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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › corporate governance weakness
Hello
If there is a corporate governance weakness that “The finance director and chairman are taking decision on appointment and remuneration of external auditors”
For its explanation can I write that “This may compromise independence of external auditors and they may think that if they don’t guarantee a clean report they may not be appointed”
For its recommendation can I write that “Task of appointment of external auditors should be done through audit committee comprising independent NED’s”
Also, auditors are required to report to members on the company’s FS which will reflect directors’ performance. If appointed by directors and therefore beholden to them, it will be perceived that auditors might be acting for the directors rather than taking an independent stance and reporting objectively to members.