Is an audit always necessary for companies?

Not all companies are required to have their financial statements audited. Also, of those companies that should have audited financial statements, not all are required to have an audit committee. The Companies Act (the Act) provides for a new classification of companies.

What happens if a company fails to appoint the first auditor?

If the board fails to appoint such auditor within the next 30 days, it shall inform the members of the company who shall appoint such auditor within 60 days at an extraordinary general meeting. Such auditor shall hold office till the conclusion of the first annual general meeting.

Why do companies need auditors?

The main reasons for the audit are to provide reasonable assurance that the financial statements are free from material misstatements and errors and to ensure that all events that can adversely affect the company have been disclosed.

Why does the Companies Act require that public companies be audited?

For the purposes of determining the financial reporting standards applicable to a company, whether certain categories of companies will be required to be audited or independently reviewed and whether such companies are required to appoint a social and ethics committee, the Regulations require every company to calculate …

Can not be appointed as the external auditor of a company?

An auditor must be independent of the company, and therefore, a person cannot be appointed as an auditor if they are: an officer or employee of the company or an associated company. a partner or employee of such a person, or a partnership of which such a person is a partner.

How are auditors of a company appointed?

After incorporation of a company in the first annual general meeting, an Auditor must be appointed by the Board of Directors. The Auditor will typically hold term till the conclusion of 6th AGM or 5 years. The members will then be required to appoint an Auditor within 90 days at an Extra Ordinary General Meeting.