The auditor may decide to resign during his period of office. However, company law will generally give certain safeguards to make sure that the shareholders are made aware of any related circumstances concerning to the auditor’s resignation.
The procedures for the resignation of the present auditors will generally include the following:
The procedures for the resignation of the present auditors will generally include the following:
- The resignation should be made to the corporation in writing. The corporation should submit this resignation letter to the proper regulatory authority.
- The auditor should prepare a statement of the circumstances. This sets out the circumstances leading to the resignation, if the auditor believes that these are related to the shareholders or creditors of the company. If no such circumstances be present, the auditor should create a statement to this effect. This statement should be sent by the auditor to the regulatory authority or by the company to all persons entitled to get a copy of the company’s financial statements.
- The auditors may require the directors to call a meeting of the shareholders in order to discuss the circumstances of the auditor’s resignation.
- In certain circumstances, auditors may be required to notify the authorities themselves of their removal.
For example, in the UK, auditors of listed companies must do this whenever they cease to hold office and other auditors must do so when they cease to hold office before the end of their current term of office.