John Selwood Q&As
During the 2014 roadshow, members raised some interesting questions on automatic auditor appointment, the challenges of audit handovers and the valuation of investments
Q) My cold file reviewer suggested to me that I have a problem with reappointment as auditor on a number of my new audits. I had assumed that automatic reappointment was the norm now, under Companies Act 2006. However, my reviewer said that automatic reappointment is not applicable to many of my new audits because the firm was not appointed by the members at the outset. She has told me that technically I am not in office for many of my audits. Is this correct?
A) For many auditors, automatic reappointment is taking some time to get used to. For private companies, gone are the days when appointment occurred at the AGM. Your cold file reviewer is correct in saying that automatic reappointment is conditional, see Companies Act 2006 (CA 2006) s487(2): (2) Where no auditor has been appointed by the end of the next period for appointing auditors, any auditor in office immediately before that time is deemed to be reappointed at that time, unless; (a) he was appointed by the directors, or (b) In order for automatic appointment to occur the auditor must have been appointed by the members, either in a general meeting or by written resolution. If the appointment was by the directors, and not confirmed by the members, automatic reappointment will not occur. As this seems like an easy thing to miss, I wonder how many other auditors have also overlooked it?
This is an extract from an article in the March 2015 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.
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