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Changing auditors

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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Changing auditors

Mike Metcalf
ICSA Publishing Ltd, 2013

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1. Quoted holding company

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.

2. Unquoted 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.

3. Subsidiaries

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.

4. An explanation of detailed auditor changeover rules

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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Please note that the information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although KPMG LLP endeavours to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice following a thorough examination of the particular situation.

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