Flow Chart for Companies
Form of the statement
The notice is to take the form of a statement by the company of what the company believes to be the reasons for the auditor’s ceasing to hold office and 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;
- The company’s name and registered number.
Where the company receives a statement from the auditor under section 519, the statement is sent at the time required by section 519(4), and the company agrees with the contents of the statement, the notice may take the form of a copy of the statement endorsed by the company to the effect that it agrees with the contents of the statement.
The notice must be given within 28 days of the auditor ceasing to hold office.
Section 519A (3) of the Companies Act 2006 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of that Act or Part 5 of that Order for the winding up of the company has been presented and not finally dealt with or withdrawn.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) 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 from the earlier of (see section 485(2)):
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
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.
Section 519A of the Companies Act 2006, as amended by Statutory Auditors and Third Country Auditors Regulations 2016, defines a Public Interest Company as any 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 575/2016 of the European Parliament and of the Council, other than one listed in Article 2 of Directive 2016/36/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 Council Directive 1991/674/EEC of the European Parliament and 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.
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.