ASIC consent is required under legislation for the resignation of public company auditors and the resignation and removal of scheme auditors or Australian Financial Services (AFS) licensee auditors. It is also required for the resignation or replacement of auditors of Australian credit licensee trust accounts. ASIC’s existing regulatory guide RG 26 Resignation of auditors provides guidance on the timing of the lodgement of applications for consent and when auditor resignations, removals or replacements should take effect.
Consultation Paper 209 Resignation, removal and replacement of auditors: Update to RG 26 (CP 209) seeks views on questions like these:
- Should ASIC continue to normally consent to the resignation of a public company auditor at the next AGM?
- Should ASIC continue to normally consent to the resignation or removal of scheme auditors within the one month after lodgement of the annual audit report?
- Do audit committees or directors generally control the timing of the resignation, removal or replacement of auditors?
- Should ASIC consent continue to be conditional on the entity having obtained a possible replacement auditor?
- If a company is unable to appoint a replacement auditor, how should ASIC comply with its statutory obligation to appoint an auditor?
- Should ASIC consent to the resignation of the incumbent auditor whenever a proposed new auditor has already commenced work?
- Should ASIC consent to the immediate resignation of an audit firm where it is merged into another firm or replaced by an authorised audit company?
ASIC will consider whether to fundamentally change our approach to consenting to the resignation, removal and replacement of auditors having regard to feedback received, legislative independence requirements introduced since the current regulatory guide was issued, experience under our current approach and the approaches in other jurisdictions.
To assist in making submissions on ASIC’s current approach to consenting to resignation, removal or replacement of auditors, the consultation paper is accompanied by a draft updated regulatory guide RG 26 Resignation, removal and replacement of auditors (RG 26) that illustrates that approach. This draft should not be taken to imply that ASIC will not change its approach.
Unlike the current regulatory guide, the draft updated RG 26 includes the possible approach in relation to resignation, removal or replacement of auditors of AFS licensees and credit licensee trust accounts.
The updated RG 26 is also intended to assist auditors and entities by providing more transparency in our guidance under the current approach, including additional examples of what may or may not constitute circumstance for early consent to auditor resignation, removal and replacement.
Submissions on CP 209 close on 30 August 2013.
Other guidance
ASIC has also released an updated regulatory guide RG 34 Auditor’s obligations: Reporting to ASIC (RG 34).
The updated RG 34 continues to provide guidance on the legislative obligations of auditors of companies and registered schemes to report suspected contraventions of the Corporations Act to ASIC, and similar obligations under other legislation. The updated RG 34 also provides improved examples of circumstances that may and may not require reporting to ASIC and introduces guidance for auditors of credit licensee trust accounts.
In 2012, ASIC issued an updated regulatory guide RG 180 Auditor registration. The main change was to include guidance on applications for the registration of New Zealand issuer auditors as registered company auditors under the Trans-Tasman Mutual Recognition Act.
