notify the FSA, without delay, when it is aware that a vacancy in the office of auditor will arise or has arisen, giving the reason for the vacancy;
appoint an auditor to fill any vacancy in the office of auditor which has arisen;
ensure that the replacement auditor can take up office at the time the vacancy arises or as soon as is reasonably practicable after that; and
A credit union is also under an obligation to appoint an auditor under the Friendly and Industrial and Provident Societies Act 1968, but a single auditor may be appointed for both purposes (See CRED 14 Annex 1 G). 1
SUP 3.4.2 R states that before a credit union appoints an auditor, it must take reasonable steps to ensure that the auditor has the required skill, resources and experience to perform his functions under the regulatory system and that the auditor is eligible under Friendly and Industrial and Provident Societies Act 1968.
SUP 3.4.7 R states that a credit union must take reasonable steps to ensure that an auditor, which it is planning to appoint or has appointed, provides information to the FSA about the auditor's qualifications, skills, experience and independence in accordance with the reasonable requests of the FSA.
If an auditor is to carry out his duties properly, he needs to be independent of the credit union he is auditing, so that he is not subject to conflicts of interest.
The FSA will regard an auditor as independent if his appointment or retention does not breach the ethical guidance in current issue from the auditor's recognised supervisory body on the appointment of an auditor in circumstances which could give rise to conflicts of interest.
In complying with SUP 3.6.1 R, a credit union should include giving a right of access at all times to the credit union's accounting and other records, in whatever form they are held, and documents relating to its business. A credit union should allow its auditor to copy documents or other material on the premises of the credit union and to remove copies or hold them elsewhere, or give him such copies on request.
Credit unions and their officers and managers are reminded that, under section 346 of the Act (Provision of false or misleading information to auditor or Actuary), knowingly or recklessly giving false information to an auditor appointed under SUP 3.3.2 R constitutes an offence in certain circumstances, which could render them liable to prosecution. This applies regardless of whether an auditor is also appointed under the Friendly and Industrial and Provident Societies Act 1968.
SUP 3.8.6 R states the auditor must take reasonable steps to satisfy himself that he is free from any conflict of interest from which bias may reasonably be inferred. He must take appropriate action where this is not the case.
Within the legal constraints that apply, the FSA may pass on to an auditor any information which it considers relevant to his function. An auditor is bound by the confidentiality provisions set out in Part XIII of the Act (Public record, disclosure of information and cooperation) in respect of confidential information he receives from a credit union or other person. An auditor may not pass on confidential information without lawful authority.
Auditors are subject to regulations made by the Treasury obliging them to report certain matters to the FSA. An auditor does not contravene any duty by giving information or expressing an opinion to the FSA, if he is acting in good faith and he reasonably believes that the information or opinion is relevant to any function of the FSA. These provisions continue to have effect after the end of the auditor's term of appointment.
of any matter connected with his ceasing which he thinks ought to be drawn to the FSA's attention; or
that there is no such matter.