Identify and briefly explain the statutory and ethical matters you would consider before accepting appointment as an auditor of a company

  • Statutory Matters
  •  The firm should be a holder of a practicing certificate issued in accordance to section 21 of the Accountants Act.
  • Ensure the firm is not disqualified to act as the auditors of the company under section 161 (2) of the Companies Act, that is:
  •  The auditor is an officer of the company
  •  The auditor is in employment of an officer or servant of the company.
  •  The auditor/firm is a body corporate
  •  Ensure that all the auditors in the firm are legally and professionally qualified to act as auditors.
  • The auditor should then request client permission to communicate with the previous auditors, to avail all the information to enable him decide whether his is prepared to accept nomination.
  •  If such permission is denied, the auditor should decline nomination.
    Ethical Matters
  •  Auditor should check if the firm is related to the client in any manner that may endanger the firm‘s independence.
  •  He should check whether the firm has adequate resources in terms of skills and expertise knowledge necessary to service the needs of the potential client.
  •  Check the current commitments of the firm that may affect its ability to carry out the audit and complete it effectively.
  •  Check the risk exposures associated to the client as regards the firm‘s reputation.



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