Insights

The Australian Securities and Investment Commission (ASIC) recently announced that it will loosen the constraints on the process for changing an auditor.

ASIC to accept resignation of auditors at any time if conditions are met

The Corporations Act 2001 (Cth) ("the Act") regulates how a public company may change its external auditor. Section 329 of the Act provides that a company required to have an auditor under the Act must obtain consent from ASIC in order for that auditor to resign.
 
On 18 June 2015, ASIC made an announcement, ASIC Reduces red tape for changes of auditors, that it will now consent to the resignation of an auditor at any time if:

  • there are no concerns in connection with the resignation, such as a concern where there is a disagreement between management and the auditor over an accounting treatment; and;

  • the change in auditor and the reasons for the change are communicated to members or in a disclosure notice, unless the change occurs at an annual general meeting (AGM).

Before ASIC announced these changes, ASIC would only consent to the resignation of an auditor if it was at the company's AGM unless there were "exceptional circumstances". 
 
ASIC's new approach is broadly consistent with the approach in other major jurisdictions around the world. 

Updated Regulatory Guide 26 on replacement of auditors

The new approach is set out in the revised Regulatory Guide 26 Resignation, removal and replacement of auditors (RG 26). The revised RG 26 also outlines how to apply for ASIC consent to the resignation, removal and replacement of auditors of registered schemes, Australian Financial Services licensees and credit licensee trust accounts. 

This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal or financial advice. Please seek your own legal or financial advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​

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