The auditor resigns

There can be several reasons why an auditor would resign after he has completed his report but before the start of the next fiscal year.

Perhaps the board doesn’t pay promptly or under-paid the auditor. Perhaps the auditor finds the board to be uncooperative and difficult to work with or perhaps the board will not agree to a new fee schedule.

In these cases the auditor will give the board a resignation letter stating the reason for his resignation. Whether he gives an honest reason or not, is hard for the owners to know.

The auditor at one Toronto condo resigned after submitting a qualified report at the corporation's fiscal 2012 AGM. The corporation could not show sufficent records for the auditor to conduct a proper audit and it appeared that the accounting firm no longer wanted to retain the contract.

Resignation after starting an audit
It is a bad omen if an auditor resigns after starting the audit. This is an indication that the auditor has uncovered something very serious.

Perhaps the auditor has lost trust in the board, there is a conflict of interest, an independence issue, or inducements by the board to perform illegal, unjust or fraudulent acts. In such circumstances, the auditor may take immediate action.

At one North York condo, the auditor resigned while performing the audit when he found that utility bills and renovation invoices belonging to a different property were charged to this condo corporation. There were also unexplained $500,000 in missing common element fees and an empty reserve fund.

A resignation is serious
Owners should become very concerned if their auditor resigns. It is always a bad sign.

top   contents   chapter   previous   next