AUDITORS. The auditors of a company are appointed by the shareholders, and their particular function is to make an inde pendent investigation of the company's affairs and to report to the shareholders.
The appointment, powers, and duties of auditors are set forth in the following sec tions of the Companies (Consolidation) Act, 1908 :— Appointment and Remuneration of Auditors.
" 112. (1) Every company shall at each annual general meeting appoint an auditor or auditors to hold office until the next annual general meeting.
" (2) If an appointment of auditors is not made at an annual general meeting, the Board of Trade may, on the application of any member of the company, appoint an auditor of the company for the current year, and fix the remuneration to be paid to him by the company for his services.
-' (3) A director or officer of the company shall not be capable of being ap pointed auditor of the company.
" (4) A person, other than a retiring auditor, shall not be capable of being ap pointed auditor at an annual general meeting unless notice of an intention to nominate that person to the office of auditor has been given by a shareholder to the company not less than fourteen days before the annual general meeting. and the company shall send a copy of any such notice to the retiring auditor, and shall give notice thereof to the shareholders, either by advertisement or in any other mode allowed by the articles, not less than seven days before the annual general meeting Provided that if, after notice of the intention to nominate an auditor has been so given, an annual general meeting is called for a date fourteen days or less after the notice has been given, the notice, though not given within the time required by this provision, shall be deemed to have been properly given for the purposes thereof, and the notice to be sent or given by the company may, instead of being sent or given within the time required by this provision, be sent or given at the same time as the notice of the annual general meeting.
" (5) The first auditors of the company may be appointed by the directors before the statutory meeting, and if so appointed shall hold office until the first annual general meeting, unless previously removed by a resolution of the shareholders in general meeting, in which case the shareholders at that meeting may appoint auditors.
" (6) The directors may fill any casual vacancy in the office of auditor, but while any such vacancy continues the surviving or continuing auditor or auditors, if any, may act.
" (7) The remuneration of the auditors of a company shall be fixed by the company in general meeting, except that the remuneration of any audi tors appointed before the statutory meeting, or to fill any casual vacancy, may be fixed by the directors.
Powers and Duties of Auditors.
113. (1) Every auditor of a company shall have a right of access at all times to the books and accounts and vouchers of the company, and shall be entitled to require from the directors and officers of the company such information and explanation as may be necessary for the perform ance of the duties of the auditors.
(2) The auditors shall make a report to the shareholders on the accounts examined by them, and on every balance sheet laid before the com pany in general meeting during their tenure of office, and the report shall state— (a) whether or not they have I obtained all the information and explanations they have required : and (1)) whether, in their opinion, the balance sheet referred to in the report is properly drawn up so as to exhibit a true and correct view of the state of the company's affairs according to the best of their information and the ex planations given to them, and as shown by the books of the company.
The balance sheet shall be signed on behalf of the board by two of the directors of the company, or if there is only one director, by that director, and the auditors' report shall be attached to the balance sheet, or there shall be inserted at the foot of the balance sheet a reference to the report, and the report shall be read before the company in general meeting, and shall be open to inspection by any shareholder.