How to change auditor: a practical guide for UK businesses

This guide is for UK companies that already have a statutory auditor and are considering a change. It covers the reasons businesses switch audit firms, the formal change of auditors procedure under the Companies Act 2006, and the practical steps involved in making the transition work.

Relationships with professional advisers tend to last. Switching accountants, solicitors or auditors can feel like more trouble than it’s worth – so many businesses stay with firms they’ve quietly outgrown, or where the relationship has simply gone a bit flat.

However, changing your auditor is more common than you might think. In most cases it’s also a perfectly straightforward process. The decision to change can reflect good business sense: your company may have grown, your needs may have changed, or you may simply want a firm with deeper sector knowledge or a more hands-on approach.

Why do businesses change their auditor?

There’s no single reason, and none of them need to be dramatic. Here are some of the most common:

1. Your business has grown

A firm that was perfectly suited to auditing an owner-managed business may not have the capacity, sector expertise, or resources to handle one that is now far larger and more complex. Growth changes what you need from your audit – not just in terms of technical depth, but in terms of advisory capability, responsiveness and the quality of the advice you receive.

2. You want a more specialist perspective

Sector knowledge matters. An auditor who understands the regulatory environment, the typical risk areas and the benchmarks in your industry will add more value than a generalist. If your current firm lacks that expertise, it may be worth looking for one that has it.

3. The relationship has run its course

Audit is a relationship-driven service. If communication has become formulaic, turnaround times have slipped, or the partners you respected have moved on and been replaced by unfamiliar faces, the relationship may have drifted from where it should be. Familiarity can be a strength – but it can also breed complacency.

4. You want better value for money

This doesn’t simply mean paying less. It means getting more. If your audit fee has crept up over the years while the service has stayed the same – or if you’re not receiving the kind of proactive advice that justifies the cost – it’s reasonable to ask whether another firm might offer more for a similar or lower fee.

5. Independence and objectivity concerns

Long-standing audit relationships can occasionally raise questions – in your own mind, or in the minds of stakeholders – about whether sufficient professional scepticism is being applied. Periodic tendering or rotation is increasingly seen as good governance practice, particularly for larger or more complex businesses.

When can you change your auditor?

In most cases, the cleanest approach is to change your auditor at the end of a financial year, so that your incoming firm begins its engagement with a fresh set of accounts. This avoids complications mid-audit and gives both parties a clear point of transition.

That said, a change can be made at other times if circumstances require it. The change of auditors procedure differs depending on how the outgoing auditor is departing and the specific route the company takes.

The change of auditors procedure under UK company law

The formal process for changing your auditor is governed by the Companies Act 2006. It’s not complicated, but there are steps that must be followed correctly.

Auditors hold office until they are replaced

Under the Companies Act, a company’s auditor holds office from the conclusion of one appointment period to the next. For private companies, auditors are typically deemed to be automatically reappointed each year under section 487 unless the company takes active steps to replace them.

Watch out for automatic reappointment
Inaction is itself a decision. If your company misses the window to formally act, your existing auditor will typically be deemed reappointed for another year under section 487 of the Companies Act – even if you’ve mentally moved on. Make sure you act before the end of the appointment period, not after.

Ending the appointment: the two main routes

The two main routes relevant here are removal by the company and resignation by the auditor. The table below summarises the key differences.

Removal by the company

Under section 510 of the Companies Act 2006, shareholders can remove an auditor from office by passing an ordinary resolution at a general meeting. Special notice – a minimum of 28 days – must be given to the company before the resolution is put. The company must send a copy to the auditor being removed, who has the right to make written representations to shareholders and to attend and be heard at the meeting.

It is important to note that a resolution to remove an auditor under section 510 cannot be passed as a written resolution of a private company. Section 288 of the Companies Act expressly excludes it. Even for private companies, removal before the end of the term requires a general meeting.

This is distinct from the procedure under section 514, which allows a private company to appoint a replacement auditor by written resolution at year-end – for example, where the existing auditor’s term is ending and the company wishes to appoint someone new in their place. That is a different mechanism, operating at a different point in the process.

Auditor resignation

For a non-public-interest company, an auditor can choose to resign by sending a written notice to the company. Under section 516, the resignation takes effect on receipt of that notice (or a later date specified in it). For a public interest company, the notice is not effective unless it is accompanied by the statement required by section 519.

The position on the auditor’s statement of reasons and connected matters is more nuanced than it might appear. For a non-public-interest company, the auditor’s duty to send a statement under section 519 is conditional: it does not apply if the auditor’s reasons are all “exempt reasons” (as defined in section 519A) and there are no matters that need to be brought to members’ or creditors’ attention. Where a statement is required, the company must deal with it under section 520; the auditor may also need to send a copy to the registrar under section 521 and notify the appropriate audit authority under section 522. Separately, where the auditor ceases to hold office before the end of the term, the company may need to notify the appropriate audit authority under section 523 within 28 days.

Appointing the new auditor

Once the outgoing auditor has been removed or has resigned, the new firm can be formally appointed. For private companies, section 485 gives directors the power to appoint an auditor to fill a casual vacancy – which is typically the position that arises following a mid-term resignation or removal. Where directors make such an appointment, it takes effect immediately and does not automatically require subsequent shareholder ratification, though a company’s articles or governance arrangements may impose additional requirements.

Where the change takes place at year-end rather than mid-term, the appointment of the new firm will typically be made by the members by ordinary resolution within the 28-day appointment period under section 485(2).

The change of auditors procedure: a plain-English summary

Once you’ve decided to make the switch, the process broadly follows these steps:

1. Decide on timing. Changing at year-end is usually cleanest. If you’re mid-term, a resignation route is more straightforward than formal removal.
2. Speak to your new firm. Agree in principle before triggering the formal process, so there’s no gap in audit cover.
3. Follow the correct legal route. Serve the necessary notice, hold a general meeting if required (removal before term-end), or accept a resignation notice if the auditor is stepping down.
4. Authorise the professional enquiry. Give written consent for your outgoing firm to respond to your new auditor’s professional enquiry.
5. Ensure information is transferred. Your outgoing auditor is required by professional rules to make relevant audit information available to their successor on written request.
6. Complete any current notification steps. The old company notification rules in sections 512 and 517 no longer apply. Instead, if the auditor ceases to hold office before the end of the term, the company may need to notify the appropriate audit authority under section 523 within 28 days. Where a section 519 statement is required, related steps under sections 520 to 522 may also apply.

Professional clearance: what happens behind the scenes

Before a new audit firm formally accepts an appointment, it will make a professional enquiry of your outgoing auditor. This is standard practice under ICAEW’s Code of Ethics. It is not something you need to manage directly – it happens between the two firms.

The purpose of the enquiry is straightforward: the incoming auditor needs to establish that there are no professional reasons why they should not accept the appointment. Your outgoing firm is required to respond and disclose any matters the incoming auditor ought to be aware of.

You’ll need to give your written consent for the outgoing firm to respond – they cannot disclose information about your affairs without it. In practice, most businesses are happy to do so, and the exchange is usually unremarkable.

The outgoing auditor does not have the ability to withhold ‘clearance’ or ‘permission’ to act. That terminology is a common misconception: the decision to accept an appointment rests entirely with the incoming firm. The professional enquiry is a process of information-gathering, not a veto.

How to make the handover work well in practice

The legal process is only part of the picture. A smooth handover also depends on how you manage the practical transition. In fairness, it also depends on the quality and goodwill of both firms involved.

1. Timing matters

Where possible, plan the change so that your new auditor is appointed before the start of the financial year they will be auditing. This gives them time to carry out opening balance procedures, review the prior year audit file, and get to know your business before the year-end work begins in earnest. A rushed handover creates unnecessary pressure for everyone.

2. Be open with both firms

It’s worth being straightforward with your outgoing auditor about the change. Professional firms handle transitions regularly, and most will manage the process with good grace. Where there are unresolved issues – outstanding fees, queries on previous year accounts, or open matters – it’s better to address these directly rather than let them complicate the handover.

3. Give your new auditor a proper briefing

Your incoming firm will review the previous year’s working papers and pick up the key context from those – but nothing replaces a direct conversation. Give them a clear picture of your business. Explain how you’ve grown, what’s changed, any areas of complexity or risk, and what you’d like the audit relationship to look like going forward.

4. Access to prior year information

Under the rules governing recognised supervisory bodies, an auditor ceasing to hold office is required to make all relevant audit information available to their successor, on written request. This is a professional obligation – not a matter of goodwill – and it applies regardless of whether there are outstanding fee disputes or any other friction in the relationship.

It’s a point worth knowing. A disagreement over audit fees does not entitle an outgoing firm to sit on audit files or withhold information that your new auditor needs to do their job. If there are any difficulties in practice, your incoming firm can advise you on the appropriate steps.

What to look for in a new auditor

Changing auditor is also an opportunity – and it’s worth approaching it as one. Rather than simply selecting the nearest alternative, take the time to consider what you actually want from the relationship.

The following are worth thinking about:

• Sector knowledge and relevant experience. Does the firm have clients in your industry? Do they understand its regulatory environment, its commercial pressures, and its typical risk areas?
• Partner-level access and continuity. You want to know that the person signing off your audit is genuinely engaged with your business – not just reviewing the file at the last moment. Ask who will lead the engagement and how accessible they’ll be.
• Advisory capability. A good audit firm does more than tick boxes. Look for a firm that will have useful observations to offer, flag emerging issues, and act as a genuine business adviser alongside the compliance function.
• Clear fee structures and no hidden surprises. Make sure you understand exactly what is and isn’t included in the quoted fee, and ask about how out-of-scope work is handled.
• Cultural fit – and how to test it. This may sound soft, but it matters. You’ll be working closely with these people, often in time-pressured circumstances. A few well-chosen questions in a pitch meeting can reveal a lot: “How do you handle a technical disagreement with a client?” tests whether they prioritise the relationship or the right answer. “What is your typical response time for partner-level queries?” tells you how accessible they really are – not just in a pitch, but in the middle of a busy year-end. The answers matter less than how comfortable and specific they are in giving them.

A note for larger and regulated businesses

For public interest entities – broadly, companies with securities listed on a UK regulated market, together with unlisted banks and insurers – the rules around audit change are considerably more prescriptive. The mandatory firm rotation framework for PIEs is underpinned by both company law (via the Statutory Auditors and Third Country Auditors Regulations 2016, which amended Part 16 of the Companies Act) and the FRC’s Ethical Standard. Under this regime, PIEs are required to put their audit out to tender at least every ten years, and to change their auditor at least every 20 years. These requirements come with audit committee involvement, prescribed tendering procedures, and specific rules on the circumstances in which extensions may be permitted.

These statutory and regulatory requirements are distinct from – and considerably more demanding than – the general change of auditors procedure that applies to private companies. If your business falls into the PIE category, you will want to take advice tailored to your specific position.

For the vast majority of UK businesses – private limited companies subject to statutory audit – the process described in this guide applies.

Thinking of making a change? Talk to THP

At THP, our audit team works with businesses across a wide range of sectors. If you’re considering changing your auditor and would like to learn more, simply get in touch.

There’s no obligation, and we’re happy to talk through your situation before any decision is made. Contact me (Andy Green) or your nearest THP office to find out more about our audit services.

Frequently asked questions

Can I change my auditor at any time?

Yes, though the timing matters in practice. The cleanest approach is to change at the end of a financial year. Mid-term changes are possible. They can be done either through a formal removal process at a general meeting or by accepting the auditor’s resignation. However, they require careful management to avoid disrupting the audit process. In all cases, the formal change of auditors procedure under the Companies Act 2006 must be followed.

Does my outgoing auditor have to cooperate with the handover?

Yes. An outgoing auditor is required to make all relevant audit information available to their successor on written request. This professional obligation cannot be withheld on the grounds of a fee dispute or other disagreement. They are also required to respond to the incoming firm’s professional enquiry.

Can an auditor refuse to be removed?

No. Shareholders have an absolute right under section 510 of the Companies Act to remove an auditor by ordinary resolution at a general meeting. The auditor has the right to make written representations and to attend and be heard at the meeting. However, they cannot prevent the resolution from taking effect.

Will changing auditor affect my company’s accounts or filing timetable?

Not if the transition is well planned. Your new auditor will need to carry out opening balance procedures and review prior year working papers. This takes a little extra time at the start of the engagement. Changing at the end of a financial year – giving your new firm time to prepare before the audit begins – minimises any impact on your timetable.

Does Companies House need to be notified?

Not under the old 14-day company-notification rules in sections 512 and 517. Those were removed. The current question is whether the company must notify the appropriate audit authority under section 523 if the auditor ceases to hold office before the end of the term. Separately, where a section 519 statement is required, the auditor may also need to send a copy to the registrar under section 521.

Is changing auditor a sign of something being wrong?

Not at all. Businesses change auditors for entirely positive reasons. These include growth, the pursuit of better value, or simply a desire for a fresh perspective. Periodic review of your audit appointment is good governance. It encourages professional rigour, can surface new ideas, and ensures your audit relationship continues to reflect your current needs.