6: Accepting engagements

Question 1

What are the rights and responsibilities of a firm removing auditors?

Answer 1

Responsibilities:
- Auditor must write a statement of circumstances and deposit it at company’s registered office explaining circumstances of removal, give copy to companies house too.
- If no circumstances exist a ‘statement of no circumstances’ must be completed ( not an option for auditors of listed companies)

Rights:
- Auditor has right to receive notice and speak at AGM
- to have written representations circulated to all members explaining why they should not be removed
- This prevents direcotrs inappropriately putting auditors up for removal when they have a disagreement, allowing auditors to argue their case.

Question 2

What are the rights and responsibilities of auditors resignation?

Answer 2

Responsibilities:
- Auditor must submit written notice to company’s registered office and submit a statement of circumstances explaining the circumstances of their resignation
- If no circumstances exist a ‘statement of no circumstances’ must be completed (not option for listed companies)
Rights:
- To request the directors convene a general meeting, allowing auditor to explain the circumstances surrounding their decision.
- To circulate the statement of circumstances in advance of the meeting