a. Appointment of auditors
The financial statements of all the companies, irrespective of their size, incorporated in Malta or have its management and control in Malta need to be audited by a local person who must hold a warrant to act as accountant under the Accountancy Profession Act and is issued with an auditing practicing certificate by the Accountancy Board. To audit banks or companies engaged in the business of insurance, an auditor requires further authorisation from the Regulatory Authority. Certain persons are disqualified from appointment as auditor of a company, e.g. officers or employees of that company, persons employed by an officer or employee of that company etc. Most companies today appoint firms of accountants as auditors and, in addition, frequently look to them for other services, especially in the fields of taxation and other financial matters, subject to normal professional independence rules.
Companies must appoint auditors at each annual general meeting to hold office until the next general meeting. The first auditors of the company are usually appointed by the directors, but thereafter the auditors are appointed by the company in general meeting. If no auditor is appointed at an annual general meeting, the court may be requested to make such an appointment by any of the directors or shareholders. The directors may fill any casual vacancy.
b. Auditing standards
The Companies Act requires that the report of the auditor should be drawn up in accordance with the International Standards on Auditing. When matters come to the auditors’ attention that prevent an unqualified opinion, they must set out clearly the reasons why they are unable to give an unqualified opinion.
c. Responsibilities of the auditor
The auditors of a company also have responsibilities under the Companies Act to report to the company’s shareholders if, in their opinion:
- the information given in the directors’ report is not consistent with the financial statements
- adequate accounting records have not been kept, or that returns adequate for their audit have not been received from branches they did not visit
- the financial statements are not in agreement with the accounting records and returns
- they have not received all the information and explanations they require for their audit, and
- certain disclosures of directors’ remuneration specified by law are not made in the financial statements, giving the required particulars in their report