Auditing and assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

a) Discuss about the procedure mentioned in Companies Act, 2063 regarding appointment of auditors.
b) Discuss about provision relating to removal of appointed auditor as per Companies Act, 2063.

a) As per Section 110 of Companies Act 2063, every company shall appoint an auditor under to have its accounts audited. In cases where any company has a branch office outside Nepal, the auditor so appointed may also audit the accounts of that branch office except as otherwise provided in the prevailing law of the country where such branch office is situated. Similarly, as persection111, the auditor of a company shall be appointed, from amongst the auditors licensed to carry out audit under the prevailing law, the general meeting subject to provisions contained in chapter 18 of this act, in the case of a public company, and, in accordance with the provision as contained in the memorandum of association, articles of association or consensus agreement, any failing such provision, the general meeting, in the case of a private company; and his/her name shall be forwarded to the Office within fifteen days from the date of such appointment.
Provided, however, that the board of directors may appoint the auditor prior to the holding of the first annual general meeting.

The auditor appointed shall hold office only until the next annual general meeting. No auditor or his/her partner or ex-partner or employee or ex-employee shall be appointed as auditor for more than three consecutive terms to perform the audit of a public company.
Provided, however, that this restriction shall not apply to any partner who ended partnership or any employee who left the service of such audit or three years before.
As per section 113, Where the annual general meeting of a company fails to appoint an auditor for any reason or where the annual general meeting itself cannot be held or where the auditor appointed pursuant to this Act ceases to continue his/her office for any reason, the Office may, at the request of the board of directors of the company, appoint another auditor.

b) Answer
As per section 119 of Companies act 2063, no auditor appointed pursuant to provisions laid down in this act shall be removed pending the completion of audit of accounts of any financial year for which he/she was appointed as the auditor. Notwithstanding anything contained in this section, if any auditor breaches the code of conduct of auditors or does any act against the interest of the company which has appointed him as the auditor or commits any act contrary to the prevailing law, such auditor may be removed through the same process wherehe/she was appointed as auditor, giving prior information to the ICAN, and with the approval of the regulatory authority, if any authorized the prevailing law for the regulation of business of the company concerned , and failing such authority, with the approval of the Office.
While removing an auditor, the auditor shall be provided with a reasonable opportunity to defend him/herself.

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