Who generally has the primary power to appoint the external auditor of a company?

Answer options:

The board of directors.

The shareholders, by ordinary resolution.

The Secretary of State.

The company secretary.

How to approach this question

Identify the body responsible for ensuring independent financial oversight.

Full Answer

B.The shareholders, by ordinary resolution.✓ Correct

The primary power to appoint an auditor rests with the shareholders (members) of the company, usually by passing an ordinary resolution. This ensures the auditor is independent of the directors, whose financial statements they are auditing.

Common mistakes

Assuming the directors appoint the auditor because they run the company.

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Practice the full ACCA LW — Corporate and Business Law Practice Exam 4

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