On 31 March 2014, Black and Black (a firm of certified practising accountants) completed the audit of E-Wine Pty Ltd for the year ended 31 December 2013. E-Wine is a wine store that operates solely on the internet. On 15 May 2014, Tom Black (the audit partner responsible for E-Wine)

received a phone call from the financial controller of E-Wine, Ms Chong, who was very angry. Ms Chong said that their accounts receivable clerk suddenly resigned a month ago. This sudden departure raised suspicions and, after an investigation of the accounting records, it was discovered that $200 000 was missing. Subsequently, the board met and decided Black and Black was almost entirely to blame. As a result, Ms Chong said the board had decided to dismiss Black and Black as auditors, effective immediately. Black and Black would receive written confirmation in the next week and legal action would probably follow.

Required

a. Explain whether E-Wine has taken the proper action to remove its auditor.

b. Explain why restrictions are placed on removing auditors.