How is the first Auditor of a company appointed?

subsidiary company for the year 1.7.2000 to 31.6.2001 up to 31.3.2gQ2. For this purpose,
the company should also pay the prescribed fee along with theapplication.{.
Steps to be taken: The Board meeting of the subsidiary company must be con
vened and it must be decided to extend theTinancial year of the subsidiary co~pany
for the year 1.7.2000 to 30.6.2001 up to 31.3.2002 ~o that it may end with the financial year of the holding company:" Thereafter an application must be made to the Central Government under Section 213 (1) seeking extension of financial year. The application may be made on a plain paper as no application Form has been prescribed for this purpose. The application must be accompanied by prescribed.fe.e. (

Audit

Q 18. (a) How is the first Auditor of a company appointed? (b) What are the disqualifications of an Auditor? (e) Can internal Auditor act as Statutory Auditor? (d) Can Statutory Auditor act as Tax Auditor?

.9l.ns .

(a) Appointment of First Auditor
Section 224 (5) lays down that the first Auditors of a company shall be appointed by the Board of Directors within one month of the registration of the company. The Auditor or Auditors so appointed shall hold office until the conclusion of the first annual general meeting. The company may, however, at a general meeting, remove any such Auditors and appoint in their place any other person who has been nominated for appointment by any member of the company and of whose nomination notice has been given to the members of the company not less than 14 days before the date of the meeting.
If the Board of Directors fails to exercise its power, the company in general meeting may appoint the first Auditor or Auditors.
Sometimes, first Auditors are named in the Articles of Association. Such appointment of an Auditor cannot be held valid since the Companies Act grants it no recognition. The first Auditors would be validly appointed only by a resolution of the Board of Directors or that of the company in general meeting.
(b) Disqualifications of an Auditor
Section 226 (3) sets out the disqualifications of auditors. As per the Section, the
following cannot be appointed as Auditors:
(i) a body corporate; ('
(ij) an officer or employee of the company; (iii) a person who is a partner or who is in the employment of an officer or
employee of the company;
(iv) a person who is indebted to the company for an amount exceeding Rs. 1,000
or who has given any guarantee or provided any security in connection with
the indebtedness of any third person;
(v) a person holding any security (carrying voting rights) of that company after
a period of one year from the date of commencement of the Companies
(Amendment) Act, 2000.