On 31st March 2010, Black and Black completed the audit of E-Wine Pty Ltd for the vear ended 31 December 2009. E-Wine is a wine store that operates solely on the internet. On 15th May 2010, Tom Black (Audit Partner) received a phone call from the financial controller of E-Wine, Ms. Chong who was very angry. Ms. Chong said that their accounts receivable clerk suddenly resigned a month ago. This sudden departure raised suspicions and after an investigation of the accounting records, it was discovered that $200,000 was missing. Subsequently, the Board met and decided Black and Black was almost entirely to blame. As a result, Ms. Chong, said the Board had decided to dismiss Black and Black as auditors, effective immediately. Black and Black would receive written confirmation in the next week and legal action would probably follow. Required:

1. Explain whether E-Wine has taken the proper action to remove an auditor. Consider the provision of Fiji Companies Act.

2. Explain why restrictions are placed in removing auditors.