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 is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.