How to Change an Auditor in a Company – Step-by-Step Process, Forms & Compliance
Every company, at some stage, may need to change its statutory auditor — due to resignation, expiry of tenure, business realignment, or compliance reasons.
The Companies Act, 2013 allows this change, but it must follow a defined legal procedure and be properly reported to the Registrar of Companies (ROC).
This blog explains in simple terms how to change your company’s auditor — whether by resignation, removal, or rotation — and what filings must be done with the MCA.
1. Why Companies Change Auditors
Common reasons include:
Completion of the auditor’s five-year term
Change in audit fees or scope of services
Conflict of interest or independence issue
Resignation of the auditor due to workload or relocation
Company’s decision to appoint a new auditor at the AGM
Regardless of the reason, the process must comply with Section 139 and Section 140 of the Companies Act, 2013.
2. Legal Provisions Governing Auditor Change
| Provision | Section | What It Covers |
|---|---|---|
| Appointment of auditors | Section 139 | First & subsequent appointments |
| Resignation / Removal of auditors | Section 140 | Process & filings |
| Eligibility / Disqualification | Section 141 | Auditor qualifications |
| Related Rules | Companies (Audit & Auditors) Rules, 2014 | Detailed compliance requirements |
3. Modes of Changing an Auditor
There are three main ways a company can change its auditor:
Auditor Resignation – The auditor voluntarily resigns before completion of term.
Auditor Removal – The company removes the auditor before term expiry with Central Government approval.
Completion of Term / Rotation – The auditor’s tenure naturally ends, and a new auditor is appointed in the AGM.
Let’s look at each scenario.
4. Case 1 – Auditor Resignation
When the auditor voluntarily steps down before completing their tenure.
Step-by-Step Process
| Step | Action |
|---|---|
| 1️⃣ | Auditor submits a resignation letter to the company. |
| 2️⃣ | Board of Directors notes the resignation in the next Board Meeting. |
| 3️⃣ | Auditor files Form ADT-3 with ROC within 30 days of resignation. |
| 4️⃣ | Company appoints a new auditor in the same Board Meeting or within 30 days. |
| 5️⃣ | Company files Form ADT-1 for the new auditor within 15 days of appointment. |
Important Notes
The company must mention the reason for resignation in Board minutes.
The new auditor’s appointment is valid until the next AGM.
Failure to file ADT-3 on time attracts additional filing fees.
5. Case 2 – Auditor Removal Before Expiry of Term
If a company wishes to remove an existing auditor before the end of their five-year term.
Step-by-Step Process
| Step | Action |
|---|---|
| 1️⃣ | Hold a Board Meeting to propose auditor removal. |
| 2️⃣ | Obtain Central Government approval by filing Form ADT-2 within 30 days of the Board resolution. |
| 3️⃣ | After approval, hold a General Meeting to pass an Ordinary Resolution for removal. |
| 4️⃣ | Appoint a new auditor through Board / Shareholder resolution. |
| 5️⃣ | File ADT-1 for new appointment within 15 days. |
Key Conditions
Central Government approval is mandatory under Section 140(1).
The outgoing auditor must be given a reasonable opportunity to be heard.
6. Case 3 – Change of Auditor on Completion of Term (Rotation)
After completing a five-year term, the auditor’s tenure ends automatically.
At the next AGM, the company must appoint a new auditor.
| Action | Timeline |
|---|---|
| Include auditor appointment in AGM notice | Before AGM |
| Shareholders pass Ordinary Resolution in AGM | AGM day |
| File Form ADT-1 with ROC | Within 15 days of AGM |
7. Forms Involved in Auditor Change
| Form | Purpose | Filed By | Due Date |
|---|---|---|---|
| ADT-1 | Appointment / Re-appointment of Auditor | Company | Within 15 days of appointment |
| ADT-2 | Application for removal of auditor | Company | Within 30 days of Board resolution |
| ADT-3 | Auditor’s notice of resignation | Auditor | Within 30 days of resignation |
8. Documents Required
Board Resolution approving resignation/removal
Auditor’s resignation letter
New auditor’s consent & eligibility certificate
Ordinary Resolution (if passed in General Meeting)
Government approval letter (in case of removal)
Acknowledgements of ADT-1 / ADT-3 filings
9. Compliance Timeline Summary
| Event | Form | Timeline |
|---|---|---|
| Auditor Resignation | ADT-3 | Within 30 days |
| Auditor Removal | ADT-2 | Within 30 days of Board Resolution |
| Appointment of New Auditor | ADT-1 | Within 15 days of appointment |
| AGM Appointment (rotation) | ADT-1 | Within 15 days of AGM |
10. Penalties for Non-Compliance
| Default | Penalty / Consequence |
|---|---|
| Failure to file ADT-3 | Additional filing fee + auditor liable |
| Removal without Govt. approval | ₹25,000 – ₹5 lakh |
| Not appointing a new auditor | Company may face ROC action / disqualification |
| Late ADT-1 filing | ₹100 per day until filed |
11. Best Practices Before Changing Auditors
✅ Communicate clearly with the existing auditor.
✅ Ensure Board and General Meeting minutes are recorded.
✅ Obtain written consent and eligibility from new auditor.
✅ File the correct ADT forms on time.
✅ Keep a compliance tracker for all auditor-related filings.
12. Example Scenario
Your company’s auditor resigns on 10 May.
| Action | Deadline |
|---|---|
| Auditor files ADT-3 | By 9 June |
| Board appoints new auditor | By 9 June |
| Company files ADT-1 | Within 15 days of appointment |
| New auditor holds office | Until next AGM |
13. How eAuditor Office Helps
At eAuditor Office, we manage the entire auditor change process seamlessly:
Drafting resolutions & letters
Preparing and filing ADT-1 / ADT-2 / ADT-3
Coordinating with both old and new auditors
Maintaining ROC and compliance records
We ensure your company remains compliant and penalty-free during every stage of the auditor transition.
