Procedure for Filing Casual Vacancy of Cost Auditor in a Company

Aakanksha Singhal

Aakanksha Singhal

Published on: Sep 15, 2021

Khushboo Sharma

Updated on: Mar 3, 2025

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Introduction

A casual vacancy gets created in the office of Cost Auditor due to reasons like resignation, death and/ or removal of the respective Cost Auditor. In either of the scenario, company has to fill the casual vacancy so created by appointing a new Cost Auditor.

Applicable Provisions:

1. Section 96, 100, 148, 173, 177 of Companies Act, 2013
2. Rule 6 of the Companies (Cost Records and Audit) Rules, 2014
3. Regulation 30, 46 of SEBI (LODR) Regulations, 2015
4. Clauses of Secretarial Standard on Board Meeting (SS-1)
5. Clauses of Secretarial Standard on General Meeting (SS-2)

Mandatory Requirements

1. Board resolution for removal of the Cost Auditor-
   • after giving a reasonable opportunity of being heard; and
   • written recording of the reasons for such removal.
2. Casual Vacancy to filled by the Board of Directors within 30 days of occurrence of such vacancy.
3. Intimate the Central Government within 30 days of such appointments of Cost Auditor.
4. Obtain written consent and certificate from the Cost Auditor prior to his/her appointment.
5. Company shall abstain from appointing its Statutory Auditor as the Cost Auditor.

Following Procedure is to be followed

1. Obtain recommendations from the Audit Committee
   Where a Company is required to constitute an Audit Committee under section 177, it shall receive a recommendation from the committee for the appointment and remuneration of the Cost Auditor. However, in case of companies that are not required to constitute an Audit Committee, Board shall endeavour to appoint the Cost Auditor (individual/ firm of Cost Accountants) [For convening meeting of Audit Committee, Refer the Procedure for Conducting Audit Committee Meeting].
2. Obtain written Consent and Certificate from the Proposed Auditor [Rule 6 (1) & (1A) of the Companies (Cost Records and Audit) Rules, 2014]
   Company shall receive before such appointment is made, the written consent of the auditor to such appointment and a certificate from him or it that the appointment, if made, shall be in accordance with the conditions. The Auditor shall submit a certificate that
   • the individual or the firm, as the case may be, is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder
   • the proposed appointment is as per the term provided under the Act
   • the proposed appointment is within the limits laid down by or under the authority of the Act
   • the list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct.
3. Convene a Meeting of Board of Directors [As per Section 173 & Secretarial Standard-1 (SS-1)]
   • Issue Notice of Board Meeting to all the Directors of Company at their addresses registered with the Company, at least 7 days before the date of Board Meeting. A shorter notice can be issued in case of urgent business.
   • Attach Agenda, Notes to Agenda and Draft Resolution with the Notice.
   • Hold a meeting of Board of Directors and pass a Board Resolution
     • to consider and appoint a Cost Auditor for filing the casual vacancy on the recommendation of Audit Committee where the Company is required to constitute an Audit Committee under section 177;
     • to approve the remuneration of Cost Auditor subject to ratification by members;
     • to authorize CS or CFO or any Director of the Company to intimate the Central Government about this appointment;
     • to fix the day, date, time and venue of the Annual General Meeting (AGM) and to approve the draft notice convening the AGM along with explanatory statement annexed to the notice as per requirement of the Section 102 of the Companies Act, 2013 and authorize the Director or Company Secretary to sign and issue notice of AGM.
   • Listed Company shall submit the disclosure of outcome of Board Meeting to the Stock Exchange as soon as reasonably possible but not later than 30 minutes from the date of the Board Meeting and post the same on the website of the Company within 2 working days. [Regulation 30 & 46(3) of the SEBI (LODR) Regulations, 2015]
     
     *Note – In case the meeting of the board of directors closes after normal trading hours of that day but more than 3 hours before the beginning of the normal trading hours of the next trading day, the listed entity shall disclose the decision pertaining to the event or information, within 3 hours from the closure of the board meeting.
   • Prepare and Circulate Draft Minutes within 15 days from the conclusion of the Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the Directors for their comments. [Refer the Procedure for Preparation and Signing of Minutes of Board Meeting]
4. File e-Form CRA-2 [Rule 6 (2) & 6 (3A) of the Companies (Cost Records and Audit) Rules, 2014]
   Every company shall inform the cost auditor concerned of his or its appointment and file a notice of such appointment with the Central Government within a period of 30 days of the Board Meeting in which such appointment is made along with the following attachments
   • Copy the Board resolution where such appointment is made
   • Copy of the Intimation sent by the Company to the Cost Auditor
   • Copy of written consent given by the Cost Auditor to the Company
   • Any other optional attachment (s) as may deem fit.
5. Convene Annual General Meeting [As per Section 96 and Secretarial Standard-2 (SS-2)]
   • Notice of General Meeting shall be given at least clear 21 days before the actual date of a Annual General Meeting in writing, by hand or by ordinary post or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means or a Shorter Notice can be issued with the consent of at least majority in number and ninety five percent of such part of the paid up share capital of the company giving a right to vote at such a meeting in accordance with Section 101.
   • Notice will be sent to all the Directors, Members and Auditors of Company, to the Secretarial Auditor, to Debenture Trustees and to others who are entitled to receive the notice of the General Meeting.
   • Notice shall specify the day, date, time and full address of the venue of the Meeting and contain a statement on the business to be transacted at the Meeting.
   • Hold a shareholder’s meeting on the fixed date and pass the Ordinary Resolution for ratification of-
     • the appointment of Cost Auditor; and
     • fixing his remuneration on the basis of recommendations by the Audit Committee [where the Company is required to constitute an Audit Committee under section 177].
   • Listed Entity shall disclose the proceeding of General Meeting to the Stock Exchange within 12 hours from the conclusion of General Meeting and same shall be posted on the website of the company within 2 working days. [Regulation 30 & 46(3) of the SEBI (LODR) Regulations, 2015]
   • Listed Company shall submit details regarding the voting results to the Stock Exchanges within 2 working days of conclusion of its general meeting in the format specied by SEBI and forthwith post the same on the website of the Company. [Regulations 44 of the SEBI (LODR) Regulations, 2015]
   • Prepare the minutes of General Meeting, get them signed and compile accordingly. [Refer the Procedure for Preparation and Signing of Minutes of General Meeting].