The Auditor Termination Letter is a crucial document used when a company in the Philippines decides to end its professional relationship with its external auditor. This document must comply with the Corporation Code of the Philippines, the Securities Regulation Code, and relevant SEC regulations. It is typically required when changing auditors, addressing independence concerns, or implementing corporate governance changes. The letter must include specific elements such as the termination date, reason for termination (if required), transition arrangements, and any regulatory disclosures, particularly for listed companies. The document serves as official notification to the audit firm and may need to be filed with regulatory bodies, making it an important corporate record subject to Philippine jurisdiction.
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1. Letter Header: Company letterhead, date, and formal addressing to the audit firm's senior partner or appropriate representative
2. Reference Line: Clear subject line indicating this is regarding the termination of audit services
3. Opening Statement: Formal introduction and reference to the existing audit engagement
4. Notice of Termination: Clear statement of the decision to terminate the audit services
5. Effective Date: Specific date when the termination becomes effective
6. Reason for Termination: Professional explanation of the termination decision (if appropriate and required)
7. Outstanding Matters: Discussion of any pending audit work, fees, or documentation that needs to be addressed
8. Transition Requirements: Details about the handover process and requirements for working papers
9. Closing Statement: Professional conclusion with acknowledgment of past services
10. Signature Block: Authorized signatory details, including name, position, and company details
1. Board Resolution Reference: Include when termination requires board approval, citing the relevant board resolution
2. SEC Disclosure Statement: Required for publicly listed companies, including mandatory disclosures about the termination
3. Confidentiality Reminder: Include when there's a need to emphasize ongoing confidentiality obligations
4. Fee Settlement Details: Include when there are specific arrangements for settling outstanding fees
5. New Auditor Information: Include when the successor auditor has already been identified and coordination is required
1. Schedule A - Outstanding Engagements: List of incomplete audit work and current status
2. Schedule B - Fee Summary: Detailed breakdown of any outstanding fees and payment arrangements
3. Appendix 1 - Board Resolution: Copy of the board resolution authorizing the termination (if applicable)
4. Appendix 2 - Required Forms: Any regulatory forms required for auditor change (especially for listed companies)
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