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Auditor: Meaning, appointments, duties, and more

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Adetunji Matthew
Adetunji Matthew
I’m Adetunji Matthew, an Economist, Social Media Manager, software Developer/Marketer Sales Consultant, and Ecompreneur. I’m popularly known as “Matt” As an artist and designer, I aim to create something brilliant daily. Eager to learn more, I use my free time to get better at w hat interests me, whether it's researching, teaching, or even something entirely new.
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The Companies and Allied Matters Act 2020 (CAMA 2020) provides that all companies in Nigeria must appoint one or more auditors at every annual general meeting of the company. The basic duty of the auditor is to audit the financial statement of the company as prepared by the directors of the company. 

Auditors hold office from the time of appointment at the last annual general meeting to the next annual general meeting. The auditor is expected to be a trusted and efficient person with integrity.

This work offers an insight into the world of auditors and how corporations and how corporations and businesses can navigate compliance with CAMA and the best governance practices.

Who is an Auditor?

Auditors are financial experts employed by the members of the company to scrutinize the financial statements made by the directors and advice the company accordingly.

The auditor is appointed to review financial records, the balance sheet, and other records of the business of the company. 

The Legal status of Auditors

Although CAMA was silent as to the position of an auditor being an officer of a company. Nonetheless, the British case of Re London and General Bank held that the auditors’ actions bind the company as any officer of a company would have. 

The auditor also acts as the agent of the company with duties ranging from protecting the company as a principal. The general rule about the auditors as the agents of the company projects that the auditor isn’t an agent of the company unless certain duties are given by the company. 

How to appoint auditors in a company

Appointing the First auditors of a company

The first auditor of a company is the auditor appointed after the registration of the company. Generally, the auditors of a company are appointed by the general meeting of the company voting through a special resolution to appoint a named person as an auditor. Nonetheless, an exception to the general rule lies in the appointment of the first auditors of the company; the first auditors are appointed by the board of directors of the company at any time before the company commences business.

The first auditors shall serve until the first annual general meeting of the company where the members at the general meeting shall have the first auditors removed and appoint other auditors to act in their place.

Nevertheless, where the directors fail to undertake their duty of appointing the first auditors as indicated, the company’s members through its general meeting can step in to undertake the same. 

Appointment of subsequent auditors of a company

The subsequent directors of a company are appointed at every annual general meeting of the company.

Nonetheless, CAMA provides that a retiring auditor can be reappointed without a resolution, insofar as the auditor is qualified for reappointment and that a resolution has been passed appointing another person to fill in the position. Also, if the auditor has presented, an intent not to be reappointed, to the members of the company’s general meeting such auditor shall not qualify for reappointment. 

Casual vacancy for auditors

A casual vacancy occurs when an auditor dies, retires or is incapable of performing his duties while his term of appointment remains. Once a casual vacancy exists, the directors of the company shall appoint an auditor to fill the vacancy; such auditor shall serve the remaining term of the former auditor. 

The casual vacancy also occurs if after an annual general meeting, the company’s general meeting fails to appoint new auditors at the annual general meeting, the directors shall appoint the auditor to fill this lacuna. 

Qualifications of an auditor

According to the provisions of CAMA, an auditor must have a certain knowledge of every accountant trained by the Institute of Chartered Accountants of Nigeria (ICAN), this means every auditor must be a member of ICAN. 

Auditors can be any of the following:

1. An individual who is employed by the company;

2. An individual employed by an employee in the company; and 

3. A body corporate

Also, persons employed by the company or in any way connected to the company during the period of the audit are exempted from being auditors of the company. 

Duties of Auditors of a company

1. Investigation on accounts: the auditors of the company are expected to review and reconcile the accounting records of the company created by the directors with a move to ensure transparency and effectiveness in business. 

2. Consolidating accounts: The auditors must reconcile the company’s balance sheet with the rest of the accounts held by the company and expected at the annual general meeting.

3. Prepare an unbiased report on findings: This is perhaps the most significant duty of the auditor. The auditor prepares an audit report on the efficiency of the company’s accounting records. This unbiased report is sent to the members of the company before the annual general meeting; this allows the company to know the true financial position of the company.

Removal of an Auditor

The auditor of a company can be removed by the members of the general meeting at any time before the completion of the auditor’s tenure. 

To remove the auditor, the company passes an ordinary resolution at the general meeting and files the notice of the removal to the Corporate Affairs Commission within 7 days. Nonetheless, the board of directors cannot remove the auditor of the company, even if the auditor was a casual vacancy or first director appointed by the board. 

Resignation of auditors

The auditor can resign from his position at any time before the end of the tenure. The resignation must be in writing and placed at the company’s registered office address.

Nonetheless, for the notice to be effective, the auditor must submit the notice together with the following:

1. A statement showing that there exist no circumstances connected with his resignation which must be brought to the members or the creditors of the company’s notice; or 

2. A statement showing any of such circumstances leading to his resignation as an auditor of the company.

Audit Committee

The audit committee is made up of a maximum of 6 members with an equal proportion of directors and representatives of shareholders to the company. The audit committee has the responsibility of examining the auditors’ reports of the company and advising the company’s annual general meeting on the steps to take. 

The audit committee is only required by a public company and the members are not entitled to remuneration. 


With companies across the world adopting excellence in trade, there has been a push towards having auditors that can provide efficiency to the company’s operations in the long run.

This article provided insight into all there is to know about auditors in the business of companies.

Frequently Asked Questions (FAQs)

What resolution is used to appoint an auditor?

The auditors of a company are appointed by a special resolution of the annual general meeting.

Must an auditor be an accountant?

Auditors must be trained in the skills of an accountant in ICAN, it suffices to say that an accountant can be an auditor. 


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