THE SNP’s auditors have resigned amid a police investigation into the party’s finances.

Accountants Johnston Carmichael, who have worked with the SNP for more than a decade, told the party they had "taken the decision to resign following a review of our client portfolio and existing resources and commitments".

It leaves the SNP looking for a new firm to audit its accounts for 2022 ahead of them being submitted to the Electoral Commission.

By law, the party has until 7 July to file the paperwork, or face possible sanctions.

The development emerged as police wound up a two-day search of the home of Niciola Sturgeon and her husband Peter Murrell, the former SNP chief executive.

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He was arrested on Wednesday and later released without charge.

It is understood Johnson Carmichael resigned before the arrest.

Police Scotland launched an investigation into SNP fundraising in July 2021 after complaints that around £660,000 raised specifically for a second independence referendum may have been spent on other things.

A spokesperson for the SNP said the party was in the process of finding a replacement firm to act as its auditors.

Scottish Labour deputy leader Jackie Baillie said the resignation of Johnstone Carmichael posed "serious questions" about the SNP's finances.

She said: "Yesterday, Humza Yousaf attempted to distance himself from the legacy of Peter Murrell - today we need to know what the current first minister plans to do to get the SNP's house in order.

"Sunlight is the best disinfectant - we need transparency and openness from the SNP now."

Tory MSP Donald Cameron said the SNP should be "fully transparent" over why their auditors decided to quit.

He said: "This resignation only raises further questions about the increasingly murky picture surrounding the SNP’s finances.

“Given this firm have audited the party’s accounts for so long, the SNP must be fully transparent over why they have decided to quit now.

“The extraordinary events of recent weeks leave the SNP with big questions to answer, and their auditors’ resignation only adds to the growing number of issues they must address.

“The public are sick of the SNP shrouding matters relating to their finances behind a wall of secrecy, and senior figures - including Humza Yousaf and Nicola Sturgeon - must be upfront about this situation.”

Under electoral law, the SNP must prepare annual financial statements and, because its income and expenditure exceeds £250,000 a year, must have them independently audited.  

Its accounts cover each calendar year, and the last set, covering the year to December 2021, were published last August. 

They showed the party's total income in 2021 was £4,510,460, while total expenditure was £5,262,032, and assets and liabilities were £1,630,454 and £1,055,689 respectively.

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In the accounts, Johnson Carmichael said they had worked with the SNP to avoid fraud or misstatements in the accounts.

Their report said: “We assessed the susceptibility of the party’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud.

“This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. 

“We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls.

“In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. 

“As a result of performing these procedures we have assessed the following areas as having a heightened risk of fraud; related party transactions and manual journal entries.”

An SNP spokesperson said: “We can confirm that Johnston Carmichael will not be providing audit services to the SNP this year.

"The National Treasurer is undertaking a tendering process for alternative provision, and we have advised the Electoral Commission of that position."

The National Treasurer is Midlothian & Musselburgh North MSP Colin Beattie.

A spokesperson for Johnston Carmichael said: “As a regulated organisation, we adhere to our obligations on client confidentiality and do not discuss client business.”