First Schedule explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Two items of Part I of the First Schedule apply to the daily work of an auditor. Item (9) makes it misconduct to accept an appointment as auditor of a company without first ascertaining that the requirements of company law for the appointment have been complied with. Item (12) makes it misconduct to allow a person who is not a member in practice, or a member who is not your partner, to sign financial statements or reports on your or your firm's behalf. This article follows the text as per the Act as printed in the ICAI edition of 2022 (amended up to the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Act, 2022).
Item (9): a chartered accountant in practice is guilty of professional misconduct if he accepts an appointment as auditor of a company without first ascertaining whether the requirements of the company law on the appointment have been duly complied with. The words on sections 139 to 141 of the Companies Act, 2013 and "any other law" are in force from 10 May 2022. Item (12): he is guilty if he allows a person who is not a member in practice, or a member who is not his partner, to sign on his behalf or on behalf of his firm any balance-sheet, profit and loss account, report or financial statements.
Where these items sit
Part I of the First Schedule lists the misconduct of chartered accountants in practice, and a matter under it goes to the Board of Discipline (section 21(3) as in force). The 2022 heading reference is enacted but not yet in force, and the reference in force is "21(3), 21A(3)"; a later commencement notification should be checked. Our article on items (1) to (4) explains the route.
If you are being appointed as an auditor, the item (9) check is a standard step of acceptance. Our compliance documentation team can help you build an appointment file that records it.
Item (9): the check before accepting
A member is guilty if he accepts an appointment as auditor of a company without first ascertaining from it whether the requirements of:
- Section 225 of the Companies Act, 1956; or
- sections 139 to 141 of the Companies Act, 2013; or
- any other law pertaining to appointment of auditors for the time being in force,
"in respect of such appointment have been duly complied with".
The 2022 words. The words "or sections 139 to 141 of the Companies Act, 2013 or any other law pertaining to appointment of auditors for the time being in force" were inserted by the 2022 Amendment Act and are in force from 10 May 2022. The reference to the Companies Act, 1956 is an old law, quoted as printed; the reader should check the current law, because the Act as printed does not say how that reference now operates.
Three points about the text:
- "First ascertaining". The check comes before acceptance. Accepting and then checking is the act the item describes.
- "From it". The member is to ascertain it from the company. The text does not specify the form; it is a question of how the member records it.
- "Any other law ... for the time being in force". The item is not limited to the Companies Act. It picks up any other law on the appointment of auditors.
Sections 139 to 141 are not explained here; our posts on auditor appointment under section 139 of the Companies Act, 2013, auditor consent and the eligibility certificate and auditor removal under section 140 of the Companies Act, 2013 deal with the substance of the appointment.
What the check covers in practice
The item turns on whether the company's appointment complies with the law on appointing auditors. A member can anchor the check to a short file note recording what he asked the company and what it replied. The Act does not require any particular document.
Item (12): signing by others
A member is guilty if he allows a person not being a member of the Institute in practice, or a member not being his partner, to sign on his behalf or on behalf of his firm any balance-sheet, profit and loss account, report or financial statements.
The item bars two groups from signing on the member's or his firm's behalf:
- a person who is not a member of the Institute in practice; and
- a member who is not his partner.
Read with section 26, the two provisions work together. Section 26 makes it an offence for a person who is not a member to sign a document for a practising chartered accountant or firm. Item (12) makes it misconduct for the practising member to allow it, and it goes further: it also reaches a member who is not a partner. Our article on section 26 explains the offence.
| Item | Aimed at | Subject |
|---|---|---|
| (9) | A member in practice | Accepting an auditor's appointment without first checking compliance |
| (12) | A member in practice | Allowing a person other than a partner or a member in practice to sign |
The three items that have their own posts
- Item (8): accepting a position as auditor previously held by another chartered accountant without first communicating with him in writing is explained in communicating with the outgoing auditor.
- Item (10): fees based on a percentage of profits or contingent on findings or results are explained in contingent fees under the First Schedule.
- Item (11): engaging in any other business or occupation, with the director proviso, is explained in engaging in another occupation.
A worked example
Palak, an invented company, writes to CA Arjun Shah to invite him to be its auditor. Before accepting, Arjun asks the company to confirm that the requirements of the law on the appointment have been complied with, and records the answer. That is the check item (9) requires. Had he accepted first and asked later, item (9) would be engaged.
Separately, Arjun's firm has an audit manager who is a member but not a partner. Arjun lets her sign the audit report on his firm's behalf. Item (12) names "a member not being his partner", so the arrangement is within the item even though she is a member. Our guide to the duties and reporting requirements of an auditor under the Companies Act explains the report itself.
Commencement note
Items (9) and (12) are in force as printed, with the 2022 words in item (9) in force from 10 May 2022. Later amendments and notifications should be checked.
Need help documenting an audit acceptance?
An appointment file that shows the compliance check, the communication with the previous auditor and the signing authority answers most questions later. Our compliance documentation team can help you prepare the formats and the file.
Key takeaways
- Item (9): ascertain first from the company that the legal requirements for the appointment have been complied with.
- The 2022 words on sections 139 to 141 of the Companies Act, 2013 and "any other law" are in force from 10 May 2022.
- Item (12): do not let a non-member, or a member who is not your partner, sign balance sheets, accounts, reports or financial statements for you or your firm.
- Items (8), (10) and (11) are explained in their own posts.
Read next
- Section 26: unqualified persons not to sign documents
- First Schedule Part I, items (5) to (7): securing work and advertising
- Auditor appointment under section 139 of the Companies Act, 2013
- Auditor rotation under section 139(2) of the Companies Act, 2013
Disclaimer: Based on the Chartered Accountants Act, 1949 as printed in the ICAI edition of 2022 (amended up to Act 12 of 2022), read with S.O. 2184(E) dated 10 May 2022, which brought only part of the 2022 amendments into force, as consulted on 3 October 2026. Regulations, rules, Council guidelines, later amendments and commencement notifications should be checked. This article is general information, not legal advice; check the official text before acting.