A statutory auditor is the chartered accountant or firm a company must appoint under the Companies Act, 2013 to audit its financial statements and report to the members. The company's members appoint the auditor, the law gives the auditor wide rights of access, and removal before the term ends needs a special resolution and Central Government approval.
Last reviewed: 17 October 2026. Facts checked. We opened two Taxmann pages (sections 139, 140 and 143; and the rotation rules), a lawx.in summary of sections 141 and 143, and ran web searches on sections 142 and 146. India Code returned a 403 error, so we did not read the statute text itself. For section 142 and section 146 we relied on search-result excerpts and did not open the pages. The text of section 140(1) (special resolution, prior Central Government approval, hearing for the auditor) was confirmed through search-result extracts of the section, not an opened government copy. This guide covers non-government companies.
This page is the overview. Each topic has its own deeper article, linked below.
What a statutory auditor does
The statutory auditor gives an independent opinion on whether the financial statements give a true and fair view. The opinion goes to members, not management. For the process and who needs an audit, see statutory audit explained.
Who can be one
Only a chartered accountant, or a firm where most partners practising in India are qualified. A body corporate cannot be appointed, apart from an LLP. A list of disqualifications covers employees, relatives of directors, certain shareholdings and debts, fraud convictions and the twenty-company limit. See Section 141.
How the auditor is appointed
| Step | What the pages we opened say |
|---|---|
| First auditor | Board appoints within 30 days of registration |
| If the Board fails | Members appoint at an EGM within 90 days |
| Later auditors | Members appoint at the first AGM, for a term to the sixth AGM |
| Casual vacancy | Board fills within 30 days |
| Filing | Form ADT-1 within 15 days of the meeting |
Rotation limits apply to listed and certain other companies. The pages we opened say one five-year term for an individual and two for a firm, with a five-year cooling-off. Details are in Section 139.
Remuneration
Search excerpts of section 142 say the auditor's pay is fixed by the company in general meeting, or in the manner the meeting decides. The Board can fix the pay of the first auditor it appoints. We did not open the section itself.
Rights of the auditor
- Access to books of account and vouchers at all times, wherever kept.
- The right to require information and explanations from officers.
- Access to subsidiary and associate records for the holding company's consolidation.
- Receipt of notices of general meetings, and, per a search excerpt of section 146, the right to attend and be heard on matters that concern the audit.
Duties of the auditor
- Report on whether the financial statements give a true and fair view.
- State the matters section 143(3) requires, including internal financial controls.
- Follow auditing standards.
- Report suspected fraud, either to the Central Government or the audit committee or Board depending on the amount.
- Avoid the services barred by section 144.
Details: Section 143 and Section 144.
Removal under section 140
The Taxmann summary gives these steps:
- For an auditor other than the first, the company passes a special resolution.
- It needs prior Central Government approval, applied for through Form ADT-2. The application is due within 30 days of the Board's resolution.
- The general meeting is held within 60 days of receiving approval.
- The auditor gets a reasonable opportunity to be heard.
The Taxmann summary says the first auditor can be removed by members at a general meeting without Central Government approval. We could not confirm that in the statute text, and the quoted wording of section 140(1) refers to auditors appointed under section 139, so check this point before you rely on it. The Tribunal can also order a change of auditor where the auditor acted fraudulently or colluded in fraud. The summary says such an auditor is barred for five years.
Resignation
The auditor files Form ADT-3 with the company and the Registrar within 30 days of resigning. See Form ADT-3.
Special notice
If the company wants to appoint someone other than the retiring auditor, or to stop a reappointment, section 140(4) asks for special notice. The retiring auditor gets a copy and can make a written representation. The summary notes an exception where the retiring auditor has completed the maximum tenure.
A yearly checklist for the client
- Confirm tenure and rotation status.
- Refresh the disqualification check.
- Pass the Board and audit committee approvals for any non-audit work.
- Put the appointment on the AGM agenda.
- File ADT-1 within 15 days.
Frequently Asked Questions
Who appoints the statutory auditor?
The Board for the first auditor, then the members at the AGM.
Can the company change auditors mid-term?
Yes, but removal needs a special resolution and prior Central Government approval. Resignation is the other route.
How is the auditor paid?
The company in general meeting fixes it, or sets the manner of fixing it.
Can the auditor attend the AGM?
Notices go to the auditor, and a search excerpt of section 146 says the auditor may attend and be heard on audit matters.
Is a statutory auditor the same as an internal auditor?
No. Statutory audit is a legal requirement for members. Internal audit is a Board-directed function. See internal auditor appointment under section 138.
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Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error