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

Delmar Ltd's members have not appointed any auditor at the general meeting where accounts were laid, and the company is not exempt from audit. Which statement best describes the position?

A company that is not exempt must have an auditor. If members fail to appoint one, the retiring auditor is generally deemed reappointed unless disqualified or unwilling, and the relevant authority can appoint where the company defaults. Failure to appoint does not create exemption from audit.

  1. AThe company is in default, and the relevant authority may appoint an auditor if the company fails to do so, while the retiring auditor is usually deemed reappointed unless disqualified or unwillingCorrect
  2. BThe company is automatically exempt from audit for that year
  3. CThe directors must act as auditors until the next meeting
  4. DThe former auditor's appointment lapses and nobody may be appointed for twelve months

Explanation

A non-exempt company must have an auditor. Where none is appointed, the retiring auditor is generally deemed reappointed unless there is a reason otherwise, and a regulator can appoint if the company defaults. Exemption does not arise from failing to appoint. Directors cannot be auditors because that would remove independence, and there is no twelve-month bar.

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