutory auditor is the chartered accountant who audits a company's financial statements under the Companies Act. The first is appointed within 30 days.
Short answer
A statutory auditor is the chartered accountant or firm of chartered accountants appointed under section 139 of the Companies Act, 2013 to audit a company's annual financial statements and report to shareholders whether they give a true and fair view. Every company, regardless of size or turnover, must appoint one, starting within 30 days of incorporation.
- First auditor
- Appointed by the board within 30 days of incorporation
- Regular term
- Five years, from one AGM to the sixth
- ROC filing
- Form ADT-1 within 15 days of appointment
- Who qualifies
- Practising CA or CA firm (section 141)
How the auditor is appointed
The board appoints the first auditor within 30 days of incorporation. If the board fails to do so, members must appoint one at an EGM within 90 days. The first auditor holds office until the end of the first AGM. At that AGM, members appoint an auditor for a term of five years, until the end of the sixth AGM, and the company files Form ADT-1 with the ROC within 15 days. Listed companies and specified classes of larger companies must rotate auditors: an individual can serve one five-year term and a firm two consecutive terms.
What the auditor does
The auditor examines the books and financial statements under the Standards on Auditing issued by ICAI and gives an opinion in the audit report. Depending on the company's size, the report also covers the Companies (Auditor's Report) Order, 2020 and internal financial controls. Small companies and certain private companies are exempt from some of these reporting requirements. An auditor can be removed before the end of the term only by special resolution with Central Government approval, and a resigning auditor must file Form ADT-3.
Why it matters for startups
There is no turnover threshold below which a company can skip the statutory audit, so even a dormant startup needs an auditor. Appoint one promptly after incorporation, agree the audit timeline early so the AGM can be held by 30 September, and make sure the auditor is independent of the founders and not providing prohibited services.
Related services
Sources
- India Code: official repository of central Acts
- Institute of Chartered Accountants of India
- Ministry of Corporate Affairs (MCA) portal
Written by the Refogo Editorial Team from the official sources above and checked on 2026-10-31. Laws, rates and due dates change, and authorities often extend deadlines, so confirm your own case with a qualified professional. This is general information, not legal or tax advice. Read our editorial policy or report an error to support@refogo.com.
Common questions
Is audit compulsory for a private company with no revenue?
Yes. Every company must have its financial statements audited, whatever its turnover.
Can the same CA do the statutory audit and tax audit?
Yes. The statutory auditor can also conduct the tax audit, but certain other services, such as accounting and internal audit, are prohibited under section 144.
What is the penalty for not appointing an auditor?
The company and officers in default face penalties under section 147, and the annual filings cannot be completed without audited statements.