Internal Audit Appointment

[umeshkumar jhawar]

Dear Sir

One CA firm ABC and Associates appointed as statutory auditor of company for FY 2024-25 due to compulsory rotation of previous auditor as per requirement of Companies Act, 2013.

Now the incoming auditor i.e. ABC and Associates want to resign as statutory auditor without signing any statutory audit for FY 2024-25 (Even the audit has not commenced). Can ABC and Associates be appointed as internal auditor of same company for FY 2025-26 after resigning from the office of Statutory audit without doing statutory audit for FY 2024-25?

AI Summary

Auditor independence: resignation before commencing audit allows later appointment as internal auditor if independence safeguards are met.
A firm that resigns as statutory auditor before commencing or signing the statutory audit may be appointed as internal auditor in a later year because the restriction in Section 144 on auditors providing internal audit applies only during the term of appointment; resignation must be properly recorded and filed under the Companies (Audit and Auditors) Rules, 2014, partner overlap must be avoided, and ICAI independence and conflict-of-interest safeguards must be observed.