Sec 266 (4)-(7): Powers of auditors

The auditor’s powers under the Companies Act 2016, arranged by section/subsection:

Section 266 (4) Right of access & to require info/explanations: 

access at all reasonable times to accounting/other records (incl. registers) and may require from any officer (and any auditor of a related company) any info/explanations needed for the audit.

Section 266 (5) Group audit access: 

for a holding company, access to subsidiaries’ records and the right to require info/explanations from officers/auditors of subsidiaries (at the holding company’s expense).

Section 266 (7) Meeting rights: 

entitled to receive notice of, attend, and be heard at any general meeting on business concerning the auditor in that capacity.

Section 266 (8) Report to Registrar (breach/non-observance): 

must report in writing to the Registrar if a breach of the Act is not (or will not be) adequately dealt with via the audit report or by notifying directors. (Additional for your Knowledge)

Section 266 (9) Report serious offences (public/controlled companies): 

must report suspected serious offences involving fraud or dishonesty by officers to the Registrar. (Additional for your Knowledge)

Section 285 (1)–(2) Mandatory AGM attendance to answer audit questions:

public-company auditors must attend the AGM where financial statements are laid;

private-company auditors must attend if a resolution requires their presence—so they

can respond to audit-related questions. (Additional for your Knowledge)

(Related protection) Section 286 (1)–(3) Qualified privilege & immunity: 

statements made in the course of duties (and reports made in good faith under s.266) are protected from defamation/criminal or disciplinary action—supporting the exercise of the above powers. (Additional for your Knowledge)

(Source: Companies Act 2016 (Act 777), as at 1 Aug 2022.) (SSM)

The auditor’s main powers

1. Access – unrestricted access to all books and records.
2. Ask – can demand any info or explanation from officers (and from group companies).
3. Inspect group – can go into subsidiaries’ records for consolidation audit.
4. Attend & speak – can attend general meetings and speak on audit-related matters.
5. Report – can issue an official audit report to members that must accompany the financial statements.
6. Escalate to regulator – can (and must) report suspected breaches or serious fraud to the Registrar, and is legally protected when doing so.