Auditor Appointment Letter (Pakistan)

An Auditor Appointment Letter in Pakistan establishes the rights and obligations of employer and employee, from pay and benefits to confidentiality and the end of the engagement.

Section 246 of the Companies Act 2017 requires every company to appoint a qualified auditor — a Fellow or Associate Member of the Institute of Chartered Accountants of Pakistan (ICAP) holding a valid Certificate of Practice (COP), or a firm of chartered accountants registered with ICAP — to audit its accounts for each financial year. Section 252(1) of the Companies Act 2017 provides that the appointment of an auditor takes effect at the conclusion of the AGM at which the appointment is made. Section 252(3) requires that within 14 days of the AGM, the company must send a notice in writing to the appointed auditor confirming the appointment and to the retiring auditor (if any) confirming the non-continuation of their appointment.

The Auditor Appointment Letter serves multiple purposes in Pakistani corporate practice. First, it formally notifies the auditor of their appointment, triggering their professional obligations under ICAP's Code of Ethics and International Standards on Auditing (ISAs) adopted by ICAP. Second, it provides documentary evidence of the appointment for SECP filing purposes and for the audit committee's records under SECP's Listed Companies (Code of Corporate Governance) Regulations 2019. Third, it enables the auditor to write back formally accepting the appointment, confirming their independence, and attaching their proposed audit engagement letter — completing the formal engagement process required by ISA 210.

For banks regulated by the State Bank of Pakistan (SBP), the appointment of an auditor must comply with SBP's Prudential Regulations for corporate / commercial banking, which require that the auditor be drawn from SBP's approved panel of auditors for banking sector audits. SBP approval of the auditor is a precondition to the formal appointment, and the Auditor Appointment Letter must be preceded by SBP's written concurrence.

For insurance companies regulated by SECP under the Insurance Ordinance 2000, the auditor must be an ICAP member approved by SECP, and SECP's Insurance Circular requirements on auditor appointment must be reflected in the appointment process and letter.

For public sector companies and public interest entities subject to the Pakistan Audit Oversight Board (PAOB) — established under the Chartered Accountants (Amendment) Act 2019 — the appointed auditor must be registered with PAOB. The Auditor Appointment Letter for public interest entities should confirm PAOB registration as a condition of the appointment. PAOB conducts independent quality inspections of registered audit firms and publishes inspection reports that affect the eligibility of firms for appointment as auditors of public interest entities.

An Auditor Appointment Letter in Pakistan is required in all circumstances where a company is formally appointing or reappointing its statutory auditor under the Companies Act 2017.

An Auditor Appointment Letter is needed after the Annual General Meeting (AGM) at which shareholders appoint or reappoint the company's auditor under Section 252 of the Companies Act 2017. The letter must be sent within 14 days of the AGM to both the newly appointed auditor (confirming appointment) and to the outgoing auditor (confirming non-continuation). The 14-day deadline under Section 252(3) is mandatory — failure to comply is an offence under Section 506 of the Companies Act 2017.

An Auditor Appointment Letter is required when the Board of Directors appoints the first auditors of a newly incorporated company under Section 252(2) of the Companies Act 2017. The Board may appoint the first auditors before the first AGM — the Auditor Appointment Letter is the formal instrument of this Board-level appointment.

An Auditor Appointment Letter is needed when the existing auditor resigns under Section 258 of the Companies Act 2017 and the Board appoints a casual vacancy filler auditor to hold office until the next AGM under Section 252(4). The letter confirms the interim appointment and its limited term.

An Auditor Appointment Letter is required when SECP exercises its power under Section 252(5) of the Companies Act 2017 to appoint an auditor if the company fails to appoint one at the AGM or within the 30-day period allowed. In such cases, SECP's appointment order itself serves as the primary instrument, but the company is still required to notify the auditor of the terms of engagement.

An Auditor Appointment Letter is needed when a bank's shareholders approve a new auditor at the AGM following SBP's prior approval — the letter confirms the appointment, notes SBP's concurrence, and specifies any SBP-mandated reporting requirements that the auditor must fulfil as part of the banking sector engagement.

An Auditor Appointment Letter is required when a listed company changes its auditor — whether due to mandatory rotation under the Listed Companies (Code of Corporate Governance) Regulations 2019 (which require rotation of the engagement partner every five years) or through shareholder vote at an EGM. The appointment of the incoming auditor must be confirmed in writing within 14 days of the shareholder vote.

A valid Auditor Appointment Letter in Pakistan under the Companies Act 2017 must contain the following essential elements to satisfy the statutory requirements and support the commencement of the audit engagement.

Date and Parties: The date of the letter (which must be within 14 days of the AGM or Board resolution under Section 252(3) of the Companies Act 2017), the full name and address of the company (including its SECP registration number), and the full name and address of the auditor or audit firm (including the ICAP registration number and Certificate of Practice number of the engagement partner).

Reference to AGM or Board Resolution: A clear reference to the AGM date, the agenda item under which the auditor was appointed, the shareholder vote outcome (ordinary resolution approving the appointment), and the resolution number. Where appointment is by Board resolution (first auditors or casual vacancy), the Board meeting date, resolution number, and the authority under Section 252(2) or 252(4) of the Companies Act 2017 must be cited.

Scope of Appointment: A statement that the auditor is appointed to audit the company's accounts for the financial year ending on the specified date, in accordance with Section 246 of the Companies Act 2017, International Standards on Auditing (ISAs) adopted by ICAP, and the applicable financial reporting framework (IFRS or AFRS for MSEs as the case may be).

Audit Fee: The annual audit fee approved at the AGM or by the Board (for first auditors), as required to be disclosed in the annual report under Schedule IV to the Companies Act 2017. Any out-of-pocket expenses policy should also be stated.

Conditions of Appointment: Any regulatory conditions attached to the appointment — such as SBP prior approval for banking sector auditors, SECP panel approval for insurance sector auditors, or PAOB registration for public interest entity auditors. The letter should state that the appointment is conditional on the auditor's confirmation of independence in accordance with ICAP's Independence Rules.

Request for Engagement Letter: A request to the auditor to submit their signed audit engagement letter under ISA 210 within a specified period (typically 14 days of receipt of the appointment letter), confirming acceptance of the appointment and setting out the engagement terms.

Signatory Authority: The letter must be signed by the Company Secretary — or in the absence of a Company Secretary, by a Director authorised by the Board — as the officer responsible for AGM administration and statutory notifications under the Companies Act 2017. The company seal (where used) or the company letterhead with full registered details should be used.

Filing with SECP: The Auditor Appointment Letter and the auditor's acceptance must be filed with SECP through the eServices portal within the prescribed period. For listed companies, the appointment is also notified to the Pakistan Stock Exchange (PSX) under PSX's Listing Regulations within 24 hours of the AGM.

Forms-legal.com provides this Auditor Appointment Letter (Pakistan) template as a practical reference. Company secretaries — preferably Fellows or Associates of the Institute of Corporate Secretaries of Pakistan (ICSP) — should confirm timely dispatch of the letter and compliance with all SECP and PSX notification requirements under the Companies Act 2017.

Additional compliance elements for a Auditor Appointment Letter (Pakistan) used in Pakistan include: Under the Companies Act 2017, the Securities and Exchange Commission of Pakistan (SECP) maintains the register of Pakistani companies. Section 16 of the Companies Act 2017 governs company incorporation. The Contract Act 1872 governs general contractual obligations. The Federal Board of Revenue (FBR) administers corporate tax under the Income Tax Ordinance 2001. The High Courts (Lahore, Sindh, Peshawar, Balochistan, Islamabad) have original and appellate jurisdiction. Forms-legal.com provides this template as a starting point for Pakistan-compliant documentation.