Auditor appointment, dismissal, and remuneration is regulated by Companies Act 2019, (Act, 992).
Required:
i) How are auditors of Limited Liability companies:
- Appointed (3 marks)
View Solution
Per the Company’s Act 2019 (Act 992), Auditors are appointed by the following process:
- The first auditors of companies are appointed by the directors who also fill in casual vacancies.
- When a company has no auditor for a continuous period of three months, the Registrar General may appoint an auditor for the company.
- By shareholders at Annual General Meeting when the appointment of existing Auditor ceases.
- Remunerated (2 marks)
View Solution
Per the Company’s Act 2019 (Act 992), Auditors are remunerated by the following process:
- When directors appoint an auditor the directors fix the fees for the period expiring at the next AGM.
- When the Registrar General appoints an auditor, the fees are fixed by the registrar general.
- By an ordinary resolution of the company or in manner by which the company may direct by an ordinary resolution.
ii) What may cause auditors to resign from their appointments? (5 marks)
View Solution
- An auditor may resign under the following circumstances:
- In relation to fee matter
- When the management of the auditee and those charged with governance demonstrate a lack of integrity
- When audit firms can no longer maintain independence
- Irreconcilable difference between the client and Auditor
- When the client changes in size and nature and the Auditor no long have the competency to perform
- When the client is engaging in illegal activities.
(Any 5 points @ 1 mark each = 5 marks)