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Sir I have read the notes and gone through the lectures about Self intrest threat relating to high proportion of fees from a client. I understand that an audit firm would not like to loose a client that generates the firm substantial income. what I don’t understand is how the auditor would loose the client if He issues a qualified/adverse opinion. Is this because the director not recommending the auditor and the shareholders listening to the directors recommendation and voting on removing him. Can you please help me clarify this. Thank you in advance.
Yes it is precisely that.
But note that if the directors do not recommend the auditor for reappointment (but nominate someone else instead), that is NOT “removal”.
To “remove” an auditor would mean during their term of office (which is about a year – from the date of one AGM to the next).
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