“The Statutory Company Auditor Is Not An Employee Of The Company”. Discuss This Statement In The Context Of The Appointment, Duties, Remuneration, Resignation And Removal Of A Company Auditor In Respect Of Both Private And Public Companies

2726 words - 11 pages

Question 3IssueEvery company must have auditors, subject to certain company exemptions under Section 205B and 205C mentioned in the Companies Act. Company auditors must be a certified practicing accountant. Auditors who want to practice their professional must register with the Accounting and Corporate Regulatory Authority (ACRA) and the Institute of Certified Practicing Accounts of Singapore (ICPAS).Unlike the internal auditors, where the job function is to satisfy that accounting information presented to management throughout the period is accurate and discloses material facts, the main duty of the company auditor is to make sure that all the company's accounts to be presented to the ...view middle of the document...

The objective of this provision is to avoid a situation where the management of the company may pressurize or influence the auditor in performing his audit function.Audit CommitteesSection 201B of CA has several provisions that seek to increase the independence of audit committees so that they can properly perform their audit functions. It is mandatory for listed companies to set up audit committees comprising of at least 3 members whereby a majority of which are non-executive directors independent of management. This reflects the law's keenness to provide additional safeguards for public investors. The audit committee is generally responsible for matters pertaining to financial reporting such as nominating the auditors of the company and acting as a liaison between the auditors and the board of directors.Appointment of AuditorsSection 205 of CA provides that the first company auditors shall be appointed by the directors within three months from the date of incorporation of the company. In the case of listed companies, the audit committee is responsible for nominating the company auditors. Subsequent company auditors shall be nominated by the members of the company and formally appointed by the company at the next annual general meeting ("AGM").The company is required to obtain a written consent of the auditor before the appointment is made. Where a new auditor is to be appointed, the shareholders must give a notice of his nomination must be given to the company at least 21 days before the AGM. The company shall disseminate the notice of nomination at least seven days before the AGM to every auditor and to everyone involved in the AGM.The term of office of the auditors shall begin from the time of appointment until the next AGM but it may come to an end prematurely by death, resignation or removal. In the event of any casual vacancy (e.g. on the death of an auditor), the directors can appoint a public accountant to fill in the office of auditor, but the remaining auditors shall continue to act until their term of office expires. The Registrar may make the appointment of auditors on a written application of any shareholder of the company if the directors do not appoint an auditor as per required by this section.It is a common practice for companies to appoint an auditing firm as auditors of the company. All resident partners of the firm must be approved company auditors and shall not knowingly consent to be appointed as auditor if he does not meet the requirements in Section 10 (1).A company classified under Section 205B (dormant company) or Section 205C (exempt private company below certain revenue threshold) shall be exempted from audit requirement, and its directors shall be exempted from obligation to appoint auditors under section 205 (1) or (2).Duties of Company AuditorsThe main functions of the company auditors are to examine the company's accounts, ensuring its accuracy and report to the members of the company on the accounts and other...

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