Auditing and assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

XYZ Co. Ltd. reappointed A and B as their joint auditors in the Annual General Meeting. The AGM authorized the Board for fill up the vacancy on their own in the event of both or either of auditors declined to accept the assignment. The Board passed a resolution to appoint C if any of the auditors declined to accept the assignment. B declined to accept the assignment and Board of Directors appointed C in place of B as per its resolution.
Answer
In the present case B is one of the joint auditors who was appointed in Annual General Meeting, but declined to accept the appointment. The Board of Directors as per their resolution, appointed C as a joint auditor in his place.
In this case, the vacancy created B is neither caused resignation of B nor is it a casual vacancy because B‟s appointment had not become effective. Hence, appointment of C as joint auditor the Board is not valid. C can only be appointed as joint auditor in the General Meeting.



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