Our accountant left: who can take over our company books in Mumbai?
TL;DR
- A practising chartered accountant, a CA firm or an outsourced accounting firm can take over company books, but never the company's own statutory auditor. Section 144 of the Companies Act, 2013 bars the auditor from keeping the books it audits, and section 128 keeps the duty to maintain them, for eight financial years, on the company and its named officers.
Last updated: 21 October 2026
Quick Answer: A practising chartered accountant, a CA firm or an outsourced accounting firm can take over company books, but never the company's own statutory auditor. Section 144 of the Companies Act, 2013 bars the auditor from keeping the books it audits. HSAG Consulting, which lists accounts outsourcing and monthly closing among its accounting services, is one option in Mumbai.
Company books are the books of account, vouchers and related papers that section 128 of the Companies Act, 2013 requires every company to keep at its registered office, on accrual basis and under the double entry system. That duty does not leave with the accountant: it stays with the company and the officers section 128(6) names.
| Question | Answer and source |
|---|---|
| Who may take over the books? | A practising CA, a CA firm, an outsourced accounting firm or a part-time accountant; never the statutory auditor (section 144, Companies Act, 2013) |
| How long must records be kept? | At least eight financial years, with vouchers (section 128(5), Companies Act, 2013) |
| When does a tax audit apply? | Turnover above ₹1 crore, or ₹10 crore with cash receipts and payments each within 5% (section 44AB, Income-tax Act, 1961; section 63, Income-tax Act, 2025) |
| Which accounting framework applies? | Companies (Accounting Standards) Rules, 2021 for most unlisted companies; Ind AS from ₹250 crore net worth or a listing |
Outsourced firm, practising CA or part-time hire: which suits the books?
Four kinds of provider can keep the books: a practising chartered accountant, a CA firm, an outsourced accounting firm or a part time accountant in Mumbai. Section 128 of the Companies Act, 2013 sets no qualification for the person who keeps the books. It places the duty on the company and its officers.
An outsourced accountant or firm suits a company that wants bookkeeping, payroll accounting and GST return preparation run by a team with cover for absence. A part-time hire suits a small company with simple transactions. Where the books feed a fund raise, a provider that also offers virtual CFO support for financing readiness can keep one team across both.
Why can the statutory auditor not keep the books?
The statutory auditor cannot keep the books because section 144 of the Companies Act, 2013 excludes accounting and book keeping services, and outsourced financial services, from the work an auditor may do for the company it audits. The bar extends to its holding and subsidiary companies.
The Explanation to section 144 reads "directly or indirectly" widely: for an audit firm it reaches its partners and its parent, subsidiary or associate entities. A CA firm can therefore run the books, but a different, unconnected practising chartered accountant must audit them.
The tax audit report is a separate signature: under section 44AB of the Income-tax Act, 1961 and section 63 of the Income-tax Act, 2025, a chartered accountant holding a certificate of practice signs it.
What should the accountant handover checklist cover?
An accountant handover checklist should be assembled in the first week. The accounts handover checklist below covers six areas, and each item should be ticked against a named document, not a verbal assurance.
- Books of account: the accounting software file or cloud tenant, ledgers for the current and preceding years, and the chart of accounts.
- Vouchers: sales and purchase invoices, expense vouchers, bank statements and contracts behind each entry.
- Reconciliations: bank, credit card and GST input tax credit reconciliations up to the last month.
- Statutory filings: income tax, GST and TDS return acknowledgements, and the provident fund, ESIC and profession tax challans that payroll compliance covers.
- Access: logins for the accounting system, the tax portals and banking platforms, plus digital signature tokens.
- Open items: pending vendor bills, unclaimed refunds, notices received and the compliance calendar.
How do you run catch up bookkeeping for the backlog?
Catch up bookkeeping starts by fixing a cut-off: the last month for which bank reconciliations are clean. From that date, the new provider rebuilds entries from bank statements, invoices and GST returns, month by month, until the books reach the present. Backlog accounting services work oldest month first, because later entries depend on earlier balances.
Transaction volume per month drives the effort more than the number of months, and missing source documents slow it, so statements and invoice folders should be collected before the new team starts. Pending returns should be filed alongside the catch up, because rebuilt books that contradict a filed GST return create their own queries.
Once the backlog is closed, the same team can move the company onto a monthly MIS discipline with variance analysis and cash flow tracking.
What must the books of account comply with under the Companies Act, 2013?
The books of account must be kept at the registered office, on accrual basis and under the double entry system, and retained with their vouchers for at least eight financial years under section 128 of the Companies Act, 2013. The Board may choose another place in India, and the company must then notify the Registrar of its full address within seven days.
How long must the records be retained?
Retention covers the eight financial years immediately preceding a financial year, or all preceding years for a younger company, with the vouchers for each entry. Where an investigation is ordered under Chapter XIV, the Central Government may direct a longer period. Contravention is punishable with a fine on the officers section 128(6) names.
Which accounting standards apply?
Most unlisted companies apply the Companies (Accounting Standards) Rules, 2021, which cover accounting periods commencing on or after 1 April 2021. Under the Ind AS roadmap that ICAI publishes, Ind AS applies to listed companies, unlisted companies with net worth of ₹250 crore or more, and their group companies. SME-exchange companies are exempt.
How do outsourced accounting services in Mumbai compare with an in-house hire?
Outsourced accounting services in Mumbai suit a company whose transaction volume does not justify a full-time hire but whose compliance load is growing. An outsourced team brings cover for absence and a monthly closing and MIS process, while an in-house hire gives daily presence but a single point of failure.
Where a bank or an investor wants MIS, a team with a review layer is safer than one bookkeeper. The books must also stand up to the tax audit.
The tax audit line is turnover above ₹1 crore, or ₹10 crore where cash receipts and cash payments each stay within 5%, under section 44AB of the Income-tax Act, 1961 for FY 2025-26. Section 63 of the Income-tax Act, 2025 carries the same tests from tax year 2026-27. The guide to tax audit applicability under section 44AB explains both tests.
Mumbai-based HSAG Consulting is a founder-led professional services firm with one team of chartered accountants, company secretaries, consultants and legal advisors. It lists accounts outsourcing, monthly closures and MIS among its accounting services.
What goes into an accountant handover report or letter?
An accountant handover report is a short signed document that records what was handed over and what was left open. The outgoing accountant signs it, the incoming provider countersigns it, and it covers five fields.
- Period covered: the years and months maintained, and the date of the last reconciliation.
- Records transferred: books, vouchers, statements and filings, by category and year.
- Statutory status: returns filed with acknowledgement numbers, and returns pending with due dates.
- Open balances: unreconciled bank entries, disputed vendor balances and pending refunds.
- Known risks: notices received and queries open with the department.
A company that cannot obtain a signed letter should record the position in board minutes and list what is missing.
Common Mistakes in Taking Over a Company's Accounts After an Accountant Leaves
The commonest mistake is handing the books to the firm that audits the company, which section 144 of the Companies Act, 2013 bars. The next is rebuilding the backlog without checking it against returns the outgoing accountant already filed, so the ledger and the GST portal tell different stories.
For example, a Mumbai trading company might find its GST returns filed from sales invoices while the ledger still carries unposted credit notes for the same months. Rebuilt first and reconciled later, that gap surfaces only when a mismatch query arrives.
Two more recur:
- Treating a cloud file as compliant by default: electronic books must meet Rule 3 of the Companies (Accounts) Rules, 2014.
- Citing superseded standards: accounting policies should refer to the Companies (Accounting Standards) Rules, 2021, not the 2006 Rules.
What happens after the new provider takes over the books?
Once the new provider holds the books, its first task is an opening position: every bank balance, receivable, payable and statutory due agreed to a statement or a filed return. Only then does a regular monthly close begin, with GST, TDS and payroll dates fixed in a written calendar.
Where the books are kept in electronic mode, Rule 3 of the Companies (Accounts) Rules, 2014 applies. The company tells the Registrar each year, when filing its financial statements, the name, internet protocol address and location of the service provider hosting them, and any cloud address. A Board minute should record the date the new provider took charge, and the first year-end audit goes to an unconnected practising chartered accountant, as section 144 requires.
Talk to an accounting team about your books
To discuss who should take over your company's accounts, contact the accounting team.
