Guidance Notes on Change of Auditors

The AFRC has been closely monitoring the phenomenon of late auditor resignations and its impact on audit quality. The AFRC outlines its most recent concerns in two publications: “AFRC Addresses Concerns Surrounding Auditor Changes” (the “Paper”) and the Guidance Notes on Change of Auditors (the “Guidance Notes”).

In the Paper, the AFRC urges auditors and audit committees of listed companies to remain vigilant about the remaining issues relating to late auditor resignations, including:

1. insufficient planning and resource allocation by incoming auditors; and
2. unwillingness of listed companies to resolve the critical audit issues leading to the auditor resignation.

The Guidance Notes provide guidance for PIE auditors and audit committees on how to best fulfil their respective responsibilities when managing a change of auditors. They consist of an introduction and three subsets targeting different parties, including:

1. Outgoing auditors, when resigning from audit engagements;
2. Incoming auditors, when accepting new engagements; and
3. Audit committees, when an auditor resigns.

The Guidance Notes articulate our expectations of PIE auditors and audit committees when managing auditor changes. They also provide concrete examples of how auditors and audit committees should conduct themselves in these circumstances.