Appointment of auditors of an LLP

The appointment of auditors of an LLP is governed by rule 24 of the Limited Liability Partnership Rules, 2009.

1. Who must be audited (rule 24(8)). The accounts of every LLP are audited under the rules, except an LLP whose turnover does not exceed ₹40 lakh in any financial year or whose contribution does not exceed ₹25 lakh; such an LLP is audited only if its partners so decide, and otherwise includes in its Statement of Account and Solvency (Form 8) the partners' statement of responsibility for the books of account.
2. Qualification (rule 24(9)). Only a Chartered Accountant in practice may be appointed auditor of an LLP.
3. For each year (rule 24(10)). An auditor is appointed for each financial year of the LLP.
4. Who appoints (rule 24(11), (12)). The designated partners may appoint the auditor (a) at any time “before the end of the first financial year; (b) at least 30 days” before the end of each later financial year; (c) to fill a casual vacancy, including when the LLP's turnover or contribution exceeds the audit-exemption limits; and (d) to fill the vacancy caused by an auditor's removal. If the designated partners fail to appoint, the partners may appoint.
5. Tenure and deemed re-appointment (rule 24(13), (14)). The auditor holds office on the terms of his appointment until new auditors are appointed or he is re-appointed. Where no auditor has been appointed under sub-rule (11), the auditor in office is deemed re-appointed, unless the LLP agreement requires actual re-appointment, or a majority of partners have decided that he should not be re-appointed and have given notice of it to the LLP; that notice may be in hard copy or electronic form and must be authenticated by whoever gives it (rule 24(16)).
6. Remuneration and removal (rule 24(17), (18)). The remuneration is fixed by the designated partners or by the procedure in the LLP agreement. The partners may remove the auditor at any time by the procedure in the agreement or, where it makes no provision, with the consent of all partners.
7. Resignation, and unwillingness to continue (rule 24(19)). An auditor may resign by depositing a written notice at the LLP's registered office. One who does not wish to be re-appointed must deposit a written notice there at least 14 days before the time for appointing the new auditor runs out. Either notice takes effect only if it carries a statement of the circumstances of his leaving office, and his term ends on the date of deposit or any later date the notice names.

Conclusion. An LLP above the exemption limits must have its accounts audited by a practising Chartered Accountant, appointed for each financial year by the designated partners (or, if they fail, by the partners), who continues by deemed re-appointment unless the agreement or a majority of partners decides otherwise.