Resignation as a Statutory Auditor – Procedures to Follow

Resigning/removed as Statutory Auditor – what to do?

Resignation as Statutory Auditor – S. 400 of the Companies Act 2014

S. 400 of the Companies Act 2014 provides for the circumstances where the statutory auditor decides to resign as auditor (s.399 relates to the circumstances whereby the company has terminated the appointment of the auditor due to the audit exemption and S.394 where the auditor has been removed). In the circumstances of S.400 the auditor must serve a notice on the company stating their intention to resign.
 
Such a statement shall contain either a statement to the effect that there are no circumstances connected with the
resignation that the statutory auditors concerned consider should be brought to the notice of the members or creditors of the company, or a statement of any such circumstances as mentioned.


Sample wording where there are no circumstances that need be brought to the attention of the creditors or members
 
Dear X,
 
We hereby give notice in accordance with S. 400 of the Companies Act 2014 that we are resigning as statutory auditor of Y Ltd.
 
There are no circumstances connected with the resignation that we consider should be brought to the attention of the members or creditors of the company.


Within 14 days of the serving of the notice a copy of the statement shall be sent to the CRO. Within 30 days of the cessation the auditor must notify IAASA  - please click here for details. There is also a requirement for the company to advise IAASA which is detailed in the IAASA link provided.

Additional requirements apply where the auditor is of the opinion that there are circumstances that need to be brought to the attention of the members or creditors.
 
The auditor may also request that a general meeting of the company be convened in accordance with S.401 and 402.

 

Resignation following audit exemption – S. 399 Companies Act 2014

In circumstances where the appointment of the auditor is terminated following a decision by the directors to avail of the audit exemption, the statutory auditors, following receipt of this notification, shall, within the period of 21 days after the date of their being notified by the company of that decision, serve a notice on the company containing the statement to the effect that there are no circumstances connected with the resignation that the statutory auditors concerned consider should be brought to the notice of the members or creditors of the company, or a statement of any such circumstances as mentioned. A copy of this notice must be filed with CRO within 14 days.
 
It is not necessary to notify IAASA in such circumstances.


Removal of the Auditor – S. 394 of the Companies Act 2014

A company may remove a statutory auditor and must pass an ordinary resolution to do so. There are restrictions provided for within S.395 of the Companies Act 2014 on the circumstances in which the auditor can be removed, i.e. there must be good and substantial grounds for the removal, diverging opinions on accounting treatments or audit procedures cannot constitute the basis for the removal. Extended notice for such a resolution is required.
 
The auditor has the right to make representations to the members in accordance with S.397 of the Companies Act 2014.
 
The company must inform the CRO in these circumstances on a form H3 and also advise IAASA accordingly.
 
In the event that the auditor is removed, the auditor must inform IAASA to ensure compliance with S.403 of the Companies Act 2014.
 
You will find relevant details on the IAASA website.
 
The notice to IAASA should be accompanied by a copy of any representations in writing made to the company by the outgoing auditor, in relation to the intended resolution removing the auditor, except where such representations were not sent to the members of the company in consequence of an application to the court.