Who appoints external auditors?

The members (shareholders) of a company appoint the auditor at an annual general meeting, or other general meetings of the company at which the financial statements are put forward for approval by the members. The appointment must be made by the end of the 28th day after the last date of which the accounts must be filed. If an auditor is not appointed within this time, the existing auditor is deemed to be reappointed, subject to certain condition.

The exception to the above rule is where the directors appoint the auditor either to:

- fill a casual vacancy, for example when the existing auditor resigns during the year; or

- Appoint the first auditor between the date of incorporation and the first AGM or if the company qualifies to require an audit, before the next AGM.

In both cases the member must then reappoint the auditors at the next AGM, by ordinary resolution (50%+ majority).

Source: ICAEW