Asic cuts red tape

ASIC cut red tape on auditor resignations and has recently released a relaxation of the rules governing consenting to a change in auditor. This newapproach will allow for a much easier transition from one auditor to the next for companies in Australia.

The new guidelines mean ASIC will generally consent to an auditor’s resignation at any time, so long as they harbour no concerns about the transition.

It has long been a point of contention within the accounting industry that the process for changing auditors was so difficult. Our office has seen on auditormany occasions instances where ASIC disallowed the change of auditor when the outgoing auditor had, seemingly, very legitimate reasons for retiring. I personally have witnessed auditor’s having to continue to audit a public company long after they’ve lost the desire, time or technical skill to do so. This prevents the best person for the job performing the audit.

ASIC’s reasons for disallowing an easy transition are solid. It prevents ‘opinion shopping’ from occurring. Opinion shopping is the process whereby company directors continually change auditors until they find one that will give them the audit report the directors want, rather than one that is ‘true and fair’.

This new approach is broadly consistent with all the major economies of the world.

Alana Thomas


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