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- 3 Marks
Question
Your client Abeka Ltd is threatening to remove your firm as auditors as a result of disagreement on account of the use of inappropriate accounting policies.
Required:
Describe THREE (3) rights as an auditor in relation to the disagreement and subsequent threat of removal. (3 marks)
Answer
The auditor has the following rights in the event of a disagreement and subsequent threat of removal:
Right to Receive Written Resolution: The auditor has the right to receive a copy of any written resolution proposal concerning their removal or any disagreements related to the audit.
Right to Attend and Speak at Meetings: The auditor has the right to attend and be heard at any meetings where a resolution regarding their removal is being discussed.
Right to Make Written Representations: The auditor has the right to make written representations to the company’s shareholders, explaining their position in the event of a proposed removal. These representations must be circulated to shareholders before any resolution for removal is passed.
(3 marks)
- Topic: Audit and Assurance Evidence
- Series: MAY 2020
- Uploader: Dotse