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in the lecture videos you’ve when an auditor is sacked it may give a notion that the auditors were too good that’s why they were sacked. How would the directors sack an auditor who is too good. by false accusation but doesn’t it have to be decided on by the majority votes of the shareholders? Can you please explain
Auditors are very rarely “sacked” (as in removed from office during the year of their appointment).
Let’s image there is disagreement over an accounting treatment between directors and auditor – directors “stick to their guns” and refuse to change the FS because to do so would not show as good a picture to the shareholders. The auditor is “too good” (actually doing a proper job) and qualifies the audit opinion, even though the directors say they will not recommend the auditor for reappointment at the next AGM.
As you say, the appointment, etc of the auditor is decided on by a majority of shareholders, but shareholders tend to be quite passive and “go with the flow” and follow the directors’ recommendations.
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