ACCA Audit and Assurance (F8) Practice Exam

Which legislation outlines the rights of auditors?

1. Companies Act 1956

2. Companies Act 2006

3. Companies Act 1985

4. Corporate Governance Code

The correct answer is: Companies Act 2006

The Companies Act 2006 is the correct choice as it significantly modernized and consolidated UK company law, providing a comprehensive framework for corporate governance and the rights and responsibilities of various stakeholders, including auditors. This legislation specifically outlines the rights of auditors, such as the right to access company records, obtain information from company officers, and attend general meetings. By establishing clear guidelines for auditors, the Companies Act 2006 enhances the accountability and transparency of the auditing process, thereby protecting the interests of shareholders and ensuring the reliability of financial reporting. The other options refer to earlier versions of company legislation, which do not encompass the robust framework introduced in the 2006 Act. While the Companies Act 1956 and the Companies Act 1985 were important historical frameworks, they were superseded by the 2006 Act, which reflects updated practices and requirements for auditors in the UK. The Corporate Governance Code, while relevant to governance standards, does not specifically delineate the rights of auditors but rather focuses on broader governance principles and practices for listed companies.