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The Accounting and Financial Reporting Council (AFRC) today issues a follow-up open letter (the follow-up letter) to public interest entity (PIE) auditors and audit committees of PIEs to express its concerns and reiterate its expectations on auditor changes.

The AFRC first published an open letter in relation to late PIE auditor resignations on 27 October 2022.  Since then, there were 56 auditor resignations between 1 November and 31 December 2022, representing a 15% decrease from 66 for the same period in 2021.  Announcements by PIEs show that the number of auditors attributing their resignations to disagreement over audit fees has decreased.  Nonetheless, we remain concerned about certain market developments (such as the use of voluntary rotation under the guise of good corporate governance as a reason for changing auditors), and their implications on audit quality as well as on the wider issue of market discipline such as opinion shopping.

In view of the above issues, the follow-up letter sets out specific expectations for incoming auditors, outgoing auditors and audit committees, all of which have their important roles to play and are accountable for ensuring the quality of financial reporting and audits.

For details, please click here.