Selecting the right audit firm is an important choice. Making the recommendation to the board in relation to the appointment of the external auditor is a fundamental part of the role of the audit committee, where one exists. However, auditor appointment is an important matter for shareholders as the auditor reports to them, and so the recommendation for appointment or re-appointment is ultimately for them to approve in general meeting.
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Chapter 1 looks at quoted companies and outlines the procedures involved in changing the auditor at either the annual general meeting (AGM) or in filling a casual vacancy - the two options available for quoted companies.
Chapter 2 addresses unquoted companies, again distinguishing between the procedures involved in changing auditors part-way through the year (to fill a casual vacancy) which is usually the case where there are only a few active shareholders involved in the selection process; and at the AGM or otherwise by shareholders’ resolution, which is usually the case where there are a large number of passive shareholders.
Chapter 3 looks at the practical implications of changing the auditors of subsidiaries. This is largely a logistical challenge, as a quoted group might have hundreds of UK subsidiaries.
Chapter 4 provides an explanation of the detailed statutory rules on auditor appointment; the statutory rules on the termination of the old auditor’s appointment; and professional and contractual matters.
Appendix: Defined terms
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