Resignation and removal of auditors of registered scheme financial report or a compliance plan

This is Information Sheet 64 (INFO 64). It is for auditors of registered scheme financial reports or compliance plans who wish to resign, or responsible entities that wish to remove an auditor from office under the Corporations Act 2001 (Corporations Act).

It explains:

• when we will consent to an auditor’s resignation or removal
• when our consent is not required
• how and when to lodge an application
• the procedure after you have applied for consent, for both a resignation and removal, and the requirement to notify ASIC of the change in auditor
• why applications are returned.

As registered schemes have no annual general meetings, appointments of auditors of a registered scheme financial report or compliance plan are managed by responsible entities. As such, responsible entities play an important role in ensuring auditor independence and audit quality.

Detailed guidance on how we apply the provisions of the Corporations Act relating to the resignation and removal of auditors of registered scheme financial reports and compliance plans is in Regulatory Guide 26 Resignation, removal and replacement of auditors (RG 26), particularly RG 26.68–RG 26.76.

When we will consent to an auditor’s resignation or removal

An auditor of a registered scheme financial report or compliance plan who wishes to resign, or a responsible entity that wishes to remove an auditor from office, must apply to ASIC for our consent.

In general, we will consent to the resignation or removal as an auditor of a registered scheme financial report or compliance plan to take effect at any time of the year if:

• our criteria for consent are satisfied (see RG 26.17)
• all relevant supporting information is provided with the application (see RG 26.71).

However, we will generally not consent to the resignation or removal of an auditor at any time of the year if:

• concerns are raised by the outgoing auditor about a disagreement with management or directors, including management or directors of a responsible entity (see RG 26.22–RG 26.27), and/or
• other evidence indicates that we should not provide our consent, including the outgoing auditor being made aware that their resignation or removal may be connected with ‘opinion shopping’ (see RG 26.18–RG 26.21).

We will decide whether to consent to a resignation or removal on the merits of each application.

The resignation of an auditor of a registered scheme financial report or compliance plan can only take effect on whichever of the following dates occurs last:

• the day specified in the notice of resignation
• the day on which we give consent, or
• the day fixed by us for this purpose under sections 331AC(5) and 601HH(5) (e.g. if disclosure is required as a condition of our consent).

For the removal of an auditor of a registered scheme financial report or compliance plan under sections 331AC(1) or 601HH(1)(b), the appointment continues until we give our consent and it ends in accordance with the terms of our consent.

When our consent is not required

If the auditor of a registered scheme compliance plan has become ineligible to act under section 601HG(2), the responsible entity must remove the auditor: section 601HH(1)(a). Our consent is not required in this case.

If the auditor of a registered scheme financial report has become ineligible to act under Divisions 2 or 3 of Part 2M.4, the auditor ceases to hold office: section 331AAA(2). The auditor will also cease to hold office if the scheme is to be wound up: section 331AD.

How and when to lodge an application

An application may be lodged, using the required form, at any time of the year subject to the requirements in RG 26. The following forms apply:

• Form 5112 Application for consent from ASIC to remove compliance plan auditor
• Form 5113 Application for consent from ASIC to resign as compliance plan auditor
• Form 5132 Application for consent from ASIC for resignation or removal of scheme auditor.

The auditor continues to hold office until consent has been granted. For this reason, auditor arrangements should not be changed before our consent is received.

We do not have the power to allow a resignation to take effect before the date on which we give consent, nor can we backdate our consent. You should lodge your application within a reasonable time so we can give due consideration to the information provided and arrive at a decision.

Generally, a reasonable time is at least three weeks before the intended date of change.

The procedure after you have applied for consent

Resignations

When an auditor applies to ASIC for consent to resign, the auditor must advise the responsible entity in writing that an application is being made: sections 331AC(2)(a)(ii) and 601HH(2)(a)(ii).

After a decision has been reached, we will advise both the auditor and the responsible entity in writing.

If we grant our consent to the resignation, the auditor must give written notice of their resignation to the responsible entity. This notice cannot be given to the responsible entity until after our consent has been received.

Removals

When an application is made to ASIC for consent to remove an auditor, the responsible entity must advise the auditor in writing that an application is being made.

If we approve the application and grant consent, we will advise the responsible entity in writing. The responsible entity should then give written notice of our decision to the auditor. Such notice should not be given until after the entity has received notification of our decision.

Notification of auditor change

The responsible entity must then lodge Form 5133 Notification of resignation, removal or cessation of a registered scheme auditor within 14 days after receiving a notice of resignation from the auditor or after the removal of the auditor: section 331AC(7).

The responsible entity must appoint an auditor to fill the vacancy no later than one month after the resignation or removal: section 331AAB(1). Form 5137 Notification of appointment of scheme auditor must be lodged by the responsible entity within 14 days of the appointment.

If the auditor of the compliance plan has changed, the responsible entity must lodge Form 5114 Notification of request by responsible entity to change compliance plan auditor as soon as practicable: section 601HI.

Why applications are returned

Our experience is that some auditors lodge applications that are either incomplete or based on one or more misconceptions about what the Corporations Act requires.

Applications that do not sufficiently address the matters referred to in RG 26, or that are incomplete or deficient, will not be assessed by us until all relevant information is provided. In this case, we will return the application to you with an ‘Intent to refuse’ letter, seeking correction of the deficiencies and asking for further information to support the application. See the checklist of information to be provided with your application in the appendix to RG 26.

Where can I get more information?

Download RG 26 Resignation, removal and replacement of auditors.

Call ASIC on 1300 300 630.

Submit a question online at www.asic.gov.au/question.

Important notice

Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. We encourage you to seek your own professional advice to find out how the applicable laws apply to you, as it is your responsibility to determine your obligations.

You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases, your particular circumstances must be taken into account when determining how the law applies to you.