Flow Chart for Audit Firms
Form of the statement
The statement must include:
- The auditor’s name and address
- The number allocated to the auditor on being entered in the register of auditors kept under section 1239 CA06;
- The company’s name and registered number.
Where there are matters connected with an auditor’s ceasing to hold office that the auditor considers need to be brought to the attention of members or creditors of the company, the statement under this section must include details of those matters.
If the auditor considers that none of the reasons for ceasing to hold office and no matters (if any) connected with the auditor’s ceasing to hold office, need to be brought to the attention of members or creditors of the company, the statement must include a statement to that effect.
Section 519A CA06, as amended by Statutory Auditors and Third Country Auditors Regulation 2016, defines a Public Interest Company as a company which is:
- an issuer whose transferable securities are admitted to trading on a regulated market;
- a credit institution within the meaning given by Article 4(1)(1) of Regulation EU No. 575/2013 of the European Parliament and of the Council, other than one listed in Article 2 of Directive 2013/36/EU of the European Parliament and of the Council on access to the activity of credit institutions and investment firms; or
- an insurance undertaking within the meaning given by Article 2(1) of the Council Directive 1991/674/EEC of the European Parliament and of the Council on the annual accounts and consolidated accounts of insurance undertakings.
‘Transferable securities’ means anything which is a transferable security for the purposes of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments.
“issuer” and “regulated market” have the same meaning as in Part 6 of the Financial Services and Markets Act 2000.
Section 519A(3) of CA06 defines “exempt reasons” as circumstances where:
- The Auditor is no longer to carry out statutory audit work within the meaning of Part 42 (see section 1210(1));
- The company is, or is to become, exempt from audit under section 477, 479A or 480, or from the requirements of this Part under section 482, and intends to include in its balance sheet a statement of the type described in section 475(2);
- The company is a subsidiary undertaking of a parent undertaking that is incorporated in the United Kingdom and
- The parent undertaking prepares group accounts, and
- The Auditor is being replaced as auditor of the company by the auditor who is conducting, or is to conduct, an audit of the group accounts.
- The company is being wound-up under Part 4 of the Insolvency Act 1986 or Part 5 of the Insolvency (Northern Ireland) Order 1989 (SI 1989/2405 (NI 19)), whether voluntarily or by the court, or a petition under Part 4 of that Act or Part 5 of that Order for the winding up of the company has been presented and not finally dealt with or withdrawn.
The reason described in c) above is only an exempt reason if the auditor who is conducting, or is to conduct, an audit of the group accounts is also conducting, or is also to conduct, the audit (if any) of the accounts of each of the subsidiary undertakings (of the parent undertaking) that is incorporated in the United Kingdom and included in the consolidation.
The end of the period for appointing an auditor for private companies is 28 days beginning with (see section 485(2) of CA06):
(a) the end of the time allowed for sending out copies of the company's annual accounts and reports for the previous financial year (see section 424), and
(b) the day on which copies of the company's annual accounts and reports for the previous financial year are sent out under section 423.
The end of an accounts meeting for a public company is the date of a general meeting of the company at which the company's annual accounts and reports are (or are to be) laid in accordance with S.437 CA06.
How to send the statement to the FRC
The notifications to the FRC should be sent either in hard copy or by email, as follows:
In hard copy to:
Change of Auditor Notification
Financial Reporting Council
125 London Wall
By Email to:
How to send the statement to the RSB
The RSB (Recognised Supervisory Body) is the body with which the audit firm is registered and which is responsible for the direct regulation of that audit firm. This will be one of the ACCA, ICAEW, ICAS or CAI.
Guidance on notifying changes of auditors to the RSBs can be found on the website of the RSBs.