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- 7 Marks
Question
The auditors of Obuasi Ltd resigned on 21 August 2019 after they had been validly appointed and accepted. The directors of Obuasi Ltd appointed Ofori Ansong and Co. Chartered Accountants as their new auditors on 10 October 2019. The Registrar General refused to accept Ofori Ansong and Co as auditors on the grounds that the directors had acted beyond their powers since the Registrar General has the power to appoint auditors.
Required:
Comment on the action of the Registrar General. (7 marks)
Answer
According to Section 134, Subsection 3 of the Companies Act 1963 (Act 179):
The first auditors of a company must be appointed within three months of incorporation or prior to delivering the particulars required under Section 27 of the Act to the Registrar.
Every existing company without auditors must appoint auditors within three months of the Act’s commencement.
Subsection 4(a) empowers the directors to appoint the first auditors or to fill a casual vacancy in the office of auditor.
Subsection 4(b) states that if a company does not have auditors for a continuous period of three months, the Registrar may appoint auditors.
Since the resignation of the previous auditors occurred on 21 August 2019 and Ofori Ansong and Co were appointed on 10 October 2019, the period between the resignation and the new appointment is less than three months. Therefore, the directors acted within their powers, and the Registrar General’s refusal to accept Ofori Ansong and Co was incorrect, as the directors had the right to fill the vacancy within the three-month period.
(7 marks)
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