When auditors leave office: new rules under Companies Act 2006

November 2007

A perception exists that when auditors resign or are removed from office, the full circumstances do not always come to light. The Companies Act 2006 introduces new duties for companies and auditors, particularly, though not exclusively, in relation to the audits of listed companies. PwC has co-published a briefing paper with law firm Herbert Smith containing practical guidance for companies and auditors regarding new legal duties, arising from the Companies Act 2006, where the auditor either resigns or is removed from office by the company.

The guidance explains the new duties and focuses on key questions that directors might ask:

• What kind of issues might be reported to members by a departing auditor?
• Do companies have any rights or obligations to report their reasons as to why an auditor has left office?
• How are regulators involved in this process?