Auditor, appointment of

Updated: Aug 20, 2021

The auditor of any company registered under the Companics Act 1985 is appointed by the members of that company acting in concert at the annual general meeting and holds office only from the end of that meeting until the commencement of the next – when he may be reappointed by a resolution of members. Prior to the coming into force of the 1976 Act existing auditors were automatically reappointed if no resolution to the contrary was passed at the annual general meeting.

The directors may appoint the first auditor(s) and fill any casual vacancy, but the appointment must be confirmed at the next annual general meeting. If not so confirmed then the office of auditor falls vacant. Any failure to appoint an auditor must be reported to the Secretary of State at the Departmem of Trade and Industry within one week and the Secretary will then make the appointment himself. The remuneration of auditors is fixed by the company in general meeting, except where the appointment is made by the directors or the Secretary of State, when the remuneration will be fixed by the appointers. Remuneration as auditor should be distinguished, in the accounts, from amounts paid for purely accounting work or the computation of tax liabihties, etc. In company accounts the latter will be included in an expense heading and must never be included in the audit fees required to be shown by the fourth schedule. Auditors of organizations other than companies are appointed as the constitution of the organization directs.

Reference: The Penguin Business Dictionary, 3rd edt.

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