ACCA AA · Chapter 2 · Question 7 of 10
Under typical company law, which of the following statements about the removal of an auditor is correct?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) An auditor whose removal is proposed may make written representations to the shareholders and ask for them to be circulated
Explanation
Company law in most jurisdictions gives the power to remove an auditor to the shareholders, by resolution at a general meeting (often with extended notice), rather than to the board. To protect independence, the auditor whose removal is proposed is typically entitled to make written representations to be circulated to shareholders and to be heard at the meeting. A special (75%) majority is not usually required, and these rights exist precisely so that directors cannot quietly replace an auditor who disagrees with them.
More Statutory audit, regulation and corporate governance MCQs
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- Q1Which body issues International Standards on Auditing (ISAs)?
- Q2In most jurisdictions, who normally appoints the external auditor of a company on a recurring basis?
- Q3In which of the following situations may the directors of a company usually appoint the auditor themselves?