Miss Shristi, a Chartered Accountant, has been appointed as an auditor in the 22nd AGM of M/s Kantipur Ltd. She was removed by Board of Directors when she was abroad for her personal visit.

Auditing and Assurance Revision Questions and Answers

Section 119 (1) of the Company Act, 2063 provides that no auditor appointed pursuant to Companies Act shall be removed pending the completion of audit of accounts of any financial year for which he/she was appointed as the auditor.

As per Sub-section (2), notwithstanding anything contained in sub-section (1), if any auditor breaches the code of conduct of auditors or does any act against the interest of the company which has appointed him/her as the auditor or commits any act contrary to the prevailing law, such auditor may be removed through the same process whereby he/she was appointed as auditor, by giving prior information to the ICAN, and with the approval of the regulatory authority, if any authorized by the prevailing law for the regulation of business of the company concerned , and if there is no such authority, with the approval of the Office of Registrar. While removing an auditor pursuant to sub-section (2) above, the auditor shall be provided with a reasonable opportunity to defend him/herself.
Thus, Board of Directors cannot remove if auditor has been appointed through AGM. Further, reasonable opportunity to defend should be provided.

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