There’s a wealth of information on the ASIC website about the process to resign as a financial auditor of a company but here are the key points you need to be across.
Information about auditors of a public company limited by guarantee
There are 3 types of public companies limited by guarantee, with different reporting obligations:
- Tier 1: Small company limited by guarantee with revenue less than $250,000. Tier 1 companies do not have to prepare a financial report or have the report audited, unless instructed by a member or by ASIC.
- Tier 2: Company limited by guarantee with annual (or consolidated) revenue of less than $1 million. Tier 2 companies must prepare a financial report. The company may choose to have the report reviewed rather than audited, unless it is a Commonwealth company or subsidiary.
- Tier 3: Company limited by guarantee with annual (or consolidated) revenue of $1 million or more. Tier 3 companies must prepare a financial report and must have the financial report audited.
Appointment of auditors
Tier 1 and 2 companies do not have to appoint a registered company auditor if they plan to have the financial reports reviewed instead of audited. However, they may choose to appoint an auditor.
Tier 3 companies must appoint a registered company auditor and fill any auditor vacancies.
Resignation of auditors
The auditor of a Tier 1 company does not need ASIC consent to resign. The auditor must resign in writing to the company, and ASIC suggests the following wording:
“I am resigning from the office of company auditor for [insert company name and ACN], a small company limited by guarantee as defined in s45B of the Corporations Act 2001. I am therefore able to resign without obtaining ASIC consent.”
The auditor of a Tier 2 or Tier 3 company must resign under the regulations of Regulatory Guide 26 Resignation, removal and replacement of auditors (RG 26). For details, you can download the PDF here. (See the section about how to resign below, including which forms are required.)
You can find more information on ASIC Information Sheet 65 Resignation of an auditor of a public company (INFO 65)
If you’re looking for information about how to remove an auditor of a company (as opposed to the auditor instigating their own resignation), see ASIC Information Sheet 62 Removal of an auditor of a company (INFO 62).
How to resign as an auditor of a public company limited by guarantee
The auditor can lodge ASIC’s “Form 342 Application for consent to resign as an auditor” at any time. The auditor must continue to hold office until ASIC grants consent to resign.
Applications for consent to resign as an auditor must be lodged at least 3 weeks prior to the company’s next AGM or 3 weeks prior to the proposed timing of the resignation. ASIC’s consent for resignation cannot be backdated.
The ASIC fee for processing Form 342 is $40, payable by the auditor. There is no specific lodging period, so late fees do not apply.
Regulations of resignation for AFS Licensees
If the company is an Australian Financial Services (AFS) Licensee, the auditor must seek ASIC consent to resign, or the company must seek ASIC consent to remove the auditor. Information about resignation or removal of AFS Licensee auditors is in RG 26.29 – RG 26.32 of this document. To resign as an auditor of a company that is an AFS Licensee, lodge ASIC “Form FS08 Application for consent from ASIC to resign as an auditor of an Australian financial services licensee”.
If the company is a Proprietary company, ASIC’s consent is not required for an auditor to resign, unless the company holds an Australian Financial Services (AFS) licence. See sections RG 26.77 to RG 26.82 of this document. To resign as an auditor of a company that is an AFS Licensee, lodge ASIC “Form FS08 Application for consent from ASIC to resign as an auditor of an Australian financial services licensee”.
No fee applies for the lodgement of Form FS08. The form must be lodged 3 weeks prior to the next AGM, or 3 weeks prior to the proposed resignation date. Late fees do not apply.
Will ASIC give or decline consent?
ASIC reserves the right to decline consent in some circumstances. ASIC describes when they are likely to give or decline consent to resign in sections RG 26.4 to RG 26.7 of this document.
See the ASIC page for more information about the appointment and removal of registered company auditors.
Finalising the auditor’s resignation
After ASIC has given the auditor consent to resign, ASIC will advise both the auditor and the company in writing. Then the auditor must advise the company in writing.
The company’s directors must lodge ASIC’s “Form 315 Notification of resignation, removal or cessation of auditor” within 14 days after receiving the notice of resignation from the auditor. The form must be printed, signed and lodged by mail.
No fee applies for the company to lodge Form 315, provided the company lodges the form within 14 days of ASIC’s notice of consent. However, late fees apply if not received within 14 days: $79 for up to one month late, and $329 for over one month late.
Please note: This information is of a general nature only. Readers are advised to seek legal advice on any particular matters.