## CARO Clause: Resignation of Statutory Auditor
### What to Report
The auditor must disclose:
1. Whether there was any resignation of the statutory auditor during the financial year
2. If yes, whether the incoming auditor has taken into account the issues, objections, or concerns raised by the outgoing auditor
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### Why This Clause Exists
An abrupt mid-year resignation can sometimes signal that the outgoing auditor encountered material issues they were unwilling to sign off on. This requirement prevents significant audit findings from being quietly abandoned when an auditor exits.
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### Key Obligation on the Incoming Auditor
- The successor auditor must consider and address concerns raised by the predecessor — not disregard them.
- This aligns with professional standards requiring communication between predecessor and successor auditors.
- Merely acknowledging the concerns is insufficient; the incoming auditor must demonstrate they have been properly examined.
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### Auditor's Procedure
1. Verify whether any statutory auditor resigned during the year (check ROC filings, board minutes).
2. If yes, obtain the resignation letter and any written communication from the outgoing auditor detailing their concerns.
3. Document how identified issues were addressed in the current audit.
4. Report findings in the CARO report.