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Auditor Change

  • Ensures the independence and objectivity of the audit process, preventing familiarity threats from long-term associations.
  • Infuses the financial review process with fresh perspectives and specialized industry knowledge.
  • Facilitates compliance with mandatory auditor rotation laws under the Companies Act for specific classes of companies.
  • Provides an opportunity to align with a firm that offers better technological integration or global reach as the company scales.
  • Enhances the reliability of financial disclosures by bringing in a firm with a higher reputation or specific expertise.
  • Resolves issues related to service quality, fee disputes, or disagreements on accounting treatments.
  • Strengthens corporate governance by demonstrating a proactive approach to financial oversight.
  • Improves the company's standing with lenders and investors who may prefer specific tier-one or specialized audit firms.

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7 Years

Of Experience

Cases Solved Icon

3622 +

Cases Solved

Awards Gained Icon

10 +

Awards Gained

Trusted Clients Icon

144 k +

Trusted Clients

Queries Solved Icon

36 k+

Queries Solved

Experience Icon

7 Years

Of Experience

Cases Solved Icon

3622 +

Cases Solved

Awards Gained Icon

10 +

Awards Gained

Trusted Clients Icon

144 k +

Trusted Clients

Queries Solved Icon

36 k+

Queries Solved

Experience Icon

7 Years

Of Experience

Cases Solved Icon

3622 +

Cases Solved

Awards Gained Icon

10 +

Awards Gained

Trusted Clients Icon

144 k +

Trusted Clients

Queries Solved Icon

36 k+

Queries Solved

Overview

An Auditor Change is a high-scrutiny event governed by Sections 139 and 140 of the Companies Act, 2013. The "trigger" for this compliance occurs in three scenarios: the resignation of the existing auditor, the removal of the auditor by the company before the expiry of their term, or the mandatory rotation after a 5 or 10-year tenure.

In the 2026 MCA V3 regulatory ecosystem, an auditor change is treated as a critical "Red Flag" event. If the change is due to resignation, the auditor must provide detailed reasons for their exit via e-Form ADT-3. If the change is a removal, the company must obtain prior approval from the Regional Director (RD) before passing a Special Resolution.

For the FY 2025–26 cycle, the outgoing auditor is often required to comment on the company’s Audit Trail (Edit Log) status at the time of their departure. This prevents companies from switching auditors to hide "Edit Log" non-compliance or accounting discrepancies. The new auditor's appointment must be notified via e-Form ADT-1 within 15 days of the meeting. The countdown for filing is unforgiving, and any delay can trigger secondary audits or "Active" status suspension.

Document Required

Documents
  • 1 Permanent Account Number (PAN) Card of the Company.
  • 2 Aadhaar Card of the Authorized Director.
  • 3 PAN Card of the Authorized Director.
  • 4 Resignation Letter from the outgoing auditor (stating clear reasons).
  • 5 Consent and Eligibility Certificate from the incoming auditor.
  • 6 Certified Copy of the Special Resolution passed by shareholders.
  • 7 Copy of the RD Order (mandatory only in cases of removal).
  • 8 Intimation Letter issued to the new auditor by the company.
  • 9 Form ADT-3 Acknowledgment from the outgoing auditor.

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Comparison

Step Name Short Description Authority
Resignation Letter The auditor submits a formal resignation stating specific reasons. Outgoing Auditor
Board Resolution Meeting to accept the resignation or propose the removal of the auditor. Board of Directors
RD Approval (Removal) Mandatory only if the company is removing the auditor before their term. Regional Director
Special Resolution Required for both removal and filling a vacancy caused by resignation. Shareholders

Comparison

Form Name Trigger/Description Countdown Deadline
ADT-3 Filed by the outgoing auditor to report their resignation. 30 Days from Resignation
ADT-1 Filed by the company to notify the appointment of the new auditor. 15 Days from Meeting
ADT-2 Filed by the company to seek RD approval for auditor removal. 30 Days from Board Res.
MGT-14 Filing the Special Resolution for the new appointment/removal. 30 Days from Meeting

Penalty and Non-compliance Risk

Penalty and Non-compliance Risk

Monetary Penalty on the Company and Officers in Default
Penalty of ₹50,000 or the Auditor's Remuneration on the Auditor (for not filing ADT3)
Inability to file Annual Financial Statements (AOC-4)
Deactivation of the Company's "Active" Status
Legal Prosecution for failure to fill a casual vacancy within 30 days
Rejection of Bank Loan and Government Tender applications
Suspension of the company’s ability to file other corporate actions

FAQs

Suspension of the company’s ability to file other corporate actions

No, the Board can only propose a name; the shareholders must approve the appointment within 3 months.

What if the auditor refuses to file ADT-3?
Is RD approval required for resignation?
How many days do we have to fill a casual vacancy?
What is Form ADT-1?
Can the outgoing auditor be re-appointed?
What are "Reasons for Resignation" in 2026?
What is the "Audit Trail" requirement for 2026?
Does a change in auditor affect the financial year?
What if the company misses the 15-day deadline for ADT-1?
Who signs the ADT-3?
Can a casual vacancy be filled at an AGM?

Seamless Compliance for Your Business

Focus on growing your business while we handle the complexities of statutory compliance. From GST filing to Annual Audits, our automated systems ensure you never miss a deadline.

CA
  • GST Filing & Reconciliation
  • Income Tax Returns (ITR)
  • TDS/TCS Returns
  • Statutory & Tax Audit
  • ROC Company Filings

What Our Clients Say

Discover what our satisfied clients have to say about their experience working with us

Sandeep Reddy
Founder, Retail Trading Business
" ARK Advisors made our audit process smooth and stress-free. Clear checklist, timely follow-ups, and very practical guidance. "
Anusha Sharma
Partner, Professional Services Firm
" Their team quickly identified compliance gaps and suggested actionable fixes. Reporting was crisp and easy for management to understand. "
Rohit Kulkarni
CFO, Manufacturing Unit
" We got strong process recommendations and control improvements. The audit insights genuinely helped us reduce leakage and improve discipline. "
Meghana Rao
Director, Startup
" Professional, responsive, and very transparent. They explained everything in simple terms and kept the entire process on schedule. "
Imran Khan
Owner, Hospitality Business
" The team ensured our documentation was audit-ready and supported us throughout. Great experience and strong attention to detail. "

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