You are auditor of a small building contractor with two partners, Thomas Murton and Ezra Byland. Neither of them has much accounting knowledge, although both are very good craftsmen. They have asked to see you because they believe they should consider forming a limited company, which they have heard would give them limited liability. They would, however, like to know what it would mean in practical terms, that is, could they continue to run the business in exactly the same way as they had been doing.

Required:

Advise them of their duties as directors and what the audit requirements would be. You should refer to the relevant CA 2006 sections as you are working through this question.