Acca aa s21 Notes

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Chapter 3
AUDITORS’ RIGHTS, APPOINTMENT, 
REMOVAL, RESIGNATION AND 
REGULATION
In most jurisdictions, external audit is regulated by company law (statute). The AA syllabus requires 
you to have only a basic knowledge and comprehension of statutory regulation which is illustrated in 
this Chapter based on English law.
1. Auditors’ rights and duties
So that they can carry out their duties properly, auditors have very powerful rights. For example:
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They have access to all records they require.
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They have a right to receive information and explanations of all transactions.
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They have a right to attend and receive notice about general meetings and they have right to 
speak at general meetings on relevant matters.
A general meeting is where the shareholders of the company come together, and the annual general 
meeting (AGM) ensures that there should be at least one of these meetings every year. Auditors have 
the right to receive in advance information about any resolutions that are proposed to be put at these 
general meetings. And finally they have the right to require that the company’s financial statements 
should be presented at the general meeting, otherwise of course if the financial statements contained 
information which the directors wanted to keep secret, the directors could delay presenting those.
Their right to be informed about, attend and speak and be heard at general meetings gives auditors 
an opportunity to communicate directly with the shareholders – by whom they have been appointed 
and for whom they are acting.