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

Mara Ltd's auditor, Fenn LLP, discovers that its own partner has just been appointed a non-executive director of Mara Ltd. What is the legal consequence for Fenn LLP under the standard rule on auditor disqualification?

Fenn LLP becomes ineligible and must resign. A non-executive director is still an officer, and a partner of an officer cannot be the company's auditor. Disclosure in the report or approval by members cannot override the statutory disqualification.

  1. AFenn LLP becomes ineligible and must resign as auditorCorrect
  2. BFenn LLP may continue if it discloses the appointment in the audit report
  3. CFenn LLP may continue because non-executive directors are not officers
  4. DFenn LLP may continue if the members approve by ordinary resolution

Explanation

A director is an officer of the company, whether executive or non-executive. A partner of an officer cannot act as auditor, so the firm becomes ineligible and must vacate office. Disclosure or member approval cannot override the statutory bar.

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