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ACCA Applied Skills · Corporate and Business Law (Global) · Other company officers

Branko Ltd's financial year has ended and no auditor has been validly reappointed. The members take no action to appoint an auditor. Under standard company law principles, who may step in to fill the vacancy?

If the company fails to fill the vacancy, the relevant government authority or regulator may appoint an auditor. A bank has no such power, and the previous auditor does not automatically continue for a fixed period such as five years.

  1. AThe company's bank, by written notice
  2. BThe relevant government authority or regulator, which may appoint an auditor where the company fails to do soCorrect
  3. CThe previous auditor, automatically, for a further five years

Explanation

Where a company fails to appoint an auditor, the relevant authority (the Secretary of State in the UK model) has power to appoint one. A bank has no such power. There is no automatic five-year extension of the previous auditor's term.

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