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

Brava Ltd, a company that is not exempt from audit, wishes to appoint an auditor. Which of the following people would normally be disqualified from acting as its auditor?

An employee of the company is disqualified from acting as its auditor, because an officer or employee cannot be independent of the entity they would be auditing. Qualified practitioners and firms that audit competitors or similar companies remain eligible to act.

  1. AA member of a recognised supervisory accountancy body who holds a practising certificate
  2. BAn accountancy firm that has audited a similar company in the same industry
  3. CAn individual who is an employee of Brava LtdCorrect
  4. DA partner in a firm that audits Brava's main competitor

Explanation

An officer or employee of the company cannot act as its auditor because they cannot be independent of the entity. Auditing a competitor or similar company does not disqualify a firm. A qualified, certificated member is eligible. Option D is wrong because acting for a competitor is not a disqualifying relationship.

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