Changing auditors is one of those decisions that sits on the CFO’s to-do list for months. You know the current arrangement isn’t working – the fees keep rising, the team keeps changing, the management letter reads like it was written for someone else’s business – but the thought of switching feels like more disruption than it’s worth.
It doesn’t have to be. Switching auditors follows a clear process under the Companies Act 2006, and a well-managed changeover typically takes less time than most finance directors expect. This guide covers the practical steps, the legal requirements, and the things that actually matter when you’re making the switch.
Why businesses change auditors
Most businesses don’t change auditors on a whim. There’s usually a trigger – sometimes several – that tips the balance from tolerable to unacceptable.
The most common reasons we hear from finance directors and business owners:
- Fee creep without explanation. Audit fees have risen significantly across UK mid-tier firms in recent years. If your fees are climbing but the service isn’t improving, that’s a fair reason to look elsewhere.
- Junior staff asking basic questions. Your audit partner promised continuity, but you’re explaining the same things to a new team every year. The people doing the work don’t understand your business.
- Boilerplate management letters. The report reads like it could apply to any company. No specific recommendations, no real insight, nothing that helps your board make better decisions.
- The firm has outgrown you (or you’ve outgrown them). Your business has moved into new sectors, new jurisdictions, or new regulatory territory. Your auditor hasn’t kept pace.
- Governance and best practice. Many businesses re-tender their audit every five to seven years as a matter of good governance. The UK Corporate Governance Code requires FTSE 350 companies to tender every 10 years, and many private company boards adopt a similar discipline voluntarily. Even when it’s not required, a periodic tender keeps your incumbent honest.
- A merger, acquisition or investment round. A PE house, bank or acquirer wants audited accounts – and they want them from a firm they recognise and trust.
Whatever the reason, switching auditors shouldn’t feel like a leap of faith. It’s a professional services appointment, not a marriage. The FRC actively encourages companies to consider their audit arrangements periodically.
How often do you need to change auditors in the UK?
There is no legal requirement for private companies to change auditors at any fixed interval. Under the Companies Act 2006, a statutory auditor is deemed reappointed automatically each year unless the company passes a resolution not to reappoint them (section 487).
That said, the FRC’s Ethical Standard and the UK Corporate Governance Code strongly encourage periodic re-tendering:
- Public interest entities (PIEs): mandatory audit firm rotation every 20 years, with a re-tender required every 10 years
- Large private companies: re-tendering every 10 years is widely considered good practice, following the listed-company model
- Other private companies: no formal requirement, but many boards choose to re-tender every five to seven years as a governance discipline
In practice, many owner-managed businesses stay with the same auditor for 15 or 20 years without ever testing the market. That’s not illegal, but it means you have no way of knowing whether the fee, the service, or the team you’re getting is competitive.
What is the process when the auditor changes? The Companies Act procedure
The Companies Act 2006 sets out the formal process for when an auditor ceases to hold office and a new one is appointed. It’s simpler than most people think, but there are steps you can’t skip.
Step 1: Decide not to reappoint the current auditor
For a private company, the simplest route is to pass an ordinary resolution at the annual general meeting (AGM) not to reappoint the existing auditor. You need a simple majority of shareholders voting in favour.
If the company’s articles allow it, the directors can also decide not to reappoint the auditor by written resolution, without calling a meeting.
Step 2: The outgoing auditor’s statement
Under section 519 of the Companies Act 2006, the outgoing auditor must provide a statement of circumstances. If they believe there are matters that should be brought to the attention of members or creditors, they must say so. If there are no such matters, they file a statement confirming that.
This statement must be sent to the company within 14 days. The company must then send it to every person entitled to receive copies of the accounts.
Step 3: Appoint the new auditor
The shareholders appoint the new audit firm by ordinary resolution. For private companies, this can be done by written resolution. The new auditor must confirm acceptance in writing and complete their own professional clearance procedures, including anti-money laundering checks and a professional enquiry to the outgoing auditor.
Step 4: Professional clearance
Before accepting the appointment, the new auditor is required by ICAEW and ACCA ethical standards to write to the outgoing auditor asking whether there are any professional reasons why they should not accept the engagement. The outgoing auditor must respond promptly and honestly.
Step 5: Notify Companies House
The outgoing auditor’s statement of circumstances is filed at Companies House. The new auditor’s appointment is recorded in the company’s next annual return or confirmation statement.
When is the best time to change auditors for a private company?
Timing matters more than most guides acknowledge. Get it wrong and you’re paying two firms to cover the same period. Get it right and the transition is invisible to everyone outside the finance team.
The ideal timing: start the tender process six to nine months before your financial year end. This gives the new audit firm time to plan properly, visit your offices, meet your team, and agree the audit approach before the year-end fieldwork begins.
The worst timing: mid-audit. If fieldwork has started, switching auditors means the new firm has to redo planning work that’s already been done. It also creates complications around opening balances and comparatives.
A practical timeline for a December year end:
- April-May: decide to tender, prepare the tender document
- June: issue the tender to three or four firms
- July: receive proposals, hold presentations
- August: make the decision, pass the shareholder resolution
- September-October: handover from the outgoing auditor, planning meetings with the new firm
- January-February: year-end audit fieldwork
How to run an audit tender
You don’t need a 30-page RFP. A clear, honest tender document gets better responses than a formal procurement exercise.
At minimum, share:
- A brief overview of your business – structure, turnover, headcount, sector
- Your financial year end and reporting deadlines
- The scope of work (statutory audit only, or do you also need tax, advisory, or grant audit services?)
- Your current audit fee and the number of audit days
- Recent financial statements (ideally the last two years)
- Any specific issues – complex transactions, group structures, overseas operations, regulatory requirements
Invite three or four audit firms. More than that creates unnecessary work for everyone. Include at least one firm from a different tier to your incumbent – if you’re with a top-10 firm, talk to a mid-tier or regional practice. The right fit is about people and expertise, not firm size.
When evaluating proposals, look beyond the fee. The cheapest quote might mean the most junior team. Consider:
- Who will actually do the work? Meet the audit partner and audit manager, not just the person who wrote the proposal.
- What sector experience do they have? Ask for specific client references.
- Is the fee fixed or time-based? What happens if the audit runs over?
- How do they handle the management letter? Will it contain real, actionable recommendations?
- What technology do they use? Data analytics, cloud portals, and automated testing can make the process less disruptive for your team.
What to expect in the first year after switching auditors
The first financial year with a new auditor takes slightly longer than subsequent years. That’s normal and expected. The changeover period requires additional work from the incoming audit firm:
- Review opening balances. ISA 510 requires the new auditor to obtain sufficient evidence that opening balances are materially correct. In practice, this means reviewing the prior year’s audit file.
- Understand your systems and controls. Expect process walkthroughs with your finance team and possibly your operations team. A good auditor will want to understand how transactions flow through your business, not just check the numbers at the end.
- Ask more questions. This isn’t a sign that the new team is weaker than the old one. It’s a sign that they’re doing their job properly. Your previous auditor stopped asking questions because they assumed the answers hadn’t changed – and that’s exactly why you changed.
Most firms absorb additional first-year costs rather than passing them on. At Audit Group, the fee we quote for year one is the fee you pay. We don’t add surcharges for the handover.
How do you remove an auditor mid-term? When the company ceases to hold office early
If you need to remove an auditor before the end of their appointment (rather than simply not reappointing them at the next annual general meeting), the process is slightly different. This covers situations where a private company ceases to hold the auditor’s appointment before the natural end point.
Under section 510 of the Companies Act 2006, shareholders can remove an auditor by ordinary resolution at a general meeting, but special notice of at least 28 clear days is required. The auditor has the right to make representations to the shareholders and to attend and speak at the meeting. The Financial Reporting Council (FRC) guidance on this process is set out in their flow chart for companies considering a change of auditor.
This route is unusual. In most cases, it’s simpler to wait until the current appointment naturally expires at the end of the financial year and then appoint the new auditor.
Checklist: what to prepare before you switch
Having these ready will speed up the transition and help the new audit firm quote accurately:
- Last two years’ signed accounts and audit reports
- Most recent management letter and your responses
- Trial balance and nominal ledger
- Group structure chart (if applicable)
- Fixed asset register and depreciation policies
- Bank, loan, and lease agreements
- Key accounting estimates (stock valuation, bad debt provision, revenue recognition policies)
- Board and audit committee minutes
- Details of any ongoing disputes, litigation, or regulatory matters
Your outgoing auditor is required by professional ethics to cooperate with the handover and provide reasonable access to working papers. If they don’t, that tells you something about why you’re changing.
Common mistakes when switching auditors
Choosing on price alone. The cheapest audit is rarely the best audit. A low fee often means a junior team, less partner time, and a management letter that tells you nothing useful. Focus on value, not just cost.
Leaving it too late. If you start the tender process three months before your year end, you’re rushing the decision and giving the new firm no time to plan properly. Start early.
Not involving the board. Changing auditors is a governance decision. The board should be informed and, ideally, involved in the evaluation process. Audit committees should own the recommendation.
Forgetting about stakeholders. Your bank, your investors, and your regulators may need to know about the change. A brief email confirming the new appointment and the reporting timetable prevents unnecessary concern.
Assuming bigger is better. A Big 4 firm might be right for a FTSE-listed group. For an owner-managed business turning over £5m to £50m, a mid-tier or specialist audit firm will usually deliver more partner involvement, better continuity, and a more proportionate fee.
Next steps: speak to an audit partner
At Audit Group, we’re part of Jack Ross Chartered Accountants – ICAEW-regulated and on the Register of Statutory Auditors since 1948. We handle the change of auditor process for private companies across the UK, from first-time statutory audit appointments to formal re-tenders.
Every engagement is led by a named audit partner who stays with you year after year. We quote fixed fees, we don’t charge extra for first-year changeover work, and we’ll tell you honestly whether we’re the right fit for your business before you commit to anything.
Call Umar Memon on 0161 832 4451 or request a proposal below.
