Comment and give your observations on the following:
a. Mr. A, who was appointed the auditor of the Company in its Annual General Meeting, resigned before the completion of his term of appointment. The casual vacancy thus created was filled in the Board of Directors. (5 Marks, June 2001)
b. UFO & Co. Chartered Accountants were appointed as the first auditors of newly formed public limited company, APC Ltd. The terms of UFO & Co. have expired and APC Ltd. now proposes to appoint new auditors due to difference of opinion with UFO & Co. without giving a special notice. (4
Marks, June 2001
As per Sec. 113 of Companies Act 2063, 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. Hence, the appointment BOD is not valid.
As per Sec 119 (2) of Companies Act 2063, 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 Nepal Chartered Accountants Institute, 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. (The provision of Special Notice is not mentioned in Companies Act 2063)