The Institute of Chartered Accountants of India ( ICAI ) has released an Implementation Guide on Resignation/ Withdrawal from an Engagement to Perform Audit of Financial Statements.
The objective of this Implementation Guide is to provide guidance to auditors in case of resignation/ withdrawal from an engagement to perform the audit of financial statements.
The financial statements of an entity are prepared by the management of the entity to provide information about the financial position, financial performance and cash flows of the entity that is useful to a wide range of users in making economic decisions.
The purpose of an audit is to enhance the degree of confidence of intended users in the financial statements. This is achieved by the expression of an opinion by the auditor on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework and are free from material misstatement whether due to fraud or error. An audit of financial statements is intended to provide credibility to the financial statements through the report issued by an auditor.
In 2018, there has been the number of mid-term resignations by auditors particularly auditors of listed companies.
In order to find a solution to the issue and to examine the reasons and circumstances leading to the resignation of auditors, a Group has been constituted.
After considering the matter, a need was felt to create further awareness among the members about the circumstances and responsibility of auditors under the framework of Standards on Auditing in such circumstances through issuing appropriate guidance. The task of developing guidance for the members was entrusted to the Auditing and Assurance Standards Board (AASB) of ICAI.
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