Part F Management, administration and regulation of companies 19: Other company officers 297
Therefore auditors of private companies are deemed automatically reappointed unless one of the
following circumstances apply.
The auditor was appointed by the directors (most likely when the first auditor was appointed).
The articles require formal reappointment.
Members holding 5% of the voting rights serve notice that the auditor should not be reappointed.
A resolution (written or otherwise) has been passed that prevents reappointment.
The directors have resolved that auditors should not be appointed for the forthcoming year as
the company is likely to be exempt from audit.
2.3 Auditor remuneration
Whoever appoints the auditors has power to fix their remuneration for the period of their appointment. It
is usual when the auditors are appointed by the general meeting to leave it to the directors to fix their
remuneration (by agreement at a later stage). The auditors' remuneration must be disclosed in a note to
the accounts.
2.4 Exemption from audit
Certain companies are exempt from audit provided the following conditions are fulfilled.
(a) A company is exempt from the annual audit requirement in a financial year if it meets the criteria
for being a small company (two from, turnover being less than £6.5 million, balance sheet total
not more than £3.26 million and having 50 or fewer employees).
(b) The exemptions do not apply to public companies, banking or insurance companies or those
subject to a statute-based regulatory regime.
(c) The company is a non-commercial, non-profit making public sector body which is subject to audit
by a public sector auditor.
(d) Members holding 10% or more of the capital of any company can veto the exemption.
(e) Dormant companies which qualify for exemption from an audit as a dormant company.
2.5 Duties of auditors
The statutory duty of auditors is to report to the members whether the accounts give a true and fair view
and have been properly prepared in accordance with the Companies Act. They must also:
State whether or not the directors' report is consistent with the accounts.
For quoted companies, report to the members on the auditable part of the directors'
remuneration report including whether or not it has been properly prepared in accordance with the
Act.
Be signed by the auditor, stating their name, and date. Where the auditor is a firm, the senior
auditor must sign in their own name for, and on behalf, of the auditor.
To fulfil their statutory duties, the auditors must carry out such investigations as are necessary to form
an opinion as to whether:
(a) Proper accounting records have been kept and proper returns adequate for the audit have been
received from branches.
(b) The accounts are in agreement with the accounting records.
(c) The information in the directors' remuneration report is consistent with the accounts.
The auditors' report must be read before any general meeting at which the accounts are considered and
must be open to inspection by members. Auditors have to make disclosure of other services rendered to
the company and the remuneration received.