ACCA AA · Chapter 2 · Question 2 of 10
In most jurisdictions, who normally appoints the external auditor of a company on a recurring basis?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The shareholders, by resolution at a general meeting
Explanation
The external auditor reports to the shareholders and is therefore normally appointed by them at a general meeting, often on the recommendation of the audit committee. Directors may appoint auditors only in limited circumstances, such as the first auditor or to fill a casual vacancy. Appointment by the shareholders supports the auditor's independence from management.
More Statutory audit, regulation and corporate governance MCQs
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- Q6What is the main purpose of a proposed auditor communicating with the outgoing auditor before accepting an audit appointment?
- Q7Under typical company law, which of the following statements about the removal of an auditor is correct?
- Q8Which of the following is NOT normally a responsibility of an audit committee?