Most companies stick with auditor after 5-year term
A recent analysis of top 500 listed companies by market capitalization revealed that a majority of such companies that were at the five-year decision point to either continue or change auditors have chosen to stick with the auditors they selected in 2017 in order to avoid transition challenges and the additional cost associated with it.
As per the provisions of the Companies Act, 2013, a firm of auditors can be appointed as statutory auditor of a company for only two consecutive terms of five years and thereafter a mandatory cooling-off period.
Audit involves a familiarisation for both the auditor and the company, which takes some time and effort. As a result, the majority of businesses have chosen to stick with their current auditors for the second term.
