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ƥ External audit protect the interest of shareholders.

ƥ Shareholders appoint the auditor in A.G.M.
ƥ Management can appoint auditor at any time before
A.G.M, to fill the vacancy.
ƥ When management not appoint auditor so he is
selected by statutory authority.
SPECIAL NOTICE OF
APPOINTMENT.
Reasonable notice should be given to appropriate
resolution.
ƥ Appoint a person other than retiring auditor.
ƥ To fill vacancy in office of auditor.
ƥ To re appoint a retiring auditor by directors to fill
vacancy.
The people who should aware of notice.
ƥ Person intended to appoint
ƥ Retiring auditor, if applicable.
ƥ Auditor who resigned, if applicable.
 Proper Laws are present for
every aspect regarding auditor.

ƥ company legislation according to the companies

ordinance 1984, serves a number of purposes.
ƥ Seeks the competency of auditor.
ƥ Promotes independence of auditors.
ƥ Duties of auditor.
ƥ Rights of auditor to help them to carry out their
duties.
Appointment of auditor

ƥ First auditor should be appointed within 60 days of date of

incorporation.

ƥ If not appointed within these days corporate law authority made

within 120 days.
ƥ The casual vacancy for an auditor made by the death or resignation
of any auditor.
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ƥ He is unqualified.
ƥ In resolution any other person is appointed at that place.
ƥ Existing auditor show unwillingness
ƥ If auditor is not selected, the company must give notice to authority
within one week of its occurrence.
ƥ Intimation of appointment to the auditor.
 ƥQUALIFICATION OF AUDITORS

ƥ Auditor must be the charted accountant, according to

ordinance 1961.
ƥ A firm of auditor also form when all partners practicing
in Pakistan are charted accountants.
ƥ In eligibility of auditor take place when he has some
relation with the company directly or indirectly.
Remuneration of auditor
ƥ Remuneration of auditor is fixed by the company in
respect to auditorƞs expense.
ƥ It is shown in annual accounts as in profit and loss
account or in note form of the company financial
statements.
ƥ Company donƞt provide resignation of auditor until and
unless the agreement is not over.
ƥ Auditors canƞt be pressurized for leaving by company.
Removal of the auditor

ƥ Appropriate notice should be given as a resolution

for removal of auditor.
ƥ Copy of representation.
ƥ Auditors may remove if thy offer themselves for re
election in A.G.M
ƥ Statement of circumstances made by resigning
auditor.
ƥ If any person or company feels aggrieved in case
of removal. He may move to the court.
ƥ If management is unhappy so this is the fault of
the company that choose auditor without
managementƞs choice.
Duties of auditor
ƥ Compliance with legislation.
ƥ True and fair view of accounts as the duties in relation
to fraud.
ƥ Proper records and returns.
ƥ Agreements of accounts to record.
ƥ Consistency in information.
ƥ To make true and fair report to directors attached to
financial statements
ƥ Strength of prospectus is checked.
ƥ To make report on the declaration of insolvency.
Rights of auditor

ƥ Right to lien working papers.

ƥ Right to access all records.
ƥ Right to ask any question from management in case of
any inconsistency.
ƥ Right to attend the meetings and speak in the
meetings
ƥ Right to be sent by company a copy of notice of
intention to propose his removal.
Other legal consideration

ƥ Report must be signed by the auditor otherwise he is

not liable for any statement.
ƥ If company is manufacturing concern so charted
accountant or cost of management accountant is
hired.
ƥ And in this case cost and management accountants
Act 1966(s. 258) is used.
Code of corporate governance

ƥ CCG and MCG issued by SECP also deal matter of

internal control system, appointment, resignation and
eligibility of auditor.
ƥ Establishment of audit committee is responsibility of
management.
ƥ Composition, members, terms of reference and
reporting procedures are salient features of audit
committee.