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Termination of auditors appointment - Coggle Diagram
Termination of auditors appointment
Resignation of auditors
An auditor may resign their office by giving notice to the company with the notice taking effect on the date it is given or such later date as may be contained in the notice
If the company is a PIE, the notice has no effect unless it is accompanied with a statement setting out the reasons for their resignation and any matters connected with their resignation that they wish to be brought to the attention of the members or creditors of the company
If the company is not a PIE, the auditor must send a statement to the company setting out the reasons for their resignation unless
In the case of a private company, at the end of a period for appointing auditors
In the case of a public company, at the end of an accounts meeting
The auditors reasons for ceasing to hold office are all exempt reasons
There are no matters connected with the auditors ceasing to hold office that the auditor considers need to be brought to the attention of members or creditors of the company
The exempt reasons for an auditors resignation are
The auditor is ceasing to carry out statutory audit working within the meaning of the Act
The company is or is to become exempt from audit
The company is a subsidiary undertaking of a UK parent undertaking and the parent undertaking prepares accounts and the auditor is being replaced as auditor of the company by the auditor who is conducting the audit of the group accounts
The company is being wound up under IA1986
Where the auditor is required to make a statement but the auditor considers that neither the resons for their resignation nor any other matters need to be brought to the attention of the members or creditors their statement should include a statement to that effect
A resigning auditor of a company that is a PIE who makes a statement that they consider should be brought to the attention of memebrs and creditors of the company may lodge a requisition calling on the directors to convene a general meeting of the company to consider the explanation of the circumstances connected with the resignation. The directors must convene this meeting within 21 days of the deposit of the requisition to be held on a date not more than 28 days from the date of the notice conveying the meeting
The auditors statement must be sent to the members of the company with the notice of the meeting, if the statement to received too late, the auditor may require that the statement is read out at the meeting. The statement need not be sent if on application of the company, the court is of the opinion that the provisions are being used by the auditor to secure needless publicity for defamatory matter
Rights of auditors who are removed or not reappointed
Where a resolution is to be proposed at a general meeting or by written resolution for removing an auditor before the expiration of their term of office or for appointing as auditor a person other than a retiring auditor the following requirements must be adhered to
Copies of the special notice or of the WR must be sent as soon as practical by the company to the person proposed to be appointed as auditor and to the retiring auditor
The auditor proposed to be removed may make representations in writing to the company on the proposed resolution and may ask the company to circulate that representation to the shareholders of the company
The company must comply with that request. If it is too late to include the representation with the notice of the meeting, a note that a representation has been made should be included and a copy of the representations to be read out at the meeting
The auditor proposed to be removed or not reappointed is also entitled to receive notice of and to attend and speak at the GM at which the resolution for their removal or non-reappointment is to be considered
The representations need not be sent out or be read at the meeting if, on the application of either the company or any other person claiming to be aggrieved, the court is satisfied that the rights conferred on the auditor proposed to be removed or not reappointed are being abused to secure needless publicity of a defamatory nature. In these circumstances, the court may also direct that the company's costs in making the application be met in whole or in part by the auditor
Company's obligation on cessation of auditor's appointment
A PIE and any other company receiving a statement from an auditor ceasing to hold office which contain reasons or matters that the auditor wishes to bring to the attention of the members or creditors must within 14 days of receipt of the statement either
Send a copy of the statement to every person entitled under CA2006 s.423 to receive a copy of the audited acocunts
Apply to the court for an order that it need not do so
If application is made to the court, the company must notify the auditor of the application. The court may reject the statement made by the auditor and order costs against the auditor in full or in part
Within 14 days of the judgement, the company must send a statement of the court's decision to those persons entitled to receive copies of the audited accounts. If the court upholds the auditors statement, the company must issue the statement to those persons entitled to receive copies of the accounts within 14 days of the courts decision, including the auditor
Audit notification to Companies House and appropriate audit authority
If the audit is not notified within 21 days that an application is to be made to the court, they must sent a copy of their statement to the Registrar within the next 7 dys
If an application is made to the court and rejected, the auditor must send a copy of their statement to the Register within 7 day of being notified of the court's decision by the company
If an auditor sends a statement to the company, they must as the same time, send a copy of their statement to the appropriate audit authority
Company notification to appropriate audit authority
Under certain circumstances, a company is required to notify the relevant audit authority that their auditor has ceased to hold office as auditor
The relevant audit authority will be either the auditors recognised supervisory body or the FRC if the company is a PIE