Appointment of an Auditor

• The auditor shall be appointed by the shareholders of the

company within one month of the issue of the certificate of
incorporation and he will hold office until the next AGM
• If the director fail to one appoint the registrar of
companies will do so
• At the end of the AGM the directors are liable to appoint
the already existing auditor or engage another auditor if the
previous one was removed from office
Reasons to why appoint auditors
•1. Protect public interest
 Audited FS taken as basis for financial decisions.
 Auditor has a duty to prevent general public from being
deceived.
 Regulation necessary to maintain high professional
• standards.
2.Maintain dignity of the auditing profession.
3.Ensure auditor’s independence & competence
4.Bring in uniformity
Rights of an auditor
• Every auditor of a company shall have a right of access at all
times to the books, accounts, vouchers and securities of a
company and shall be entitled to require from the officers
of the company such information and explanations as he
thinks necessary.
• Every auditor of a holding company shall have a right to
attend a general meeting of the company and receive all
notices relating to any general meeting of the company.
• The auditor is entitled to be heard at any general meeting
which he attends.
Legal background
•The companies Act lays down the
legal background to an audit that
includes the appointment of an
auditor, the disqualification for
appointment as auditor and the rights
and duties.
Appointment and remuneration of an auditor

• The first auditors of a company shall be appointed by the directors within one month
of issue of the certificate that the company is entitled to commence business in the
case of a public company and other companies within one month of the issue of the
certificate of incorporation.
• An auditor so appointed shall hold office until the conclusion of the first Annual
General meeting.
• The directors shall at each AGM appoint an auditor to hold office from the conclusion
of that meeting until the conclusion of the next AGM.
• The directors may fill any casual vacancy in the office of auditor but while any such
vacancy continues, the continuing auditor, if any, may act.
• The remuneration of the auditor of a company shall be fixed by the company in general
meeting, or in such manner as the company in general meeting may determine.
• Any sums paid by the company in respect of the auditors` expenses shall be deemed to
be included in the remuneration.
Disqualification from appointment as auditor

• None of the following persons shall be qualified for appointment

as auditors of a company:
• An officer or servant of the company
• A person who is a partner of a company
• A person who is an employer or an employee of an officer or
servant of a company.
• A body corporate
• A person who is an officer or servant of a body corporate
• A person who by himself or his partner or his employee regularly
performs the duties of secretary or bookkeeper of the company.
 
Resignation and removal of the auditor

• Auditors may be removed from office by resolution of the company at an Annual

General Meeting for which a notice of twenty eight days is required.
• The company must send such a notice of the resolution to the auditor in writing.
• The auditor is then given an opportunity to make presentations in writing with
copies of presentations sent to all members.
• Auditors may be removed so as to strengthen audit independence by appointing
another auditor.
• Auditors who qualify their opinion on the financial statements cannot be removed
by directors for qualifying the financial statements.
• When resigning the auditor should notify the company in writing.
• The notice must be accompanied by any circumstances to be brought to the
attention of members or creditors or a statement that no such circumstances
exist.
The auditor can be removed from office:
• if he lacks all or any of the principles of
an auditor
• If he is not competent enough
• Expiration of the term of an office
• Conflict of interest
• cost of services
• breach of the engagement letter