MIDLANDS STATE UNIVERSITY
FACULTY OF COMMERCE
DEPARTMENT OF ACCOUNTING
* Appointment of Auditors
* Remuneration of Auditors
* Qualification for appointment as Auditor
* Eligibility for appointment
* Ensuring independence of Auditors
* Recognized supervisory bodies
APPOINTMENT OF AUDITORS
The statutory provisions deal with the appointment of an auditor by two categories of a company that is public and other companies. In the case of the public company, the auditor must be appointed by the directors within one month of issue of certificate that a company is entitled to commence business.
The other companies shall appoint their auditor within one month of the issue of the certificate of incorporation. This is evidenced in the companies act S150 (1). If directors fail to appoint the first auditor, the auditor is then appointed by the members of the company in the Annual General Meeting (AGM) S150 (1) (ii). An auditor so appointed shall hold office till the conclusion of the first Annual General Meeting (AGM). The company shall at each AGM appoint the auditor to hold office from the conclusion of that meeting until the conclusion of the next AGM. This is according to S150 (2).
If neither the board of director nor the company appoints the auditor the minister may on the application of the member do so as in S150 (1) (iii). The nomination of the substitute auditor shall be made by special notice by a member of the company to the other members not less than fourteen days before the date of the meeting. This is according S150 (1) (I).
According to S150(3) if an annual general meeting fails to appoint or re-appoint an auditor the minister may appoint a person to fill the vacancy after having been notified by the company within one week after the meeting that the company had failed to appoint an auditor. If a company fails to give notice to the minister, the company and every officer of the company who is in default shall be guilty to an offence and liable to default fine S150(4).
S150 (5) states that the casual vacancy of an auditor may be filled by directors. The appointment of an auditor by a private company is regulated by S150 (7). Referring to S150 (7) (b) a private shall not be required to appoint an auditor if but only if the number of members does not exceed ten, the name of the company is i. A public company which is incorporated under this act or the law of a foreign country. ii. A private company which is subsidiary is determined in terms of S143 referred to in sub paragraph (I). iii. Such a company is not a subsidiary of a holding company which has itself appointed the auditors. iv. All the members in such a company agree that an auditor shall not be appointed. The resolution for the appointment of a person other than the retiring auditor as the auditor of the company at an AGM requires a special notice. A special notice is required also for a resolution proving expressly that a retiring auditor shall not be appointed according to S151
REMUNERATION OF AUDITORS
As a general rule the remuneration of the auditor of the company is determined by agreement with the company. The remuneration is fixed by the company in the general meeting or in such a manner as the company in the general meeting may determine. This set out in accordance with the companies act s150 (6). Remuneration in that capacity must be stated in a note to the annual financial statement.
However were a joint auditor is appointed by the minister in terms of s150 (1) (ii), the minister determines the remuneration to be paid to the auditor by the company.
Moreover, in the case of an...
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