Appointment of Auditor: Meaning, Process & Role Explained Simply
The Appointment of Auditor is very important for every office, whether it is a government group or a private company. At the end of the year, all companies must check their money records. These records, called financial statements, show how much money came in, how much was spent, and what is left. Before sending these papers to the government, someone has to make sure everything is correct. This checking process is called an audit.
The person who does this checking is called an Auditor. Only a trained and trusted expert can do this job. The auditor must be a Chartered Accountant (CA), who is allowed to work under the Chartered Accountant Act, 1949. The auditor carefully looks at all the money papers and gives a report to say if things are right or if there are any mistakes.
Qualifications of an Auditor:
- A person is eligible for the appointment as an auditor only if he is a Chartered Accountant.
- A firm is eligible for the appointment as an auditor only when the majority of its partners are Chartered Accountants practicing in India
- In the case where a limited liability partnership firm is appointed as auditor, only the partners who are Chartered Accountants will be authorized to act and sign on behalf of the firm.
Appointment of Auditor is significant in a company that analyses and understands a company’s financial records to deliver effective analyses and relevant information. Management can use this information to evaluate the company and implement measures necessary to meet their objectives.