EU Audit Provisions
S.I. No. 229/2009 –
European Communities (Transitional Period Measures In Respect of Third Country Auditors) Regulations 2009
EUROPEAN COMMUNITIES (TRANSITIONAL PERIOD MEASURES IN RESPECT OF THIRD COUNTRY AUDITORS) REGULATIONS 2009
Notice of the making of this Statutory Instrument was published in
“Iris Oifigiúil” of 26th June, 2009.
I, MARY COUGHLAN, Minister for Enterprise, Trade and Employment, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving effect (subject to, and in so far only as is required by, Commission Decision 2008/627/EC of 29 July 2008 1 ) to Article 45 of Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 2 and to the said Commission Decision and, in so far as is required by reason of the said giving effect, partial effect to Articles 35(1) and 36(2) of the said Directive, hereby make the following regulations:
1. (1) These Regulations may be cited as the European Communities (transitional period measures in respect of third country auditors) Regulations 2009.
(2) These Regulations shall come into operation on 26 June 2009.
(3) Section 12 of the Company Law Enforcement Act 2001 (No. 28 of 2001) shall apply in relation to these Regulations as it applies in relation to the Companies Acts, subject to the modification that references in that section to Companies Acts shall be construed as including references to these Regulations.
Interpretation.
2. In these Regulations, unless otherwise indicated—
“Annex” means the Annex to the Decision;
“Article” means an Article of the Decision;
“Commission” means the Commission of the European Communities;
“competent authority” shall be construed in accordance with Regulation 3;
“Decision” means Commission Decision 2008/627/EC of 29 July 20081 concerning a transitional period for audit activities of certain third country auditors and audit entities;
“Directive” means Directive 2006/43/EC of the European Parliament and of the Council of 17 May 20062 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC 3 and 83/349/EEC 4 and repealing Council Directive 84/253/EEC 5 ;
“third country” means a country listed in the Annex;
“third country auditor” has the meaning assigned to it by Regulation 4.
Competent authority.
3. For the purposes of these Regulations and the Decision the Irish Auditing and Accounting Supervisory Authority is the competent authority in the State.
Functions of competent authority.
4. Where an auditor or audit entity from a third country (which auditor or audit entity is hereinafter referred to as a “third country auditor”) provides to the competent authority all of the information listed at subparagraphs (a) to (e) of Article 1(1), correct and accurate in all material respects and so certified by the third country auditor concerned (and updated and recertified by him, her or it as and when necessary), and, subject to compliance with such reasonable requests for clarification or further information as the competent authority may make, pays to the authority such fee (if any) of an amount specified from time to time by the Minister sufficient to cover its administration expenses—
(a) the provisions of Article 45 of the Directive shall not apply in relation to audit reports, concerning annual accounts or consolidated accounts as referred to in Article 45(1) of the Directive for financial years starting on a date which is in the period starting on 29 June 2008 and ending on 1 July 2010, which are issued by such a third country auditor, and
(b) the competent authority shall record the said information, and shall ensure that the public is informed about—
(i) the name and address of each such third country auditor, and
(ii) the fact that the third countries concerned are not yet recognised as equivalent for the purposes of the Directive.
Confidentiality requirements.
5. (1) No person shall disclose, except in accordance with law (including Regulation 4(b)), information that—
(a) is furnished pursuant to these Regulations to the competent authority, and
(b) has not otherwise come to the notice of members of the public.
(2) Without limiting paragraph (1), the persons to whom that subsection applies include the following:
(a) a member or director or former member or director of the competent authority;
(b) an employee or former employee of the competent authority;
(c) a professional or other adviser to the competent authority, including a former adviser.
(3) A person who contravenes paragraph (1) commits an offence and is liable, on summary conviction, to a fine not exceeding €2,000.
Arrangements on quality assurance reviews.
6. The provisions of Regulation 4(a) shall be without prejudice to cooperative arrangements on quality assurance reviews between the competent authority and a competent authority of a third country, provided that such an arrangement meets the criteria listed at paragraphs (a) to (c) of Article 1(4).
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GIVEN under my Official Seal,
23 June 2009
MARY COUGHLAN,
Minister for Enterprise, Trade and Employment.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation)
These Regulations give effect to Commission Decision 2008/627/EC of 29 July 2008 and provides for a transitional period in respect of the registration requirements set out at Article 45 of Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 in respect of auditors and audit entities from the third countries listed at the Annex to the Commission Decision. The third country auditors and audit entities in question are those non-EU auditors and audit entities who audit companies incorporated outside of the European Community which have transferable securities listed to trading on a market regulated within the Community.
The Regulations which come into effect from 26 June 2009, provide for auditors and audit entities from the third countries in question, in lieu of the requirements at Article 45 of Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006, to provide stipulated information to the competent authorities in Member States who are required to record this information and ensure that the public is informed about specific aspects of the information. The Irish Auditing and Accounting Supervisory Authority (IAASA) is the competent authority in Ireland for the purposes of the Commission Decision and these Regulations.
The arrangements provided for in these Regulations apply for financial years starting on 29 June 2008 and ending on 1 July 2010.
1 OJ No. L202, 31.7.2008, p.70.
2 OJ No. L157, 9.6.2006, p.87.
3 OJ No. L222, 14.8.1978, p.11.
4 OJ No. L193, 18.7.1983, p.1.
5 OJ No. L126, 12.5.1984, p.20.
S.I. No. 68/2017 –
European Union (Adequacy of Competent Authorities of Certain Third Countries Regarding Transfer of Relevant Audit Papers) Regulations 2017.
I, MARY MITCHELL O’CONNOR, Minister for Jobs, Enterprise and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving effect to Commission Decision 2010/64/EU of 5 February 20101 , Commission Implementing Decision (EU) 2016/1010 of 21 June 20162 and Commission Implementing Decision (EU) 2016/1156 of 14 July 20163 , hereby make the following regulations:
1. These Regulations may be cited as the European Union (Adequacy of Competent Authorities of Certain Third Countries Regarding Transfer of Relevant Audit Papers) Regulations 2017.
2. In these Regulations—
“Audit Directive” means Directive 2006/43/EC of the European Parliament and of the Council of 17 May 20064 as amended by Directive 2014/56/EU of the European Parliament and of the Council of 16 April 20145 on statutory audits of annual accounts and consolidated accounts;
“Commission Decision 2010/64/EU” means Commission Decision of 5 February 2010 on the adequacy of the competent authorities of certain third countries pursuant to Directive 2006/43/EC of the European Parliament and of the Council;
“Commission Implementing Decision (EU) 2016/1010” means Commission Implementing Decision (EU) 2016/1010 of 21 June 2016 on the adequacy of the competent authorities of certain third countries and territories pursuant to Directive 2006/43/EC of the European Parliament and of the Council;
“Commission Implementing Decision (EU) 2016/1156” means Commission Implementing Decision (EU) 2016/1156 of 14 July 2016 on the adequacy of the competent authorities of the United States of America pursuant to Directive 2006/43/EC of the European Parliament and of the Council;
“Supervisory Authority” means the Irish Auditing and Accounting Supervisory Authority.
3. In accordance with Article 1 of Commission Decision 2010/64/EU, the following competent authorities of third countries shall be considered adequate for the purpose of Article 47(1) of the Audit Directive:
(a) the Canadian Public Accountability Board;
(b) the Financial Services Agency of Japan;
(c) the Certified Public Accountants and Auditing Oversight Board of Japan;
(d) the Federal Audit Oversight Authority of Switzerland.
4. In accordance with Article 2(1) of Commission Decision 2010/64/EU, without prejudice to Article 47(4) of the Audit Directive and in accordance with Article 53 of the Audit Directive, any transfer, to any of the competent authorities listed in Regulation 3, of audit working papers or other documents held by statutory auditors or audit firms shall be either subject to the prior approval of the Supervisory Authority or shall be carried out by the Supervisory Authority.
5. In accordance with Article 2(2) of Commission Decision 2010/64/EU, the transfer, to any of the competent authorities listed in Regulation 3, of audit working papers or other documents held by statutory auditors or audit firms shall not serve any purposes other than the public oversight, external quality assurance or investigations of auditors and audit firms.
6. In accordance with Article 1 of Commission Implementing Decision (EU) 2016/1010, the following competent authorities of third countries or territories meet requirements which shall be considered adequate within the meaning of Article 47(1)(c) of the Audit Directive for the purpose of transfers of audit working papers or other documents and of inspection and investigation reports under Article 47(1) of the Audit Directive:
(a) the Comissao de Valores Mobiliarios of Brazil;
(b) the Dubai Financial Service Authority of Dubai International Financial Centre;
(c) the Registrar of Companies of Guernsey;
(d) the Finance Professions Supervisory Centre of Indonesia;
(e) the Financial Supervision Commission of the Isle of Man;
(f) the Jersey Financial Services Commission;
(g) the Audit Oversight Board of Malaysia;
(h) the Independent Regulatory Board for Auditors of South Africa;
(i) the Financial Services Commission of South Korea and the Financial Supervisory Service of South Korea;
(j) the Financial Supervisory Commission of Taiwan;
(k) the Securities and Exchange Commission of Thailand.
7. In accordance with Article 3 of Commission Implementing Decision (EU) 2016/1010, Regulation 6(d) and (h) shall apply until 31 July 2019.
8. In accordance with Article 2(3) of Commission Decision 2010/64/EU and Article 2 of Commission Implementing Decision (EU) 2016/1010, where audit working papers or other documents are exclusively held by a statutory auditor or audit firm registered in a Member State other than the State and—
(a) the group auditor of the statutory auditor or audit firm is registered in the State, and
(b) the Supervisory Authority has received a request to transfer audit working papers or other documents from any of the competent authorities listed at Regulations 3 and 6,
such papers or documents shall be transferred to the requesting competent authority only if the competent authority of the other Member State has given its express agreement to the transfer.
9. In accordance with Article 1 of Commission Implementing Decision (EU) 2016/1156, the Public Company Accounting Oversight Board of the United States of America and the Securities and Exchange Commission of the United States of America meet requirements which shall be considered adequate within the meaning of Article 47(1)(c) of the Audit Directive for the purpose of transfers of audit working papers or other documents and of inspection and investigation reports under Article 47(1) of the Audit Directive.
10. In accordance with Article 2(1) of Commission Implementing Decision (EU) 2016/1156, where audit working papers or other documents are exclusively held by a statutory auditor or audit firm registered in a Member State other than the State and—
(a) the group auditor of the statutory auditor or audit firm is registered in the State, and
(b) the Supervisory Authority has received a request to transfer audit working papers or other documents from any of the competent authorities listed at Regulation 9,
such papers or documents shall be transferred to the requesting competent authority only if the competent authority of the other Member State has given its express agreement to the transfer.
11. In accordance with Article 2(2) of Commission Implementing Decision (EU) 2016/1156, the Supervisory Authority shall ensure that any joint inspections carried out in the European Union by it and the competent authorities of the United States fulfil the conditions laid down in Article 47 of the Audit Directive, and are, as a general rule, under the leadership of the Supervisory Authority.
12. In accordance with Article 2(3) of Commission Implementing Decision (EU) 2016/1156, the Supervisory Authority shall ensure that any bilateral working arrangements between it and the competent authorities of the United States comply with the conditions for cooperation set out in that Article.
13. In accordance with Article 3 of Commission Implementing Decision (EU) 2016/1156, Regulations 9 to 12 shall apply from 1 August 2016 to 31 July 2022.
14. The European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016 ( S.I. No. 312 of 2016 ) are amended—
(a) in Regulation 131, in paragraph (2), in subparagraph (b), by the substitution of the following clause for clause (ii):
“(ii) the third-country competent authority that will deal with the matter provides an undertaking in writing to the Supervisory Authority that it will—
(I) comply with its obligation referred to in clause (i), and
(II) deliver up possession of the audit working papers and other documents to the Supervisory Authority, and otherwise do everything within its power to secure the return of them to the Supervisory Authority, once the performance of the functions referred to in subparagraph (c) in relation to them is completed, and”, and
(b) by the insertion of the following:
“133A.The Supervisory Authority may perform the functions (whether in whole or in part or in a particular instance) referred to in section 905(2)(n)(iii) of the Companies Act 2014 (No. 38 of 2014) in so far as such functions are part of a joint inspection under Commission Implementing Decision (EU) 2016/1156.”.
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GIVEN under my Official Seal,
7 March 2017.
MARY MITCHELL O’CONNOR,
Minister for Jobs, Enterprise and Innovation.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation)
These Regulations give effect to Commission Decision 2010/64/EU of 5 February 2010, Commission Implementing Decision (EU) 2016/1010 of 21 June 2016 and Commission Implementing Decision (EU) 2016/1156 of 14 July 2016 on the adequacy of competent authorities of certain third countries and territories regarding transfer of relevant audit papers.
It provides that, for the purpose of Article 47(1) of Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006, the competent authorities of third countries listed below shall be considered adequate.
(i) Under Commission Decision 2010/64/EU– the Canadian Public Accountability Board; the Financial Services Agency of Japan; the Certified Public Accountants and Auditing Oversight Board of Japan; the Federal Audit Oversight Authority of Switzerland.
(ii) Under Commission Implementing Decision (EU) 2016/1010– the Comissao de Valores Mobiliarios of Brazil; the Dubai Financial Service Authority of Dubai International Financial Centre; the Registrar of Companies of Guernsey; the Finance Professions Supervisory Centre of Indonesia; the Financial Supervision Commission of the Isle of Man; the Jersey Financial Services Commission; the Audit Oversight Board of Malaysia; the Independent Regulatory Board for Auditors of South Africa; the Financial Services Commission of South Korea and the Financial Supervisory Service of South Korea; the Financial Supervisory Commission of Taiwan; the Securities and Exchange Commission of Thailand.
These Regulations apply to the Finance Professions Supervisory Centre of Indonesia and the Independent Regulatory Board for Auditors of South Africa until 31 July 2019.
(iii) Under Commission Implementing Decision (EU) 2016/1156– the Public Company Accounting Oversight Board of the USA; the Securities and Exchange Commission of the USA.
These Regulations apply to (iii) above from 1 August 2016 to 31 July 2022.
The Irish Auditing and Accounting Supervisory Authority (IAASA) is the competent authority in Ireland for the purposes of these Commission Implementing Decisions and these Regulations.
These Regulations also provide for two related amendments at Regulation 131 and 133 of the Statutory Audits Regulations ( S.I. No. 312 of 2016 ).
1 OJ L35, 6.2.2010, p. 15
2 OJ L165, 23.6.2016, p. 17
3 OJ L190, 15.7.2016, p. 83
4 OJ L157, 9.6.2006, p. 87
5 OJ L158, 27.5.2014, p. 196
S.I. No. 68/2017 –
European Union (Adequacy of Competent Authorities of Certain Third Countries Regarding Transfer of Relevant Audit Papers) Regulations 2017.
I, MARY MITCHELL O’CONNOR, Minister for Jobs, Enterprise and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving effect to Commission Decision 2010/64/EU of 5 February 20101 , Commission Implementing Decision (EU) 2016/1010 of 21 June 20162 and Commission Implementing Decision (EU) 2016/1156 of 14 July 20163 , hereby make the following regulations:
1. These Regulations may be cited as the European Union (Adequacy of Competent Authorities of Certain Third Countries Regarding Transfer of Relevant Audit Papers) Regulations 2017.
2. In these Regulations—
“Audit Directive” means Directive 2006/43/EC of the European Parliament and of the Council of 17 May 20064 as amended by Directive 2014/56/EU of the European Parliament and of the Council of 16 April 20145 on statutory audits of annual accounts and consolidated accounts;
“Commission Decision 2010/64/EU” means Commission Decision of 5 February 2010 on the adequacy of the competent authorities of certain third countries pursuant to Directive 2006/43/EC of the European Parliament and of the Council;
“Commission Implementing Decision (EU) 2016/1010” means Commission Implementing Decision (EU) 2016/1010 of 21 June 2016 on the adequacy of the competent authorities of certain third countries and territories pursuant to Directive 2006/43/EC of the European Parliament and of the Council;
“Commission Implementing Decision (EU) 2016/1156” means Commission Implementing Decision (EU) 2016/1156 of 14 July 2016 on the adequacy of the competent authorities of the United States of America pursuant to Directive 2006/43/EC of the European Parliament and of the Council;
“Supervisory Authority” means the Irish Auditing and Accounting Supervisory Authority.
3. In accordance with Article 1 of Commission Decision 2010/64/EU, the following competent authorities of third countries shall be considered adequate for the purpose of Article 47(1) of the Audit Directive:
(a) the Canadian Public Accountability Board;
(b) the Financial Services Agency of Japan;
(c) the Certified Public Accountants and Auditing Oversight Board of Japan;
(d) the Federal Audit Oversight Authority of Switzerland.
4. In accordance with Article 2(1) of Commission Decision 2010/64/EU, without prejudice to Article 47(4) of the Audit Directive and in accordance with Article 53 of the Audit Directive, any transfer, to any of the competent authorities listed in Regulation 3, of audit working papers or other documents held by statutory auditors or audit firms shall be either subject to the prior approval of the Supervisory Authority or shall be carried out by the Supervisory Authority.
5. In accordance with Article 2(2) of Commission Decision 2010/64/EU, the transfer, to any of the competent authorities listed in Regulation 3, of audit working papers or other documents held by statutory auditors or audit firms shall not serve any purposes other than the public oversight, external quality assurance or investigations of auditors and audit firms.
6. In accordance with Article 1 of Commission Implementing Decision (EU) 2016/1010, the following competent authorities of third countries or territories meet requirements which shall be considered adequate within the meaning of Article 47(1)(c) of the Audit Directive for the purpose of transfers of audit working papers or other documents and of inspection and investigation reports under Article 47(1) of the Audit Directive:
(a) the Comissao de Valores Mobiliarios of Brazil;
(b) the Dubai Financial Service Authority of Dubai International Financial Centre;
(c) the Registrar of Companies of Guernsey;
(d) the Finance Professions Supervisory Centre of Indonesia;
(e) the Financial Supervision Commission of the Isle of Man;
(f) the Jersey Financial Services Commission;
(g) the Audit Oversight Board of Malaysia;
(h) the Independent Regulatory Board for Auditors of South Africa;
(i) the Financial Services Commission of South Korea and the Financial Supervisory Service of South Korea;
(j) the Financial Supervisory Commission of Taiwan;
(k) the Securities and Exchange Commission of Thailand.
7. In accordance with Article 3 of Commission Implementing Decision (EU) 2016/1010, Regulation 6(d) and (h) shall apply until 31 July 2019.
8. In accordance with Article 2(3) of Commission Decision 2010/64/EU and Article 2 of Commission Implementing Decision (EU) 2016/1010, where audit working papers or other documents are exclusively held by a statutory auditor or audit firm registered in a Member State other than the State and—
(a) the group auditor of the statutory auditor or audit firm is registered in the State, and
(b) the Supervisory Authority has received a request to transfer audit working papers or other documents from any of the competent authorities listed at Regulations 3 and 6,
such papers or documents shall be transferred to the requesting competent authority only if the competent authority of the other Member State has given its express agreement to the transfer.
9. In accordance with Article 1 of Commission Implementing Decision (EU) 2016/1156, the Public Company Accounting Oversight Board of the United States of America and the Securities and Exchange Commission of the United States of America meet requirements which shall be considered adequate within the meaning of Article 47(1)(c) of the Audit Directive for the purpose of transfers of audit working papers or other documents and of inspection and investigation reports under Article 47(1) of the Audit Directive.
10. In accordance with Article 2(1) of Commission Implementing Decision (EU) 2016/1156, where audit working papers or other documents are exclusively held by a statutory auditor or audit firm registered in a Member State other than the State and—
(a) the group auditor of the statutory auditor or audit firm is registered in the State, and
(b) the Supervisory Authority has received a request to transfer audit working papers or other documents from any of the competent authorities listed at Regulation 9,
such papers or documents shall be transferred to the requesting competent authority only if the competent authority of the other Member State has given its express agreement to the transfer.
11. In accordance with Article 2(2) of Commission Implementing Decision (EU) 2016/1156, the Supervisory Authority shall ensure that any joint inspections carried out in the European Union by it and the competent authorities of the United States fulfil the conditions laid down in Article 47 of the Audit Directive, and are, as a general rule, under the leadership of the Supervisory Authority.
12. In accordance with Article 2(3) of Commission Implementing Decision (EU) 2016/1156, the Supervisory Authority shall ensure that any bilateral working arrangements between it and the competent authorities of the United States comply with the conditions for cooperation set out in that Article.
13. In accordance with Article 3 of Commission Implementing Decision (EU) 2016/1156, Regulations 9 to 12 shall apply from 1 August 2016 to 31 July 2022.
14. The European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016 ( S.I. No. 312 of 2016 ) are amended—
(a) in Regulation 131, in paragraph (2), in subparagraph (b), by the substitution of the following clause for clause (ii):
“(ii) the third-country competent authority that will deal with the matter provides an undertaking in writing to the Supervisory Authority that it will—
(I) comply with its obligation referred to in clause (i), and
(II) deliver up possession of the audit working papers and other documents to the Supervisory Authority, and otherwise do everything within its power to secure the return of them to the Supervisory Authority, once the performance of the functions referred to in subparagraph (c) in relation to them is completed, and”, and
(b) by the insertion of the following:
“133A.The Supervisory Authority may perform the functions (whether in whole or in part or in a particular instance) referred to in section 905(2)(n)(iii) of the Companies Act 2014 (No. 38 of 2014) in so far as such functions are part of a joint inspection under Commission Implementing Decision (EU) 2016/1156.”.
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GIVEN under my Official Seal,
7 March 2017.
MARY MITCHELL O’CONNOR,
Minister for Jobs, Enterprise and Innovation.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation)
These Regulations give effect to Commission Decision 2010/64/EU of 5 February 2010, Commission Implementing Decision (EU) 2016/1010 of 21 June 2016 and Commission Implementing Decision (EU) 2016/1156 of 14 July 2016 on the adequacy of competent authorities of certain third countries and territories regarding transfer of relevant audit papers.
It provides that, for the purpose of Article 47(1) of Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006, the competent authorities of third countries listed below shall be considered adequate.
(i) Under Commission Decision 2010/64/EU– the Canadian Public Accountability Board; the Financial Services Agency of Japan; the Certified Public Accountants and Auditing Oversight Board of Japan; the Federal Audit Oversight Authority of Switzerland.
(ii) Under Commission Implementing Decision (EU) 2016/1010– the Comissao de Valores Mobiliarios of Brazil; the Dubai Financial Service Authority of Dubai International Financial Centre; the Registrar of Companies of Guernsey; the Finance Professions Supervisory Centre of Indonesia; the Financial Supervision Commission of the Isle of Man; the Jersey Financial Services Commission; the Audit Oversight Board of Malaysia; the Independent Regulatory Board for Auditors of South Africa; the Financial Services Commission of South Korea and the Financial Supervisory Service of South Korea; the Financial Supervisory Commission of Taiwan; the Securities and Exchange Commission of Thailand.
These Regulations apply to the Finance Professions Supervisory Centre of Indonesia and the Independent Regulatory Board for Auditors of South Africa until 31 July 2019.
(iii) Under Commission Implementing Decision (EU) 2016/1156– the Public Company Accounting Oversight Board of the USA; the Securities and Exchange Commission of the USA.
These Regulations apply to (iii) above from 1 August 2016 to 31 July 2022.
The Irish Auditing and Accounting Supervisory Authority (IAASA) is the competent authority in Ireland for the purposes of these Commission Implementing Decisions and these Regulations.
These Regulations also provide for two related amendments at Regulation 131 and 133 of the Statutory Audits Regulations ( S.I. No. 312 of 2016 ).
1 OJ L35, 6.2.2010, p. 15
2 OJ L165, 23.6.2016, p. 17
3 OJ L190, 15.7.2016, p. 83
4 OJ L157, 9.6.2006, p. 87
5 OJ L158, 27.5.2014, p. 196
S.I. No. 367/2018 –
European Union (Third-Country Auditors and Third-Country Audit Entities Equivalence, Transitional Period and Fees) Regulations 2018
I, HEATHER HUMPHREYS, Minister for Business, Enterprise and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving effect to Commission Decision 2011/30/EU of 19 January 20111 on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the European Union, Commission Implementing Decision 2016/1155/EU of 14 July 20162 on the equivalence of the public oversight, quality assurance, investigation and penalty systems for auditors and audit entities of the United States of America pursuant to Directive 2006/43/EC of the European Parliament and of the Council and Commission Implementing Decision (EU) 2016/1223 of 25 July 20163 amending Commission Decision 2011/30/EU on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the European Union, hereby make the following regulations:
1. (1) These Regulations may be cited as the European Union (Third-Country Auditors and Third-Country Audit Entities Equivalence, Transitional Period and Fees) Regulations 2018.
(2) These Regulations shall come into operation on 21 September 2018.
2. (1) In these Regulations—
“Act of 2014” means the Companies Act 2014 (No. 38 of 2014);
“Commission Decision” means Commission Decision 2011/30/EU of 19 January 2011 as amended by Commission Implementing Decision 2013/288/EU of 13 June 20134 amending Decision 2011/30/EU on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the European Union and Commission Implementing Decision (EU) 2016/1223 of 25 July 2016;
“Commission Implementing Decision 2013” means Commission Implementing Decision 2013/280/EU of 11 June 20135 on the adequacy of the competent authorities of the United States of America pursuant to Directive 2006/43/EC of the European Parliament and of the Council;
“Commission Implementing Decision 2016” means Commission Implementing Decision 2016/1155/EU of 14 July 2016;
“relevant Articles” means Articles 29, 30 and 32 of the Audit Directive;
“Supervisory Authority” has the meaning given to it by section 900(1) of the Act of 2014;
“third-country auditor” means an individual who carries out audits of accounts or consolidated accounts of a company incorporated in a third country, other than an individual who is registered as a statutory auditor in any Member State as a consequence of approval in accordance with Articles 3 and 44 of the Audit Directive;
“third-country audit entity” means an entity, regardless of its legal form, which carries out audits of the accounts or consolidated accounts of a company incorporated in a third country, other than an entity which is registered as an audit firm in any Member State as a consequence of approval in accordance with Article 3 of the Audit Directive.
(2) A word or expression which is used in these Regulations and which is also used in the Commission Decision, Commission Implementing Decision 2013 or Commission Implementing Decision 2016 has, unless the contrary intention appears, the same meaning in these Regulations as it has in the Commission Decision, Commission Implementing Decision 2013 or Commission Implementing Decision 2016, as the case may be.
(3) Section 1461 of the Act of 2014 shall apply to the interpretation of these Regulations as that section applies to the interpretation of Part 27 of that Act.
3. (1) Subject to paragraph (2), in accordance with the first paragraph of Article 1 of the Commission Decision and for the purpose of Article 46(1) of the Audit Directive, the public oversight, quality assurance, investigation and penalty systems for third-country auditors and third-country audit entities of—
(a) Australia,
(b) Canada,
(c) China,
(d) Croatia,
(e) Japan,
(f) Singapore,
(g) South Africa,
(h) South Korea,
(i) Switzerland, and
(j) the United States of America,
meet requirements which shall be considered equivalent to those of the relevant Articles in relation to audit activities concerning the accounts or consolidated accounts for financial years starting from 2 July 2010.
(2) In accordance with Article 4 of the Commission Decision, paragraph (1) ceased to apply to the third country specified in paragraph (1)(j) on 31 July 2013.
(3) In accordance with the second paragraph of Article 1 of the Commission Decision and for the purpose of Article 46(1) of the Audit Directive, the public oversight, quality assurance, investigation and penalty systems for third-country auditors and third-country audit entities of—
(a) Abu Dhabi,
(b) Brazil,
(c) Dubai International Financial Centre,
(d) Guernsey,
(e) Indonesia,
(f) Isle of Man,
(g) Jersey,
(h) Malaysia,
(i) Taiwan, and
(j) Thailand,
meet requirements which shall be considered equivalent to those of the relevant Articles in relation to audit activities concerning the accounts or consolidated accounts for financial years starting from 1 August 2012.
(4) Subject to paragraph (5), in accordance with Article 1 of Commission Implementing Decision 2013 and for the purpose of Article 46(1) of the Audit Directive, the public oversight, quality assurance, investigation and penalty systems for auditors and audit entities of the United States of America meet requirements which shall be considered equivalent to those of the relevant Articles in relation to audit activities concerning the accounts or consolidated accounts for financial years starting from 1 August 2012.
(5) In accordance with Article 3 of Commission Implementing Decision 2013, paragraph (3) applied from 1 August 2013 to 31 July 2016.
(6) In accordance with the third paragraph of Article 1 of the Commission Decision and for the purpose of Article 46(1) of the Audit Directive, the public oversight, quality assurance, investigation and penalty systems for third-country auditors and third-country audit entities of—
(a) Mauritius,
(b) New Zealand, and
(c) Turkey,
meet requirements which shall be considered equivalent to those of the relevant Articles in relation to audit activities concerning accounts or consolidated accounts for financial years starting from 1 August 2016.
(7) Subject to paragraph (8), in accordance with Article 1 of Commission Implementing Decision 2016 and for the purpose of Article 46(1) of the Audit Directive, the public oversight, quality assurance, investigation and penalty systems for auditors and audit entities of the Securities and Exchange Commission of the United States of America and the Public Company Accounting Oversight Board of the United States of America shall be considered to meet requirements that are equivalent to those of the relevant Articles.
(8) In accordance with Article 3 of Commission Implementing Decision 2016, paragraph (7) shall apply from 1 August 2016 to 31 July 2022.
4. For the purpose of section 1580(2)(a) of the Act of 2014, the Commission—
(a) has carried out—
(i) for the purpose of Article 46(1) of the Audit Directive, an assessment, in respect of the third countries specified in paragraphs (1), (3), (4), (6) and (7) of Regulation 3, of the systems referred to in section 1580(1) of the Act of 2014, and
(ii) each assessment in accordance with Article 46 of the Audit Directive, and
(b) has, in respect of the third countries specified in paragraphs (1), (3), (4), (6) and (7) of Regulation 3, assessed the systems referred to in paragraph (a) as meeting the requirements equivalent to those in the corresponding provisions of the Audit Directive.
5. (1) This Regulation applies to the provision by a third-country auditor or third-country audit entity of an audit report concerning the accounts or consolidated accounts for a company incorporated in a third country specified in Annex I to the Commission Decision for a financial year starting during the period from 2 July 2010 to 31 July 2012 and Annex II to the Commission Decision for 2 July 2010 to 31 July 2018 where the transferable securities of such company are admitted to trading on a regulated market of the State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 20046 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC.
(2) A third-country auditor or third-country audit entity shall—
(a) provide the Supervisory Authority with all of the information specified in subparagraphs (a) to (e) of Article 2(1) of the Commission Decision and subparagraphs (a) to (e) of Article 2(2) of the Commission Decision, and
(b) pay the fee specified in Regulation 8.
(3) The Supervisory Authority shall—
(a) record the information provided in accordance with paragraph (2), and
(b) inform the public—
(i) of the name and address of third-country auditors and third-country audit entities that provide audit reports concerning the accounts or consolidated accounts of companies incorporated in the third countries specified in Annex I or Annex II to the Commission Decision, and
(ii) that the public oversight, quality assurance, investigation and penalty systems of those countries are not yet recognised as equivalent under Article 46(2) of the Audit Directive.
6. (1) A person shall not disclose, except in accordance with law, information that—
(a) is obtained by the Supervisory Authority pursuant to Regulation 5(2)(a) in so far as it relates to information provided to it in respect of subparagraph (e) of Article 2(1) of the Commission Decision or subparagraph (e) of Article 2(2) of the Commission Decision, or
(b) is required, in accordance with subparagraph (e) of Article 2(1) of the Commission Decision or subparagraph (e) of Article 2(2) of the Commission Decision, to be treated on a confidential basis.
(2) Without limiting paragraph (1), the persons to whom that paragraph applies include the following:
(a) a member or director, or former member or former director, of the Supervisory Authority;
(b) an employee, or former employee, of the Supervisory Authority;
(c) a professional or other advisor, or former professional or other advisor, to the Supervisory Authority.
(3) A person who contravenes paragraph (1) shall be guilty of an offence and shall be liable, on summary conviction, to a Class A fine.
(4) Proceedings for a summary offence under this Regulation may be brought and prosecuted by the Director of Corporate Enforcement.
7. (1) Article 2(2) of the Commission Decision is without prejudice to a cooperative arrangement on quality assurance reviews between the Supervisory Authority and the competent authority of a third country specified in Annex II to the Commission Decision if such cooperative arrangement—
(a) includes carrying out quality assurance reviews on the basis of equality of treatment,
(b) has been communicated in advance to the Commission, and
(c) does not pre-empt a Commission decision under Article 47 of the Audit Directive.
(2) Article 1 of Commission Implementing Decision 2013 shall be without prejudice to cooperative arrangements on individual quality assurance reviews between the Supervisory Authority and the competent authorities of the United States of America if such arrangement meets the criteria set out in Article 2 of Commission Implementing Decision 2013 and does not pre-empt any decision to be taken in accordance with Article 47(3) of the Audit Directive.
(3) Article 1 of Commission Implementing Decision 2016 shall be without prejudice to cooperative arrangements on individual quality assurance reviews between the Supervisory Authority and the competent authorities of the United States of America.
8. A third-country auditor or third-country audit entity referred to in Regulation 5(1) shall in each year pay a fee, for the purposes of administrative expenses incurred pursuant to these Regulations, of €2,000 to the Supervisory Authority.
9. The following Regulations are revoked:
(a) the European Union (Third Country Auditors and Audit Entities Equivalence, Transitional Period Measures and Fees) Regulations 2012 ( S.I. No. 312 of 2012 );
(b) the European Union (Third Country Auditors and Audit Entities Equivalence, Transitional Period and Fees) (Amendment) Regulations 2014 ( S.I. No. 555 of 2014 );
(c) the European Union (Third Country Auditors and Audit Entities Equivalence, Transitional Period and Fees) (Amendment) Regulations 2017 ( S.I. No. 67 of 2017 ).
/images/ls
GIVEN under my Official Seal,
19 September 2018.
HEATHER HUMPHREYS,
Minister for Business, Enterprise and Innovation.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation)
These Regulations consolidate three existing statutory instruments ( S.I. No. 312 of 2012 , S.I. No. 555 of 2014 and S.I. No. 67 of 2017 ) which transpose Commission Decisions and Commission Implementing Decisions.
These Decisions relate to the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the European Union, as provided for in Article 46 of the EU Audit Directive 2006/43/EC (as amended by Directive 2014/56/EU).
The following Regulations are revoked:
(a) the European Union (Third Country Auditors and Audit Entities Equivalence, Transitional Period Measures and Fees) Regulations 2012 ( S.I. No. 312 of 2012 );
(b) the European Union (Third Country Auditors and Audit Entities Equivalence, Transitional Period and Fees) (Amendment) Regulations 2014 ( S.I. No. 555 of 2014 );
(c) the European Union (Third Country Auditors and Audit Entities Equivalence, Transitional Period and Fees) (Amendment) Regulations 2017 ( S.I. No. 67 of 2017 ).
The Irish Auditing and Accounting Supervisory Authority (IAASA) is the competent authority in Ireland for the purposes of these Commission Decisions, Commission Implementing Decisions and these Regulations.
1 OJ L15, 20.1.2011, p. 12
2 OJ L190, 15.7.2016, p. 80
3 OJ L201, 27.7.2016, p. 23
4 OJ L163, 15.6.2013, p. 26
5 OJ L161, 13.6.2013, p. 4
6 OJ L145, 30.4.2004, p. 1
S.I. No. 220/2010 –
European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010.
PART 1
Preliminary and General
1. Citation and construction
2. Application
3. Interpretation
PART 2
Miscellaneous Amendments — Amendments of Preliminary and General Nature, Amendments Adapting Certain Provisions of Companies Acts in Consequence of Directive, Etc.
4. Amendment of Principal Act
5. Amendment of Companies (Amendment) Act 1986
6. Amendment of section 187 of Act of 1990
7. Amendment of section 188 of Act of 1990
8. Amendment of section 189 of Act of 1990
9. Amendment of section 190 of Act of 1990
10. Amendment of section 191 of Act of 1990
11. Amendment of section 192 of Act of 1990
12. Amendment of section 198 of Act of 1990
13. Amendment of sections 199 and 200 of Act of 1990
14. Amendments of Act of 2003
15. Revocation of certain secondary legislation
PART 3
Designation of competent authorities
16. Designation of competent authorities and meaning of “competent authority” and related expressions
17. Operation of provisions with regard to particular recognised accountancy bodies
18. Conflicts of interest to be avoided
PART 4
Approval of Statutory Auditors and Audit Firms, Prohibition on Unapproved Persons Acting as Auditor, etc.
Chapter 1
Approval of Statutory Auditors and Audit Firms
19. Applications for approval, general principle as to good repute, etc.
20. Restriction as to the persons who may carry out statutory audits
21. Restriction on acting as statutory auditor
22. Restriction on acting as statutory audit firm
23. Offence for contravening Regulation 20, 21 or 22
24. Conditions for approval as statutory auditor
25. Transitional provision — deemed approval of persons qualified for appointment pursuant to Part X of Act of 1990
26. Appropriate qualification for purpose of Regulation 24(a)
27. Conditions for approval as statutory audit firm and transitional provision
28. Powers of Director of Corporate Enforcement
29. Evidence in prosecutions under Regulation 23
Chapter 2
Aptitude Test
30. Aptitude test to be passed
31. Scope of aptitude test
32. Adequate standards to be applied in administration of aptitude test
Chapter 3
Withdrawal of approval
33. Grounds for mandatory withdrawal in case of statutory auditor
34. Grounds for mandatory withdrawal in case of statutory audit firm
35. Appeals against withdrawal of approval
36. Amendment of section 24 of Act of 2003 to clarify relationship between powers thereunder and powers under these Regulations
37. Certain persons to be notified of withdrawal
38. Other persons to be notified of withdrawal
PART 5
Standards and provisions applicable to statutory auditors and audit firms
Chapter 1
Standards for statutory auditors and audit firms
39. Continuing education
40. Professional ethics
41. Independence and objectivity
42. Standards for purposes of Regulations 39 to 41
43. Arrangements for enforcement of standards
Chapter 2
Confidentiality and Professional Secrecy
44. Rules of confidentiality to apply
45. Supplemental provisions in relation to Regulation 44
46. Saving
47. Incoming statutory auditor or audit firm to be afforded access to information
48. Access by competent authority to audit documents
49. Access by competent authority with supervisory and other functions to documents in possession of competent authority
50. Professional privilege
51. No liability for acts done in compliance with Regulations
52. Restriction of section 31 of Act of 2003
53. Further amendment of section 31 of Act of 2003
Chapter 3
Auditing Standards and Audit Reporting
54. International auditing standards to be applied
55. Audit of group accounts — responsibility of group auditor
56. Further responsibility of group auditor
57. Amendment of section 193 of Act of 1990
Chapter 4
Transparency report
58. Transparency report
59. Contents of transparency report — general
60. Publication of transparency report
61. Specific requirements in relation to contents of transparency report
Chapter 5
Duties to notify competent authority with supervisory and other functions in event of cessation of office by statutory auditor or audit firm and restrictions on their removal
62. Amendment of Principal Act with regard to removal of auditors
PART 6
Public Register
63. Public register
64. Notification of information to competent authority with registration functions
65. Prohibition on certain acts unless registered
66. Obligation of statutory auditor or audit firm to notify certain information
67. Information must be signed
68. Transitional provision
69. Language of information to be entered in register
PART 7
Independence
70. Requirement for independence — general
71. Prohibited relationships — specific provisions to secure independence
72. Additional requirements in case of public-interest entities
73. Threats to independence and other information to be recorded
74. Non-intervention by certain persons in execution of audit
75. Restrictions with regard to fees
76. Additional reporting and other requirements in case of public-interest entities
77. Rotation of key audit partner in cases of public-interest entities
78. Moratorium on taking up management position in audited public-interest entity
PART 8
Public Oversight and Quality Assurance of Statutory Auditors and Audit Firms
Chapter 1
Public Oversight
79. Amendment of section 10 of Act of 2003
80. System of public oversight — responsibility of competent authority with supervisory and other functions
81. Further amendments of Act of 2003
Chapter 2
Quality Assurance
82. Competent authority with supervisory and other functions to engage in oversight of quality assurance
83. System of quality assurance to be put in place
84. Organisation of quality assurance system
85. Quality assurance review deemed to include individual auditors in certain cases
86. Right of competent authority as regards professional discipline
Chapter 3
Systems of investigations and penalties
87. System of investigation and penalties
88. Duty of each competent authority with regard to sanctions
89. Scope of penalties and publicity in relation to their imposition
90. Further amendment of section 24 of Act of 2003
PART 9
Audit Committees
91. Audit committees in respect of public-interest entities
PART 10
Regulatory arrangements between Member States
Chapter 1
Cooperation with other Member States
92. Cooperation with other Member States
93. Specific requirements with regard to cooperation
94. Confidentiality of information
95. Supplemental provisions in relation to Regulation 94
96. Obligation to supply information required for certain purposes and saving concerning confidential information
97. Obligation of competent authority to gather information
98. Application of Regulation 94 to certain information
99. Requesting authority to be notified if its request not complied with
100. Grounds for refusing request for information
101. Use to which information may be put
102. References in Regulations 103 to 105 to counterpart authority
103. Counterpart authority to be notified of non-compliance with Directive
104. Counterpart authority may be requested to carry out investigation
105. Duty of competent authority to take certain action
106. Due consideration to be given to counterparty’s request for investigation
107. Grounds for refusing request for investigation
Chapter 2
Mutual recognition of regulatory arrangements between Member States
108. Article 34 of the Directive — clarification of preceding Regulations’ effect
Chapter 3
Transfer of working papers to third-country competent authorities
109. Transfer of audit documentation to third-country competent authority
110. Derogation from Regulation 109 in exceptional cases
111. Particulars of working arrangements to be notified
PART 11
Third-Country Auditors
Chapter 1
International Aspects
112. Approval of third-country auditor
Chapter 2
Registration and oversight of third-country auditors and audit entities
113. Registration of third-country auditors and audit entities
114. Application of Part 8 to registered third-country auditors and audit entities
115. Audit by non-registered auditor or audit entity — consequence
116. Conditions for registration of third-country auditor or audit entity
117. Competent authority with supervisory and other functions may assess matter of equivalence for purposes of Regulation 116(iv) in certain circumstances
118. Certain fees chargeable by competent authority with supervisory and other functions
119. Exemptions in case of equivalence
PART 12
Miscellaneous
120. Disclosure of auditors’ remuneration, etc. in accounts
121. Saving for disciplinary proceedings in being
SCHEDULE 1
Information required, by Part 6, to be supplied and entered in Public Register
SCHEDULE 2
Standards relating to training and qualifications for approval of natural person as statutory auditor
S.I. No. 220 of 2010
EUROPEAN COMMUNITIES (STATUTORY AUDITS) (DIRECTIVE 2006/43/EC) REGULATIONS 2010
Notice of the making of this Statutory Instrument was published in
“Iris Oifigiúil” of 25th May, 2010.
I, BATT O’KEEFFE, Minister for Enterprise, Trade and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006, hereby make the following regulations:
PART 1 Preliminary and General
Citation and construction
1. (1) These Regulations may be cited as the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010.
(2) These Regulations shall be read as one with the Companies Acts.
Application
2. Save where otherwise provided, these Regulations apply—
(a) in so far as they relate to the conduct of statutory audits and the duties and powers of statutory auditors and audit firms in relation thereto — to the conduct of statutory audits for financial years commencing on or after the date of the making of these Regulations; and
(b) as regards each other matter provision for which is made by these Regulations — on and from the date of the making of these Regulations.
Interpretation
3. (1) In these Regulations—
“Act of 1990” means the Companies Act 1990 (No. 33 of 1990);
“Act of 2003” means the Companies (Auditing and Accounting) Act 2003 (No. 44 of 2003);
“affiliate”, in relation to a statutory audit firm, means any undertaking, regardless of legal form, which is connected to the statutory audit firm by means of common ownership, control or management;
“approved”, in relation to a statutory auditor or audit firm, means approved under these Regulations;
“audit report” means the report issued by the statutory auditor or audit firm to the members of a company in accordance with section 193 of the Act of 1990;
“audit working papers”, in relation to a statutory auditor or audit firm, means material (whether in the form of data stored on paper, film, electronic media or other media or otherwise) prepared by or for, or obtained by the statutory auditor or audit firm in connection with the performance of the audit concerned, and includes—
(a) the record of audit procedures performed,
(b) relevant audit evidence obtained, and
(c) conclusions reached,
and a reference to audit working papers in relation to—
(i) a Member State auditor or audit firm, or
(ii) a third-country auditor or audit entity,
shall be read accordingly;
“Commission” means Commission of the European Communities;
“competent authorities under these Regulations” has the meaning assigned to it by Regulation 16(3);
“competent authority”, where used without qualification, has the meaning assigned to it by Regulation 16(2);
“competent authority with registration functions” has the meaning assigned to it by Regulation 16(2);
“competent authority with supervisory and other functions” has the meaning assigned to it by Regulation 16(2);
“Directive” means Directive No. 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC;
“EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;
“EEA State” means a state that is a contracting party to the EEA Agreement;
“enactment” includes an instrument made under an enactment;
“financial year”, in relation to a statutory auditor or audit firm, means—
(a) subject to paragraph (b), any period in respect of which a profit and loss account or income statement is prepared by the auditor or audit firm for income tax or other business purposes, or
(b) in the case of a statutory audit firm that is a company, any period in respect of which accounts under the Companies Acts are prepared by the firm,
whether that period is of a year’s duration or not;
“firm” includes a body corporate;
“group auditor” means the statutory auditor or audit firm carrying out the statutory audit of the group accounts in question;
“key audit partner” or “key audit partners” means:
(a) the one or more statutory auditors designated by a statutory audit firm for a particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm, or
(b) in the case of a group audit, at least the one or more statutory auditors designated by a statutory audit firm as being primarily responsible for carrying out the statutory audit at the level of the group and the one or more statutory auditors designated as being primarily responsible at the level of material subsidiaries, or
(c) the one or more statutory auditors who sign the audit report;
“Member State” means a Member State of the European Union or an EEA State;
“Member State audit firm” means an audit entity approved in accordance with the Directive by a competent authority of another Member State to carry out audits of annual or group accounts as required by Community law;
“Member State auditor” means an auditor approved in accordance with the Directive by a competent authority of another Member State to carry out audits of annual or group accounts as required by Community law;
“Minister” means the Minister for Enterprise, Trade and Innovation;
“network”, in relation to a statutory auditor or audit firm, means the larger structure:
(a) which is aimed at cooperation and to which the statutory auditor or audit firm belongs, and
(b) either—
(i) the clear objective of which is profit or cost-sharing, or
(ii) which shares—
(I) common ownership, control or management,
(II) common quality control policies and procedures,
(III) a common business strategy, or
(IV) the use of a common brand-name or a significant part of professional resources;
“Principal Act” means the Companies Act 1963 (No. 33 of 1963);
“public-interest entities” means—
(a) companies or other bodies corporate governed by the law of a Member State whose transferable securities are admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC,
(b) credit institutions as defined in point 1 of Article 1 of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions, and
(c) insurance undertakings within the meaning of Article 2(1) of Directive 91/674/EEC;
“recognised accountancy body” means a body of accountants—
(a) recognised, or
(b) deemed, by virtue of section 191(3) or (4) of the Act of 1990, to be recognised,
by the competent authority with supervisory and other functions for the purposes of—
(i) section 187 of the Act of 1990, or
(ii) these Regulations;
“standards” means those standards of a recognised accountancy body as defined in section 4 of the Act of 2003;
“statutory audit” means an audit of individual accounts or group accounts in so far as required by Community law;
“statutory audit firm” means an audit firm which is approved in accordance with these Regulations to carry out statutory audits;
“statutory auditor” means a natural person who is approved in accordance with these Regulations to carry out statutory audits;
“third country” means a country or territory that is not a Member State or part of a Member State;
“third-country audit entity” means an entity that is entitled, under or by virtue of the laws, regulations or administrative provisions of a third country, to carry out audits of the annual or group accounts of a company incorporated in that third country;
“third-country auditor” means a natural person who is entitled, under or by virtue of the laws, regulations or administrative provisions of a third country, to carry out audits of the annual or group accounts of a company incorporated in that third country;
“third-country competent authority” means an authority in a third country with responsibilities, as respects auditors and audit entities in that country, equivalent to those of a competent authority or the competent authority with supervisory and other functions;
“transparency report” shall be read in accordance with Regulation 58.
(2) A reference in these Regulations to a registered third-country auditor or audit entity is a reference to a third-country auditor or entity registered under Chapter 2 of Part 11.
(3) A word or expression that is used in these Regulations and is also used in the Directive shall have in these Regulations the same meaning as it has in the Directive.
PART 2 Miscellaneous Amendments — Amendments of Preliminary and General Nature, Amendments Adapting Certain Provisions of Companies Acts in Consequence of Directive, Etc.
Amendment of Principal Act
4. (1) Section 2(1) of the Principal Act is amended—
(a) by inserting the following definition after the definition of “articles”:
“ ‘auditor’ means a statutory auditor or statutory audit firm within the meaning of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010;”, and
(b) by inserting the following definition after the definition of “subsidiary”:
“ ‘Supervisory Authority’ means the Irish Auditing and Accounting Supervisory Authority;”.
(2) Section 149A(1)(b)(xi) of the Principal Act is amended by deleting “paragraph 39(5) of the Schedule to the Act of 1986 and”.
(3) Section 150B(2)(k) of the Principal Act is amended by deleting “paragraph 39(5) of the Schedule to the Act of 1986 and”.
(4) Section 160 of the Principal Act is amended, in subsection (9), by inserting “(not being a body corporate)” after “firm” where it firstly occurs.
(5) The amendments effected by paragraphs (2) and (3) apply to accounts for financial years ending on or after the date falling 3 months after the date of the making of these Regulations.
Amendment of Companies (Amendment) Act 1986
5. (1) Part IV of the Schedule to the Companies (Amendment) Act 1986 (No. 25 of 1986) is amended by deleting subparagraph (5) of paragraph 39.
(2) The amendment effected by this Regulation applies to accounts for financial years ending on or after the date falling 3 months after the date of the making of these Regulations.
Amendment of section 187 of Act of 1990
6. Section 187 of the Act of 1990 is amended—
(a) in subsection (1), by deleting “either as auditor of a company or”;
(b) by deleting subsection (2);
(c) in subsection (3), by substituting the following paragraph for paragraph (f):
“(f) a person who is disqualified under Regulation 71 of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 for appointment as auditor of a company that is a subsidiary or holding company of the society,”;
(d) in subsection (6), by deleting “as auditor of a company or”;
(e) in subsection (7), by deleting “auditor of a company or”; and
(f) in subsection (12), by deleting “as an auditor of a company or”.
Amendment of section 188 of Act of 1990
7. Section 188 of the Act of 1990 is amended, in subsection (1), by deleting “auditor of a company or”.
Amendment of section 189 of Act of 1990
8. Section 189 of the Act of 1990 is amended—
(a) in subsection (1), by deleting “auditor of a company or”; and
(b) in subsection (2)(a) and (c), by deleting “auditor of a company or”.
Amendment of section 190 of Act of 1990
9. The following section is substituted for section 190 of the Act of 1990:
“Consultation by Supervisory Authority regarding standards and qualifications.
190. (1) Before granting, renewing, withdrawing, revoking, suspending or refusing a recognition of a body of accountants under or for the purposes of—
(a) the Companies Acts; or
(b) the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 (the ‘Regulations of 2010’),
the Supervisory Authority may consult with any body of persons or other person as to the conditions or standards required by the body of accountants concerned in connection with membership of that body or, as the case may be, the awarding to persons of practising certificates or the approval of persons as auditors.
(2) Without prejudice to any obligations in that behalf in connection with the performance of the foregoing functions as they relate to the Regulations of 2010, the Supervisory Authority may also consult with any body of persons or other person before forming any opinion or making any declaration in relation to the qualifications held by any person or class of persons as respects qualification for appointment as a public auditor.”.
Amendment of section 191 of Act of 1990
10. The following section is substituted for section 191 of the Act of 1990:
“Recognition of body of accountants.
191. (1) The Supervisory Authority may grant recognition to a body of accountants under or for the purposes of section 187 or the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 but may only grant such recognition if satisfied—
(a) in the case of a grant of recognition—
(i) to a body of accountants under or for the purposes of section 187, that the standards relating to training, qualifications and repute required by that body for the awarding of a practising certificate to a person are not less than those that were specified in Articles 3 to 6, 8 and 19 of the Council Directive before the repeal thereof by Directive No. 2006/43/EC of the European Parliament and of the Council of 17 May 2006; and
(ii) to a body of accountants under or for the purposes of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010, that the standards relating to training, qualifications and repute required by that body for the approval of a person as an auditor are not less than those specified in Articles 4, 6 to 8 and 10 of Directive No. 2006/43/EC of the European Parliament and of the Council of 17 May 2006;
and
(b) in either of those 2 cases, as to the standards that body applies to its members in the area of ethics, codes of conduct and practice, independence, professional integrity, auditing and accounting standards and investigation and disciplinary procedures.
(2) In subsection (3) ‘relevant amendment’ means the amendment of this section by Regulation 10 of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010.
(3) Each of the following—
(a) the Association of Chartered Certified Accountants;
(b) the Institute of Chartered Accountants in Ireland;
(c) the Institute of Chartered Accountants in England and Wales;
(d) the Institute of Chartered Accountants of Scotland;
(e) the Institute of Certified Public Accountants in Ireland;
(f) the Institute of Incorporated Public Accountants,
being a body of accountants that stood recognised under or for the purposes of section 187 immediately before the relevant amendment, continues to stand recognised under or for the purposes of section 187 (and such recognition shall be deemed to have been granted by the Supervisory Authority).
(4) Each of the bodies of accountants referred to in subsection (3) shall be deemed to have been granted recognition by the Supervisory Authority under or for the purposes of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010.”.
Amendment of section 192 of Act of 1990
11. Section 192 of the Act of 1990 is amended—
(a) in subsections (1) to (3), by inserting “or the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010” after “under or for the purposes of section 187”;
(b) in subsection (4)(a), by inserting “or the Regulations referred to in the preceding subsections” after “the said section 187”; and
(c) in subsection (6), by inserting “or the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010” after “for the purposes of section 187”.
Amendment of section 198 of Act of 1990
12. (1) Section 198 of the Act of 1990 is amended—
(a) in subsection (1)—
(i) by inserting “(‘the register of public auditors’)” after “a register”; and
(ii) by deleting “as auditor of a company or”;
(b) in subsection (2)—
(i) by deleting “as an auditor of a company or” in paragraphs (a) and (b);
(ii) by deleting “an auditor of a company or” in paragraph (c);
and
(iii) by substituting “register of public auditors” for “register of auditors” in paragraph (c)(i);
and
(c) in subsection (3)—
(i) by substituting “register of public auditors” for “register of auditors” where it firstly occurs;
(ii) by substituting “a public auditor” for “an auditor” in paragraph (a); and
(iii) by substituting “register of public auditors” for “register of auditors” in paragraph (b).
Amendment of sections 199 and 200 of Act of 1990
13. (1) Section 199 of the Act of 1990 is amended—
(a) in subsection (1), by deleting “auditor of a company or”;
(b) in subsection (2), by adding “as public auditors” after “in the State”; and
(c) in subsection (3), by deleting “as auditor of a company or”.
(2) Section 200 of the Act of 1990 is amended—
(a) in subsection (1), by deleting “as auditor of a company or”;
(b) in subsection (2), by adding “as public auditors” after “in the State”; and
(c) in subsection (3), by deleting “as auditor of a company or”.
Amendments of Act of 2003
14. The Act of 2003 is amended—
(a) in section 4(1), by substituting the following definition for the definition of “recognised accountancy body”:
“ ‘recognised accountancy body’ means a body of accountants—
(a) recognised, or
(b) deemed, by virtue of section 191(3) or (4) of the Act of 1990, to be recognised,
by the Supervisory Authority for the purposes of—
(i) section 187 of the Act of 1990, or
(ii) the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010;”; and
(b) in section 9(2), by inserting the following paragraph after paragraph (ma) (inserted by the Investment Funds, Companies and Miscellaneous Provisions Act 2006 (No. 41 of 2006)):
“(mb) to perform the functions (and in particular the functions of public oversight) conferred on it by the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010;”.
Revocation of certain secondary legislation
15. (1) Regulations 1 to 4 of the Companies Act 1990 (Auditors) Regulations 1992 ( S.I. No. 259 of 1992 ) are revoked save in so far as they relate to public auditors.
(2) Regulations 5 to 7 of the Companies Act 1990 (Auditors) Regulations 1992 ( S.I. No. 259 of 1992 ) are revoked.
(3) Part I of the Schedule to the European Communities (Credit Institutions: Accounts) Regulations 1992 ( S.I. No. 294 of 1992 ) is amending by revoking subparagraph (3) of paragraph 74.
(4) Part III of the Schedule to the European Communities (Insurance Undertakings: Accounts) Regulations 1996 ( S.I. No. 23 of 1996 ) is amended by revoking subparagraph (d) of paragraph 21.
(5) The amendments effected by paragraphs (3) and (4) apply to accounts for financial years ending on or after the date falling 3 months after the date of the making of these Regulations.
PART 3 Designation of competent authorities
Designation of competent authorities and meaning of “competent authority” and related expressions
16. (1) This Regulation—
(a) designates, for the purposes of the tasks provided for in the Directive, various bodies or other persons as competent authorities in the State; and
(b) assigns a meaning to each of the following expressions used in these Regulations and which are connected with the foregoing designation, namely:
(i) “competent authority” — where that expression is used without qualification;
(ii) “competent authorities under these Regulations”;
(iii) “competent authority with registration functions”; and
(iv) “competent authority with supervisory and other functions”.
(2) In these Regulations, other than this paragraph—
“competent authority”, where used without qualification, means a recognised accountancy body;
“competent authority with registration functions” means the Registrar of Companies;
“competent authority with supervisory and other functions” means the Irish Auditing and Accounting Supervisory Authority,
and, accordingly, each recognised accountancy body, the Registrar of Companies and the Irish Auditing and Accounting Supervisory Authority is designated as a competent authority in the State for the purposes of such of the tasks provided for in the Directive as correspond to the particular functions conferred on it or him or her by the provision concerned of these Regulations.
(3) In these Regulations “competent authorities under these Regulations” means—
(a) each of the recognised accountancy bodies;
(b) the Registrar of Companies; and
(c) the Irish Auditing and Accounting Supervisory Authority,
save that in Regulations 96 to 98, 101 and 103 to 107 the expression does not include the Registrar of Companies.
(4) Regulation 17 supplements paragraph (2) with regard to the operation of a provision of these Regulations that refers to a competent authority without qualification.
Operation of provisions with regard to particular recognised accountancy bodies
17. (1) This Regulation applies where the provision referred to in paragraph (2), (3), (4) or (5) uses the expression “competent authority” without qualification and that provision does not, by its express terms, itself indicate which recognised accountancy body is being referred to.
(2) A provision of these Regulations that confers a function on a competent authority in relation to a statutory auditor or audit firm shall be read as conferring that function—
(a) in the case of a statutory auditor who is not a member of a statutory audit firm — on the recognised accountancy body of which the statutory auditor is a member;
(b) in the case of a statutory auditor who is a member of a statutory audit firm — on the recognised accountancy body of which the statutory audit firm is a member;
(c) in the case of a statutory audit firm — on the recognised accountancy body of which the statutory audit firm is a member.
(3) With regard to the function conferred by Regulation 19 on a competent authority in relation to a natural person or firm, paragraph (2) applies as if, for each reference in that paragraph to a statutory auditor or statutory audit firm (as the case may be), there were substituted a reference to the natural person or firm, as appropriate.
(4) A provision of these Regulations requiring that an act is to be done, or enabling an act to be done, by a person (other than a person referred to in paragraph (5)(b)) in relation to a competent authority shall be read as requiring or enabling it to be done by the person in relation to—
(a) if the person is not a member of a statutory audit firm — the recognised accountancy body of which the person is a member;
(b) if the person is a member of a statutory audit firm — the recognised accountancy body of which the statutory audit firm is a member; and
(c) if the person is a statutory audit firm — the recognised accountancy body of which the statutory audit firm is a member.
(5) In the case—
(a) of a provision of the kind referred to in paragraph (2), (3) or (4);
(b) where the provision falls to be applied to a Member State auditor, a Member State audit firm, a third-country auditor or any other person who or which is not a member of a recognised accountancy body (or, as the case may be, the firm of which the person is a member is not a member of a recognised accountancy body),
the recognised accountancy body that shall perform the function concerned or, as the case may be, in relation to which the act concerned is required or enabled to be done shall be determined—
(i) by reference to arrangements, in writing, entered into by the recognised accountancy bodies amongst themselves for the purpose (which arrangements those bodies are empowered by this paragraph to enter into); or
(ii) in default of—
(I) such arrangements being entered into; or
(II) the provisions of such arrangements dealing with the particular case falling to be determined,
by the competent authority with supervisory and other functions.
(6) On a determination being made by the competent authority with supervisory and other functions for the purposes of paragraph (5)(ii), a direction in writing, reflecting the terms of the determination, shall be given by it (which direction that authority is empowered by this paragraph to give).
(7) Arrangements shall not be entered into under paragraph (5)(i) by the recognised accountancy bodies save after consultation by them with the competent authority with supervisory and other functions.
(8) If in consequence of the operation of this Regulation, the function of withdrawal of a particular approval under this Regulation falls to be discharged by a recognised accountancy body that is different from the recognised accountancy body that granted the approval:
(a) the first-mentioned accountancy body shall notify in writing the second-mentioned accountancy body of the proposal by it to withdraw the approval; and
(b) the second-mentioned accountancy body shall provide such assistance, by way of provision of information or clarification of any matter, to the first-mentioned accountancy body as the latter considers it may require so as to inform itself better on any issue bearing on the performance of the function of withdrawal,
and the procedures adopted for those purposes by the foregoing accountancy bodies shall be such as will—
(i) avoid any unnecessary delay in the performance of the function of withdrawal; and
(ii) respect the requirements of procedural fairness as concerns the auditor or audit firm in question being able to answer any part of the case made against him, her or it that is informed by those procedures being employed.
(9) In a case falling within paragraph (8), if the approval concerned is withdrawn, the first-mentioned body in that paragraph, in addition to making the notifications required by Regulation 37 and (where it applies) Regulation 38, shall notify the second-mentioned body in that paragraph of the withdrawal of approval.
Conflicts of interest to be avoided
18. The competent authorities under these Regulations shall organise themselves in such a manner so that conflicts of interests are avoided.
PART 4 Approval of Statutory Auditors and Audit Firms, Prohibition on Unapproved Persons Acting as Auditor, etc.
Chapter 1 Approval of Statutory Auditors and Audit Firms
Applications for approval, general principle as to good repute, etc.
19. (1) A competent authority may, on application made to it by a natural person or firm, approve, under these Regulations, the applicant as a statutory auditor or audit firm.
(2) A competent authority may, on foot of an application under paragraph (1), grant approval under these Regulations only to—
(a) natural persons; or
(b) firms,
who or which are of good repute.
(3) A competent authority may, on application to it by a third-country auditor and in accordance with Regulation 112, approve, under these Regulations, the applicant as a statutory auditor.
(4) For the purposes of this Regulation, in the case of an application under paragraph (1)—
(a) by a firm that is a Member State audit firm; or
(b) by a Member State auditor,
the fact that the applicant is a Member State audit firm or a Member State auditor, as the case may be, shall constitute conclusive evidence that the applicant is of good repute unless, arising out of the cooperation referred to in paragraph (5), a counterpart authority in the Member State where the applicant is approved as a statutory audit firm or auditor has notified the competent authority (or the competent authority with supervisory and other functions) that the counterpart authority has reasonable grounds for believing that the good repute of the audit firm or auditor has been seriously compromised.
(5) The cooperation referred to in paragraph (4) is the cooperation that the State is required to engage in by virtue of Chapter VIII (which relates to, inter alia, regulatory arrangements between Member States) of the Directive.
(6) On approving a person as a statutory auditor or audit firm, the competent authority shall assign an individual identification number to the person and a written record shall be maintained by the competent authority of all such numbers assigned by it under this paragraph.
(7) A competent authority shall, in performing its functions under this Regulation, be subject to the supervision of the competent authority with supervisory and other functions.
(8) In paragraph (4) the reference to counterpart authority shall be construed in accordance with Regulation 93.
Restriction as to the persons who may carry out statutory audits
20. Statutory audits shall be carried out only by auditors or audit firms that are approved under these Regulations.
Restriction on acting as statutory auditor
21. A person shall not—
(a) act as a statutory auditor;
(b) describe himself or herself as a statutory auditor; or
(c) so hold himself or herself out as to indicate, or be reasonably understood to indicate, that he or she is a statutory auditor,
unless he or she has been approved in accordance with the provisions of these Regulations.
Restriction on acting as statutory audit firm
22. A firm shall not—
(a) act as a statutory audit firm;
(b) describe itself as a statutory audit firm; or
(c) so hold itself out as to indicate, or be reasonably understood to indicate, that it is a statutory audit firm,
unless it has been approved in accordance with the provisions of these Regulations.
Offence for contravening Regulation 20, 21 or 22
23. (1) A person who contravenes Regulation 20, 21 or 22 is guilty of an offence and is liable—
(a) on summary conviction, to a fine not exceeding €5,000; or
(b) on conviction on indictment, to a fine not exceeding €50,000 or imprisonment for a term not exceeding 12 months or both.
(2) If the contravention in respect of which a person is convicted of an offence under paragraph (1) is continued after the conviction, the person is guilty of a further offence for each day that the contravention continues and for each such offence the person is liable—
(a) on summary conviction, to a fine not exceeding €1,000, or
(b) on conviction on indictment, to a fine not exceeding €10,000.
Conditions for approval as statutory auditor
24. A person shall not be eligible for approval as a statutory auditor unless he or she is—
(a) a member of a recognised accountancy body and holds an appropriate qualification as referred to in Regulation 26; or
(b) a Member State auditor and complies with Regulation 30; or
(c) a third-country auditor and complies with Regulations 30 and 112.
Transitional provision — deemed approval of persons qualified for appointment pursuant to Part X of Act of 1990
25. (1) Subject to Regulation 121, a person who, immediately before the commencement of this Regulation, is qualified for appointment as auditor of a company pursuant to Part X of the Act of 1990 shall, without prejudice to paragraph (3), be deemed to have been approved as a statutory auditor in accordance with these Regulations.
(2) The following paragraph has effect in the case of a person to whom paragraph (1) applies, being a person who is qualified for appointment as auditor of a company pursuant to Part X of the Act of 1990 by virtue of having been authorised by the Minister to be so appointed before 3 February 1983.
(3) The deemed approval, by virtue of paragraph (1), of a person referred to in paragraph (2) shall cease to have effect unless, as soon as may be after the commencement of this Regulation, the person becomes either—
(a) a member of; or
(b) subject to the regulation of,
a competent authority.
(4) In relation to a person to whom paragraph (1) applies, Regulation 33 shall have effect as if—
(a) in paragraph (3) of that Regulation, the following subparagraph were substituted for subparagraph (b):
“(b) either—
(i) any of the conditions specified in Regulation 24(a) are not being complied with in respect of the auditor; or
(ii) in the case of a person referred to in Regulation 25(2) who has complied with the condition specified in Regulation 25(3)(a) or (b), that condition ceases to be complied with by him or her,”;
and
(b) there were substituted, in paragraph (5), for all the words beginning with “Where, having” and ending immediately before subparagraph (ii) of that paragraph, the following:
“Where, having—
(a) complied with the requirements of procedural fairness in that regard; and
(b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,
the competent authority is satisfied that circumstances referred to in paragraph (3)(a) have arisen or that a statutory auditor has failed to comply with any of the conditions specified in Regulation 24(a) or, in the case of a person referred to in Regulation 25(2) who has complied with the condition specified in Regulation 25(3)(a) or (b), that that condition has ceased to be complied with by him or her, it shall, subject to paragraph (6), serve a notice in writing on the auditor stating that—
(i) it is satisfied that, as appropriate—
(I) those circumstances have arisen;
(II) such a failure has occurred; or
(III) that condition has ceased to be complied with,
in relation to the auditor;”.
Appropriate qualification for purpose of Regulation 24(a)
26. (1) An individual holds an appropriate qualification, as required by Regulation 24(a), if he or she holds a qualification granted by a recognised accountancy body whose standards relating to training and qualifications for the approval of a person as a statutory auditor are not less than those specified in Schedule 2.
(2) In paragraph (1) “qualification” means a qualification to undertake an audit of individual accounts and group accounts in so far as required by Community law.
Conditions for approval as statutory audit firm and transitional provision
27. (1) In this Regulation references to a firm include references to a Member State audit firm.
(2) A firm shall not be eligible for approval as a statutory audit firm unless:
(a) the natural persons who carry out statutory audits in the State on behalf of the firm are approved as statutory auditors in accordance with these Regulations;
(b) the majority of the voting rights in the firm are held by—
(i) natural persons who are eligible for approval in the State or in any other Member State as statutory auditors; or
(ii) audit firms approved as statutory audit firms in the State or in any other Member State;
and
(c) the majority of the members of the administrative or management body of the firm are—
(i) natural persons who are eligible for approval in the State or in any other Member State as statutory auditors; or
(ii) audit firms approved as statutory audit firms in the State or in any other Member State,
and, for the avoidance of doubt, a majority, for the purposes of subparagraph (b) or (c), may be constituted by a combination of natural persons so eligible and audit firms so approved.
(3) Where the administrative or management body of the firm has no more than 2 members, then, for the purposes of subparagraph (c) of paragraph (2), one of those members shall satisfy at least the conditions in that subparagraph.
(4) Subject to Regulation 121, a firm that, immediately before the commencement of these Regulations, is qualified for appointment as auditor of a company pursuant to Part X of the Act of 1990 shall be deemed to have been approved as a statutory audit firm in accordance with these Regulations.
(5) In relation to a firm referred to in paragraph (4), Regulation 34 shall have effect as if—
(a) in paragraph (3) of that Regulation, the following subparagraph were substituted for subparagraph (b):
“(b) the condition specified in Regulation 27(2)(a) is not being complied with in respect of the firm,”; and
(b) there were substituted, in paragraph (5), for all the words beginning with “Where, having” and ending immediately before subparagraph (ii) of that paragraph, the following:
“Where, having—
(a) complied with the requirements of procedural fairness in that regard; and
(b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,
the competent authority is satisfied that circumstances referred to in paragraph (3)(a) have arisen or that a statutory audit firm has failed to comply with the condition specified in Regulation 27(2)(a), it shall, subject to paragraph (6), serve a notice in writing on the audit firm stating—
(i) it is satisfied that—
(I) those circumstances have arisen; or
(II) such a failure has occurred,
in relation to the firm;”.
Powers of Director of Corporate Enforcement
28. (1) The Director of Corporate Enforcement may demand of a person—
(a) acting as a statutory auditor or audit firm of a company; or
(b) purporting to have obtained approval under these Regulations to so act,
the production of evidence of the person’s approval under these Regulations in respect of any period during which the person so acted or purported to have obtained such approval.
(2) If the person concerned refuses or fails to produce the evidence referred to in paragraph (1) within 30 days after the date of the demand referred to in that paragraph, or such longer period as the Director may allow, the person is guilty of an offence.
(3) A person who is guilty of an offence under this Regulation is liable—
(a) on summary conviction, to a fine not exceeding €5,000; or
(b) on conviction on indictment, to a fine not exceeding €12,500.
(4) In a prosecution for an offence under this Regulation, it shall be presumed, until the contrary is shown, that the defendant did not, within 30 days, or any longer period allowed, after the day on which the production was demanded, produce evidence in accordance with paragraph (1).
Evidence in prosecutions under Regulation 23
29. (1) Subject to paragraph (2), in proceedings for an offence under Regulation 23, the production to the court of a certificate purporting to be signed by a person on behalf of a competent authority and stating that the defendant is not approved under these Regulations by that competent authority shall be sufficient evidence, until the contrary is shown by the defendant, that the defendant is not so approved.
(2) Paragraph (1) does not apply unless a copy of the certificate concerned is served by the prosecution on the defendant, by registered post, not later than 28 days before the day the certificate is produced in court in the proceedings concerned.
(3) If the defendant in those proceedings intends to contest the statement contained in such a certificate, he or she shall give written notice of that intention to the prosecution within 21 days, or such longer period as the court may allow, after the date of receipt by him or her of a copy of the certificate from the prosecution.
Chapter 2 Aptitude Test
Aptitude test to be passed
30. (1) Subject to paragraph (2), a Member State auditor or a third-country auditor applying for approval as a statutory auditor in the State is required to sit and pass an aptitude test to demonstrate his or her knowledge of the enactments and practice that are relevant to statutory audits in the State.
(2) Paragraph (1) shall not apply to a Member State auditor or a third-country auditor if the competent authority is satisfied that he or she has otherwise demonstrated sufficient knowledge of the enactments and practice referred to in that paragraph.
(3) The competent authority with supervisory and other functions shall issue guidance to each competent authority as to the specific matters that a competent authority should have regard to in reaching a decision that it is satisfied that a person has demonstrated, in accordance with paragraph (2), the knowledge referred to in this Regulation.
(4) That guidance shall be issued by the competent authority with supervisory and other functions as soon as may be after the date of the making of these Regulations but, in any event, not later than 6 months thereafter.
(5) A competent authority may charge and impose a fee (of an amount specified from time to time by the Minister sufficient to cover the authority’s administrative expenses in respect of the following) on a Member State auditor or third-country auditor in respect of the administration of an aptitude test under this Regulation in relation to him or her.
(6) A fee imposed under paragraph (5) may, in default of payment, be recovered from the Member State auditor or third-country auditor concerned as a simple contract debt in any court of competent jurisdiction.
Scope of aptitude test
31. (1) The aptitude test shall—
(a) be conducted in an official language of the State; and
(b) cover only the applicant’s adequate knowledge of the enactments and practice that are relevant to statutory audits in the State.
(2) Any decision by a competent authority—
(a) as to the various matters that shall constitute the contents of the aptitude test; or
(b) that those contents shall stand altered in any manner (which decision the competent authority is empowered, by this paragraph, to make from time to time),
shall require the prior approval of the competent authority with supervisory and other functions.
Adequate standards to be applied in administration of aptitude test
32. (1) The competent authorities shall apply adequate standards in the administration of the aptitude test.
(2) No standards shall be used by a competent authority for that purpose unless those standards have (with respect to that use) first been approved by the competent authority with supervisory and other functions.
Chapter 3 Withdrawal of approval
Grounds for mandatory withdrawal in case of statutory auditor
33. (1) The procedures under this Regulation are in addition to those procedures, in the cases to which those paragraphs (8) and (9) apply, that are required by Regulation 17(8) and (9) to be employed.
(2) For the purposes of this Regulation—
(a) the cases that can constitute circumstances of an auditor’s good repute being seriously compromised include cases of professional misconduct or want of professional skill on the part of the auditor; and
(b) “disciplinary committee” has the same meaning as it has in the Act of 2003.
(3) Without prejudice to Regulation 89, a competent authority shall withdraw an approval of an auditor under these Regulations if, but only if—
(a) circumstances arise (involving acts or omissions on the part of the auditor) from which the competent authority can reasonably conclude that the auditor’s good repute is seriously compromised; or
(b) any of the conditions specified in Regulation 24 are no longer being complied with in respect of the auditor,
but this paragraph is subject to paragraph (5).
(4) Unless there do not exist internal appeal procedures of the competent authority as referred to in paragraph (7)(a), references in paragraphs (5) and (6) to a competent authority shall be read as references to a competent authority acting through the disciplinary committee that deals with matters at first instance.
(5) Where, having—
(a) complied with the requirements of procedural fairness in that regard; and
(b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,
the competent authority is satisfied that circumstances referred to in paragraph (3)(a) have arisen or that non-compliance, as referred to in paragraph (3)(b), with a condition has occurred, it shall, subject to paragraph (6), serve a notice in writing on the auditor stating that—
(i) it is satisfied that—
(I) those circumstances have arisen in relation to; or
(II) such non-compliance has occurred on the part of,
the auditor;
(ii) as the case may be, the auditor must take specified steps to restore his or her repute to good standing, or comply with the condition concerned, within a specified period (which shall not be less than a month); and
(iii) if those steps are not taken or the condition concerned is not complied with within that specified period, it shall withdraw the approval of the auditor,
and, if but only if, as the case may be—
(I) those steps are not taken; or
(II) the condition concerned is not complied with,
within that specified period by the auditor, the competent authority shall withdraw the approval of the auditor under these Regulations.
(6) The procedure specified in paragraph (5) as concerns the service of a notice with respect to the matters specified in subparagraphs (i) to (iii) of it need not be employed if the acts or omissions concerned referred to in paragraph (3)(a) are such as, in the opinion of the competent authority, constitute professional misconduct or want of professional skill on the part of the auditor of a degree that employing that procedure would not be in the public interest but nothing in this paragraph affects the application of the requirements of procedural fairness to the withdrawal of approval.
(7) If—
(a) there exist applicable internal appeal procedures of the competent authority; and
(b) the investigation and disciplinary procedures of the competent authority provide that a decision of its disciplinary committee referred to in paragraph (4), being a decision of a nature to which this Regulation applies, shall stand suspended or shall not take effect until, as the case may be—
(i) the period for making an appeal under those procedures has expired without such an appeal having been made;
(ii) such an appeal has been made and the decision to withdraw the approval confirmed; or
(iii) such an appeal that has been made is withdrawn,
then, notwithstanding anything in the preceding provisions of this Regulation, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the happening of an event specified in clause (i), (ii) or (iii).
(8) If—
(a) there exist applicable internal appeal procedures of the competent authority; and
(b) the investigation and disciplinary procedures of the competent authority do not provide, as mentioned in paragraph (7)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect,
then, notwithstanding anything in those procedures, the auditor to whom that decision relates may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the relevant appellate committee of an appeal that he or she is making under those internal appeal procedures and, where such an application is made, paragraphs (11) to (14) apply to that application with—
(i) the substitution of references to an appeal under those internal appeal procedures for references to an appeal under Regulation 35; and
(ii) any other necessary modifications.
(9) If the relevant appellate committee referred to in paragraph (8) is of opinion, having regard to the particular issues that have arisen on that appeal, that, in the interests of justice, the disposal by it of an appeal referred to in that paragraph ought to include its proceeding in the manner specified in the provisions of paragraph (5) that follow subparagraphs (a) and (b) of paragraph (5), then, in disposing of that appeal, it shall proceed in the manner so specified.
(10) The competent authority shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in paragraph (8) is prosecuted promptly and it shall be the duty of that appellate committee to ensure that any such appeal to it is disposed of as expeditiously as may be and, for that purpose, to take all such steps as are open to it to ensure that, in so far as is practicable, there are no avoidable delays at any stage in the determination of such an appeal.
(11) Where a competent authority has made a decision to withdraw the approval of an auditor under this Regulation (that is to say a final decision of the competent authority on the matter after the internal appeal procedures (if any) of it have been employed and exhausted), the auditor may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the High Court of an appeal under Regulation 35 that he or she is making against the withdrawal.
(12) On the hearing of an application under paragraph (11), the High Court may, subject to paragraph (14), as it considers appropriate and having heard the competent authority concerned and, if it wishes to be so heard, the competent authority with supervisory and other functions (which shall have standing to appear and be heard on the application)—
(a) grant an order suspending the operation of the withdrawal; or
(b) refuse to grant such an order,
and an order under subparagraph (a) may provide that the order shall not have effect unless one or more conditions specified in the order are complied with (and such conditions may include conditions requiring the auditor not to carry out statutory audits save under the supervision of another statutory auditor or not to carry out such audits save in specified circumstances).
(13) The High Court may, on application to it by the auditor or competent authority concerned, vary or discharge an order under paragraph (12)(a) if it considers it just to do so.
(14) In considering an application under paragraph (11) or (13), the High Court shall have regard to—
(a) whether, as regards the appeal the applicant is making under Regulation 35 to the High Court, the applicant has a strong case that is likely to succeed before that Court (and, for that purpose, the High Court shall require the applicant to give an indication of the facts that will be relied upon, or of the evidence that will be adduced in the case of facts that are in controversy, by him or her on the hearing of that appeal); and
(b) the public interest and, in particular, the public interest in ensuring that there is the minimum of disruption, consistent with law, to the discharge by the competent authority concerned, as a body designated in the State for the purposes of the Directive, of the function of granting and withdrawing approval.
Grounds for mandatory withdrawal in case of statutory audit firm
34. (1) The procedures under this Regulation are in addition to those procedures, in the cases to which those paragraphs (8) and (9) apply, that are required by Regulation 17(8) and (9) to be employed.
(2) For the purposes of this Regulation—
(a) the cases that can constitute circumstances of an audit firm’s good repute being seriously compromised include cases of professional misconduct or want of professional skill on the part of the audit firm or any of the one or more auditors through whom it acts; and
(b) “disciplinary committee” has the same meaning as it has in the Act of 2003.
(3) Without prejudice to Regulation 89, a competent authority shall withdraw an approval of an audit firm under these Regulations if, but only if—
(a) circumstances arise (involving acts or omissions on the part of the audit firm or auditor or auditors through whom it acts) from which the competent authority can reasonably conclude that the firm’s good repute is seriously compromised; or
(b) any of the conditions specified in Regulation 27(2) are no longer being complied with in respect of the firm,
but this paragraph is subject to paragraph (5).
(4) Unless there do not exist internal appeal procedures of the competent authority as referred to in paragraph (7)(a), references in paragraphs (5) and (6) to a competent authority shall be read as references to a competent authority acting through the disciplinary committee that deals with matters at first instance.
(5) Where, having—
(a) complied with the requirements of procedural fairness in that regard; and
(b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,
the competent authority is satisfied that circumstances referred to in paragraph (3)(a) have arisen or that non-compliance, as referred to in paragraph (3)(b), with a condition has occurred, it shall, subject to paragraph (6), serve a notice in writing on the audit firm stating that—
(i) it is satisfied that—
(I) those circumstances have arisen in relation to; or
(II) such non-compliance has occurred on the part of, the firm;
(ii) as the case may be, the firm must take specified steps to restore its repute to good standing, or comply with the condition concerned, within a specified period (which shall not be less than a month); and
(iii) if those steps are not taken or the condition concerned is not complied with within that specified period, it shall withdraw the approval of the firm,
and, if but only if, as the case may be—
(I) those steps are not taken; or
(II) the condition concerned is not complied with,
within that specified period by the audit firm, the competent authority shall withdraw the approval of the audit firm under these Regulations.
(6) The procedure specified in paragraph (5) as concerns the service of a notice with respect to the matters specified in subparagraphs (i) to (iii) of it need not be employed if the acts or omissions concerned referred to in paragraph (3)(a) are such as, in the opinion of the competent authority, constitute professional misconduct or want of professional skill on the part of the audit firm (or the auditor or auditors through whom it acts) of a degree that employing that procedure would not be in the public interest but nothing in this paragraph affects the application of the requirements of procedural fairness to the withdrawal of approval.
(7) If—
(a) there exist applicable internal appeal procedures of the competent authority; and
(b) the investigation and disciplinary procedures of the competent authority provide that a decision of its disciplinary committee referred to in paragraph (4), being a decision of a nature to which this Regulation applies, shall stand suspended or shall not take effect until, as the case may be—
(i) the period for making an appeal under those procedures has expired without such an appeal having been made;
(ii) such an appeal has been made and the decision to withdraw the approval confirmed; or
(iii) such an appeal that has been made is withdrawn,
then, notwithstanding anything in the preceding provisions of this Regulation, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the happening of an event specified in clause (i), (ii) or (iii).
(8) If—
(a) there exist applicable internal appeal procedures of the competent authority; and
(b) the investigation and disciplinary procedures of the competent authority do not provide, as mentioned in paragraph (7)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect,
then, notwithstanding anything in those procedures, the audit firm to which that decision relates may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the relevant appellate committee of an appeal that it is making under those internal appeal procedures and, where such an application is made, paragraphs (10) to (14) apply to that application with—
(i) the substitution of references to an appeal under those internal appeal procedures for references to an appeal under Regulation 35; and
(ii) any other necessary modifications.
(9) If the relevant appellate committee referred to in paragraph (8) is of opinion, having regard to the particular issues that have arisen on that appeal, that, in the interests of justice, the disposal by it of an appeal referred to in that paragraph ought to include its proceeding in the manner specified in the provisions of paragraph (5) that follow subparagraphs (a) and (b) of paragraph (5), then, in disposing of that appeal, it shall proceed in the manner so specified.
(10) The competent authority shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in paragraph (8) is prosecuted promptly and it shall be the duty of that appellate committee to ensure that any such appeal to it is disposed of as expeditiously as may be and, for that purpose, to take all such steps as are open to it to ensure that, in so far as is practicable, there are no avoidable delays at any stage in the determination of such an appeal.
(11) Where a competent authority has made a decision to withdraw the approval of an audit firm under this Regulation (that is to say a final decision of the competent authority on the matter after the internal appeal procedures (if any) of it have been employed and exhausted), the audit firm may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the High Court of an appeal under Regulation 35 that it is making against the withdrawal.
(12) On the hearing of an application under paragraph (11), the High Court may, subject to paragraph (14), as it considers appropriate and having heard the competent authority concerned and, if it wishes to be so heard, the competent authority with supervisory and other functions (which shall have standing to appear and be heard on the application)—
(a) grant an order suspending the operation of the withdrawal; or
(b) refuse to grant such an order,
and an order under subparagraph (a) may provide that the order shall not have effect unless one or more conditions specified in the order are complied with (and such conditions may include conditions requiring the audit firm not to carry out statutory audits save under the supervision of one or more statutory auditors or one or more other statutory audit firms or not to carry out such audits save in specified circumstances).
(13) The High Court may, on application to it by the audit firm or competent authority concerned, vary or discharge an order under paragraph (12)(a) if it considers it just to do so.
(14) In considering an application under paragraph (11) or (13), the High Court shall have regard to—
(a) whether, as regards the appeal the applicant is making under Regulation 35 to the High Court, the applicant has a strong case that is likely to succeed before that Court (and, for that purpose, the High Court shall require the applicant to give an indication of the facts that will be relied upon, or of the evidence that will be adduced in the case of facts that are in controversy, by it on the hearing of that appeal); and
(b) the public interest and, in particular, the public interest in ensuring that there is the minimum of disruption, consistent with law, to the discharge by the competent authority concerned, as a body designated in the State for the purposes of the Directive, of the function of granting and withdrawing approval.
Appeals against withdrawal of approval
35. (1) A person may appeal to the High Court against the withdrawal by a competent authority of approval under these Regulations of the person as a statutory auditor or audit firm, but this is subject to paragraph (2).
(2) An appeal shall not lie under paragraph (1) unless and until any applicable internal appeal procedures of the competent authority have been employed and exhausted by the first-mentioned person in that paragraph.
(3) An appeal under paragraph (1) shall be made within one month—
(a) unless subparagraph (b) applies, after the date of the withdrawal of approval; or
(b) after the confirmation of that withdrawal on foot of the internal appeal procedures of the competent authority having been employed.
(4) On the hearing of such an appeal, the High Court—
(a) if it is satisfied that the appellant has established that there was not a reasonable basis for the decision of the competent authority concerned to withdraw the approval, shall cancel the withdrawal of the approval; or
(b) if it is not so satisfied, shall confirm the withdrawal of the approval.
(5) For the purposes of paragraph (4), there is a reasonable basis for the decision of the competent authority if, taking into account the expertise and specialist knowledge possessed by the competent authority, the decision (and the process that led to its making) was not vitiated by—
(a) any serious and significant error or a series of such errors;
(b) a mistake of law; or
(c) the evidence, taken as a whole, not supporting the decision.
(6) The High Court may, on the hearing of an appeal under paragraph (1), consider evidence not adduced or hear an argument not made to the competent authority concerned if the Court is satisfied that—
(a) there are cogent circumstances justifying the failure to adduce the evidence or make the argument to the competent authority; and
(b) it is just and equitable for the Court to consider the evidence or hear the argument, as the case may be.
(7) A notification of the outcome of an appeal under this Regulation (or of any appeal from a decision of the High Court thereunder to the Supreme Court) shall be made by the competent authority concerned to the same persons to whom a notification of a withdrawal of approval must be made by Regulation 37 and (where it applies) Regulation 38.
Amendment of section 24 of Act of 2003 to clarify relationship between powers thereunder and powers under these Regulations
36. Section 24 of the Act of 2003 is amended by inserting the following subsections after subsection (11):
“(11A) For the avoidance of doubt, the following matters may, without prejudice to the generality of the preceding provisions, be the subject of an investigation by the Supervisory Authority under this section, namely matters—
(a) in relation to which a competent authority (within the meaning of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010) has decided not to withdraw a person’s approval under those Regulations as a statutory auditor or audit firm; or
(b) which either—
(i) have not been considered by such a competent authority as grounds for the withdrawal of a person’s approval under those Regulations as a statutory auditor or audit firm; or
(ii) having been considered by it as such grounds, are not considered by it to disclose a prima facie case for proceeding further.
(11B) Where—
(a) those matters are the subject of such an investigation by the Supervisory Authority; and
(b) a breach of standards is found by the Supervisory Authority,
subsection (7)(a) shall be read as requiring or enabling (depending on whether the breach of standards found falls within Part 4 or Chapter 3 of Part 8 of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010) the Supervisory Authority to withdraw the approval under those Regulations of the person concerned as a statutory auditor or audit firm; where such an approval is withdrawn by it, the following provisions of those Regulations shall, with any necessary modifications, apply (and not subsections (8) and (9) of this section) to that withdrawal, namely Regulation 33(11) to (14) (or, as the case may be, Regulation 34(11) to (14)) and Regulation 35.
(11C) Subsection (11B) does not prejudice the imposition, in the circumstances concerned, by the Supervisory Authority of another sanction referred to in subsection (7)(a) in addition to a withdrawal of approval (where withdrawal of the approval is mandatory under the foregoing Regulations) or in lieu of a withdrawal of approval (where such withdrawal is not so mandatory).”.
Certain persons to be notified of withdrawal
37. Without prejudice to Regulation 38, where the approval under these Regulations of a statutory auditor or audit firm is withdrawn for any reason by a competent authority, that fact and the reasons for the withdrawal shall be communicated by the competent authority to—
(a) the competent authority with supervisory and other functions; and
(b) the competent authority with registration functions,
as soon as possible, but not later than one month after the date of withdrawal of approval.
Other persons to be notified of withdrawal
38. (1) Where—
(a) the approval under these Regulations of a statutory auditor or audit firm is withdrawn for any reason by a competent authority, and
(b) the statutory auditor or audit firm is also approved in another Member State,
the competent authority shall, in addition to making the communication specified in Regulation 37, notify the relevant competent authorities of Member States where the statutory auditor or audit firm is also approved and entered in the relevant register of the fact of the withdrawal and the reasons for it.
(2) The notification under this Regulation shall be made as soon as possible, but not later than one month after the date of withdrawal of approval.
(3) If the approval under these Regulations of a statutory auditor or audit firm is withdrawn by the competent authority with supervisory and other functions under section 24 (as amended by these Regulations) of the Act of 2003, this Regulation and Regulation 37 (other than paragraph (a) of it) shall apply in relation to the withdrawal as if the references in them to the competent authority were references to the competent authority with supervisory and other functions and with any other necessary modifications.
PART 5 Standards and provisions applicable to statutory auditors and audit firms
Chapter 1 Standards for statutory auditors and audit firms
Continuing education
39. (1) A competent authority shall attach the following condition to an approval granted by it under these Regulations to a person as statutory auditor.
(2) That condition is one requiring the person to take part in appropriate programmes of continuing education in order to maintain his or her theoretical knowledge, professional skills and values at a sufficiently high level.
(3) In the case of a statutory auditor who is a person in relation to whom a competent authority may, by virtue of Regulation 17, perform functions under these Regulations but either—
(a) the approval of whom as a statutory auditor has not been granted by that competent authority; or
(b) the person is a person referred to in Regulation 25(1),
a like obligation to that mentioned in paragraph (2) as regards taking part in appropriate programmes of continuing education is, by virtue of this paragraph, imposed on him or her.
Professional ethics
40. The competent authorities shall subject statutory auditors and audit firms to principles of professional ethics, covering at least their public interest function, their integrity and objectivity and their professional competence and due care.
Independence and objectivity
41. Statutory auditors and audit firms are subject to the independence and objectivity requirements of Articles 22, 24 and 25 of the Directive as implemented in the State by Part 7.
Standards for purposes of Regulations 39 to 41
42. (1) The competent authorities shall, in respect of statutory auditors and audit firms—
(a) have adequate standards requiring those auditors and audit firms to comply with the obligations specified in Regulations 39 to 41, and
(b) institute adequate arrangements for the effective monitoring and enforcement of compliance with such standards.
(2) No standards shall be used by a competent authority for that purpose unless those standards have (with respect to that use) first been approved, in accordance with section 9(2)(c) of the Act of 2003, by the competent authority with supervisory and other functions.
Arrangements for enforcement of standards
43. The arrangements for enforcement referred to in Regulation 42(1)(b) shall include, in accordance with Regulations 88 and 89, provision for—
(a) sanctions which include—
(i) at the discretion of the competent authority, in accordance with the third-mentioned Regulation, the withdrawal of approval under these Regulations as a statutory auditor or audit firm;
(ii) appropriate penalties;
(iii) appropriate disciplinary measures;
(iv) appropriate regulatory sanctions,
and
(b) making available to the public information relating to the measures taken and the penalties imposed in respect of statutory auditors and audit firms.
Chapter 2 Confidentiality and Professional Secrecy
Rules of confidentiality to apply
44. (1) The rules of confidentiality and secrecy of the competent authority (of which the statutory auditor or audit firm concerned is a member) shall apply with respect to information and documents to which a statutory auditor or audit firm has access when carrying out a statutory audit.
(2) The statutory auditor or audit firm, as the case may be, shall comply with those rules of confidentiality and secrecy.
(3) Where the statutory auditor or audit firm is not a member of a recognised accountancy body, then the preceding provisions of this Regulation shall apply as if the references to the rules of confidentiality and secrecy were references to the rules of confidentiality and secrecy of the competent authority that, by virtue of Regulation 17, may perform functions in relation to him, her or it.
Supplemental provisions in relation to Regulation 44
45. (1) Regulation 44 shall continue to apply with respect to an audit assignment notwithstanding—
(a) that the statutory auditor or audit firm referred to in that Regulation has ceased to be engaged in that audit assignment; or
(b) that the auditor or audit firm referred to in that Regulation ceases to be—
(i) a statutory auditor or audit firm; or
(ii) an auditor or audit firm.
(2) Accordingly, in such a case—
(a) the statutory auditor or, as the case may be, audit firm, or
(b) the former such auditor or, as the case may be, audit firm,
shall continue to comply with the rules of confidentiality and secrecy concerned.
Saving
46. Nothing in Regulation 44 or 45 shall operate to prevent a competent authority from complying with its obligations under these Regulations or the Companies Acts.
Incoming statutory auditor or audit firm to be afforded access to information
47. (1) Where a statutory auditor or audit firm is replaced by another statutory auditor or audit firm, the former statutory auditor or audit firm shall provide access to all relevant information concerning the audited entity to the incoming statutory auditor or audit firm.
(2) This Regulation applies to a replacement of a statutory auditor or audit firm that occurs on or after the date falling 3 months after the date of the making of these Regulations.
Access by competent authority to audit documents
48. (1) Where it considers it reasonably necessary to do so for the purpose of performing a particular function or particular functions under these Regulations, a competent authority may inspect and make copies of all relevant documents in the possession or control of a statutory auditor or audit firm; for that purpose it may, by notice in writing served on the statutory auditor or audit firm, require the auditor or firm either (as shall be specified) to—
(a) furnish to it specified documents; or
(b) permit it to have access, under specified circumstances, to all relevant documents in the possession or control of the auditor or audit firm,
within a specified period.
(2) Without prejudice to the generality of paragraph (1), the powers under that paragraph are exercisable in relation to a statutory auditor or audit firm where a complaint is made to the competent authority that the statutory auditor or audit firm has failed to comply with any requirement of these Regulations.
(3) Where the powers under paragraph (1) are exercisable, the following additional power may be exercised by the competent authority if it considers that the exercise of it is reasonably necessary to enable it to clarify any matter arising from its inspection of the documents concerned, namely a power to require the statutory auditor or a member of the statutory audit firm to—
(a) attend before it; and
(b) explain any entry in the documents concerned and otherwise give assistance to it in clarifying the matter concerned.
(4) In this Regulation “specified” means specified in the notice concerned.
(5) Without prejudice to paragraph (6), a person who fails, without reasonable excuse, to comply with a requirement under paragraph (1) or (3) is guilty of an offence and is liable—
(a) on summary conviction, to a fine not exceeding €5,000, or
(b) on conviction on indictment, to a fine not exceeding €12,500.
(6) Where a person fails to comply with a requirement under paragraph (1) or (3), the competent authority concerned may apply to the High Court for an order compelling compliance by the person with the requirement, and, on the hearing of such application, the High Court may make such an order or such other order as it thinks just.
(7) Nothing in this Regulation derogates from—
(a) the powers exercisable by a disciplinary committee in the circumstances, and under the conditions, specified in section 192A of the Act of 1990; or
(b) the bye-laws of a competent authority.
Access by competent authority with supervisory and other functions to documents in possession of competent authority
49. (1) Where it considers it reasonably necessary to do so for the purposes of performing a particular function or particular functions under these Regulations, the competent authority with supervisory and other functions may inspect and make copies of all relevant documents in the possession or control of a competent authority; for that purpose it may, by notice in writing served on the competent authority, require the authority either (as shall be specified) to—
(a) furnish to it specified documents; or
(b) permit it to have access, under specified circumstances, to all relevant documents in the possession or control of the authority,
within a specified period.
(2) Without prejudice to the generality of paragraph (1), the powers under that paragraph are exercisable in relation to a competent authority where a complaint is made to the competent authority with supervisory and other functions that the first-mentioned competent authority has failed to comply with any requirement of these Regulations.
(3) Where the powers under paragraph (1) are exercisable, the following additional power may be exercised by the competent authority with supervisory and other functions if it considers that the exercise of it is reasonably necessary to enable it to clarify any matter arising from its inspection of the documents concerned, namely a power to require an officer of the competent authority to—
(a) attend before it; and
(b) explain any entry in the documents concerned and otherwise give assistance to it in clarifying the matter concerned.
(4) In this Regulation “specified” means specified in the notice concerned.
(5) A person who fails, without reasonable excuse, to comply with a requirement under paragraph (1) or (3) is guilty of an offence and is liable—
(a) on summary conviction, to a fine not exceeding €5,000, or
(b) on conviction on indictment, to a fine not exceeding €12,500.
(6) Nothing in this Regulation derogates from the powers exercisable by the competent authority with supervisory and other functions in the circumstances, and under the conditions, specified in section 23 or 24 of the Act of 2003.
Professional privilege
50. Nothing in this Chapter compels the disclosure by any person of any information that the person would be entitled to refuse to produce on the grounds of legal professional privilege.
No liability for acts done in compliance with Regulations
51. (1) No professional or legal duty to which a statutory auditor or audit firm is subject by virtue of his or her or its appointment as a statutory auditor or audit firm shall be regarded as contravened by reason of compliance with the obligations imposed by these Regulations.
(2) No liability to the company audited or being audited, its shareholders, creditors, or other interested parties shall attach to the statutory auditor or audit firm by reason of such compliance.
(3) For the avoidance of doubt, nothing in this Regulation affects the liability of a statutory auditor or audit firm for negligence or breach of duty in the conduct of a statutory audit by him, her or it.
Restriction of section 31 of Act of 2003
52. Nothing in section 31 of the Act of 2003 shall operate to prevent a competent authority or the competent authority with supervisory and other functions from complying with its obligations under these Regulations.
Further amendment of section 31 of Act of 2003
53. Section 31(3) of the Act of 2003 is amended—
(a) in paragraph (a), by substituting “section 23, 24 or 26,” for “section 23, 24 or 26, or”;
(b) in paragraph (b)(xv), by substituting “the purposes of this section, or” for “the purposes of this section.”; and
(c) by inserting the following paragraph after paragraph (b):
“(c) if the information disclosed is to an individual or entity performing functions in another state which are similar to the functions the Authority has by virtue of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 (including functions under this Act which the Authority has by virtue of those Regulations), provided that restrictions equivalent to those provided by this section apply in that state in relation to that individual or entity with respect to disclosure of information so given.”.
Chapter 3 Auditing Standards and Audit Reporting
International auditing standards to be applied
54. (1) On and from the adoption of international auditing standards, statutory auditors and audit firms shall carry out statutory audits in accordance with those standards.
(2) The reference in paragraph (1) to the adoption of international auditing standards is a reference to the adoption by the Commission, in accordance with the procedure referred to in Article 48(2) of the Directive, of international auditing standards.
Audit of group accounts — responsibility of group auditor
55. (1) Where a statutory audit of the group accounts of a group of undertakings is carried out—
(a) the group auditor shall bear the full responsibility for the audit report in relation to the group accounts;
(b) the group auditor shall carry out a review, and maintain documentation of such review, of the work of whoever of the following performed audit work for the purposes of the group audit, namely one or more:
(i) third-country auditors;
(ii) statutory auditors;
(iii) third-country audit entities;
(iv) statutory audit firms;
(v) Member State auditors;
(vi) Member State audit firms.
(2) The documentation referred to in paragraph (1)(b) to be retained by the group auditor shall be such as enables the competent authority to review the work of the group auditor properly.
Further responsibility of group auditor
56. (1) Where—
(a) a statutory audit of the group accounts of a group of undertakings is carried out, and
(b) a component of the group of undertakings is audited by one or more third-country auditors or audit entities that have no working arrangement as referred to in Regulation 109(1)(c) or 110(c),
the group auditor is responsible for ensuring proper delivery, when requested, to the competent authority with supervisory and other functions of the documentation of the audit work performed by those auditors or audit entities, including the working papers relevant to the group audit.
(2) To ensure such delivery, the group auditor shall retain a copy of such audit documentation, or alternatively—
(a) agree with the one or more third-country auditors or audit entities concerned arrangements for the group auditor’s proper and unrestricted access, upon request, to the documentation, or
(b) take any other appropriate action.
(3) Where legal or other impediments prevent audit working papers from being passed from a third country to the group auditor, the documentation retained by the group auditor shall include—
(a) evidence that he or she has undertaken the appropriate procedures in order to gain access to the audit documentation, and
(b) in the case of an impediment other than a legal one arising from legislation of the third country or countries concerned, evidence supporting such an impediment.
Amendment of section 193 of Act of 1990
57. Section 193 of the Act of 1990 is amended—
(a) in subsection (4D), by deleting paragraph (a); and
(b) by inserting the following subsection after subsection (4F):
“(4G) (a) The auditors’ report shall state the name of the auditor and be signed, as provided for in paragraph (b), and dated.
(b) Where the auditor is—
(i) a statutory auditor (within the meaning of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010, the report shall be signed by that person, or
(ii) a statutory audit firm (within the meaning of the foregoing Regulations), the report shall be signed by—
(I) the statutory auditor (or, where more than one, each statutory auditor) designated by the statutory audit firm for the particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm, or
(II) in the case of a group audit, at least the statutory auditor (or, where more than one, each statutory auditor) designated by the statutory audit firm as being primarily responsible for carrying out the statutory audit at the level of the group,
in his or her own name, for and on behalf of, the audit firm.”.
Chapter 4 Transparency report
Transparency report
58. (1) A statutory auditor or audit firm that carries out the statutory audit of one or more public-interest entities shall prepare and publish, within 3 months after the end of—
(a) the financial year of the statutory auditor or audit firm referred to in paragraph (2); and
(b) each subsequent financial year of the statutory auditor or audit firm,
a report in relation to that financial year (in these Regulations referred to as a “transparency report”).
(2) The financial year referred to in paragraph (1)(a) is one ending on or after the date falling 3 months after the date of the making of these Regulations.
Contents of transparency report — general
59. The transparency report shall contain at least the information specified in Regulation 61 and shall be—
(a) approved by the statutory auditor or audit firm; and
(b) signed—
(i) in the case of a report prepared by a statutory auditor — by him or her; or
(ii) in the case of a report prepared by a statutory audit firm — by a partner or other member of the firm who has senior executive responsibility in relation to the affairs of the firm.
Publication of transparency report
60. The statutory auditor or audit firm shall ensure that his, her or its transparency report—
(a) is made available on a website, being a website maintained by or on behalf of the statutory auditor or audit firm, not later than 3 months after the end of the financial year of the statutory auditor or audit firm to which it relates, and
(b) remains available for a period of 3 years reckoned from the end of the period of 3 months referred to in paragraph (a).
Specific requirements in relation to contents of transparency report
61. The transparency report shall—
(a) where the subject of the report is a statutory audit firm (referred to in this Regulation as the “subject”), contain at least the information specified hereafter in this Regulation, and
(b) where the subject of the report is a statutory auditor (also referred to in this Regulation as the “subject”), contain at least so much of the information specified hereafter in this Regulation as is applicable in the case of an individual,
namely—
(i) a description of the legal structure and ownership of the subject;
(ii) where the subject belongs to a network, a description of the network and the legal and structural arrangements of the network;
(iii) a description of the governance structure of the subject;
(iv) a description of the internal quality control system of the subject and a statement by the administrative or managerial body on the effectiveness of its functioning;
(v) an indication of when the last quality assurance review referred to in Chapter 2 of Part 8 took place;
(vi) a list of public-interest entities for which the subject has carried out statutory audits during the preceding financial year;
(vii) a statement concerning the subject’s independence practices which also confirms that an internal review of independence compliance has been conducted;
(viii) a statement on the policy followed by the subject concerning the continuing education of statutory auditors referred to in Regulation 39;
(ix) financial information showing the significance, from the perspective of the market, of the subject, such as the total turnover divided into fees from the statutory audit of annual and group accounts, and fees charged for other assurance services, tax advisory services and other non-audit services;
(x) information concerning the basis for the remuneration of the principals or partners.
Chapter 5 Duties to notify competent authority with supervisory and other functions in event of cessation of office by statutory auditor or audit firm and restrictions on their removal
Amendment of Principal Act with regard to removal of auditors
62. The Principal Act is further amended, with effect from the date that is 3 months after the date of the making of these Regulations—
(a) in section 160, by inserting, in subsection (5), “and subject to section 161C” after “in relation to his removal under this subsection”; and
(b) by inserting the following sections after section 161:
“Duty of auditor to notify Supervisory Authority regarding cessation of office.
161A. (1) Where, for any reason, during the period between the conclusion of the last annual general meeting and the conclusion of the next annual general meeting of a company, an auditor ceases to hold office either by virtue of section 160, or section 185 of the Act of 1990, the auditor shall—
(a) in such form and manner as the Supervisory Authority specifies, and
(b) within 1 month after the date of that cessation,
notify the Supervisory Authority that the auditor has ceased to hold office.
(2) That notification shall be accompanied by:
(a) in the case of resignation of the auditor, the notice served under section 185(1) of the Act of 1990, or
(b) in the case of removal of the auditor at a general meeting pursuant to section 160(5), a copy of any representations in writing made to the company, pursuant to section 161(3), in relation to the intended resolution except where such representations were not sent out to the members of the company in consequence of an application to the court under section 161(4).
(3) Where, in the case of resignation, the notice served under section 185(1) of the Act of 1990 is to the effect that there are no circumstances connected with the resignation to which it relates that the auditor concerned considers should be brought to the notice of members or creditors of the company, the notification under subsection (1) shall also be accompanied by a statement of the reasons for the auditor’s resignation.
(4) In this section—
(a) ‘resignation’ includes an indication of unwillingness to bere-appointed at an annual general meeting; and
(b) a reference to a notice served under section 185(1) of the Act of 1990 includes a reference to a notice given by the auditor under section 160(2)(c).
Duty of company to notify Supervisory Authority of auditor’s cessation of office.
161B. (1) Where, for any reason, during the period between the conclusion of the last annual general meeting and the conclusion of the next annual general meeting, an auditor ceases to hold office either by virtue of section 160, or section 185 of the Act of 1990, the company shall—
(a) in such form and manner as the Supervisory Authority specifies, and
(b) within 1 month after the date of that cessation,
notify the Supervisory Authority that the auditor has ceased to hold office.
(2) That notification shall be accompanied by:
(a) in the case of resignation of the auditor, the notice served by the auditor under section 185(1) of the Act of 1990, or
(b) in the case of removal of the auditor at a general meeting pursuant to section 160(5)—
(i) a copy of the resolution removing the auditor, and
(ii) a copy of any representations in writing made to the company, pursuant to section 161(3), by the outgoing auditor in relation to the intended resolution except where such representations were not sent out to the members of the company in consequence of an application to the court under section 161(4).
(3) In this section—
(a) ‘resignation’ includes an indication of unwillingness to be re-appointed at an annual general meeting; and
(b) a reference to a notice served under section 185(1) of the Act of 1990 includes a reference to a notice given by the auditor under section 160(2)(c).
Restrictions on removal of auditor.
161C. (1) The passing of a resolution to which this section applies shall not be effective with respect to the matter it provides for unless—
(a) in case the resolution provides for the auditor’s removal from office, there are good and substantial grounds for the removal related to the conduct of the auditor with regard to the performance of his duties as auditor of the company or otherwise; or
(b) in the case of any other resolution to which this section applies, the passing of the resolution is, in the company’s opinion, in the best interests of the company,
but—
(i) for the foregoing purposes, diverging opinions on accounting treatments or audit procedures cannot constitute the basis for the passing of any such resolution, and
(ii) in paragraph (b) ‘best interests of the company’ does not include any illegal or improper motive with regard to avoiding disclosures or detection of any failure by the company to comply with the Companies Acts.
(2) This section applies to—
(a) a resolution removing an auditor from office,
(b) a resolution at an annual general meeting appointing somebody other than the retiring auditor as auditor,
(c) a resolution providing expressly that the retiring auditor shall not be re-appointed.”.
PART 6 Public Register
Public register
63. (1) From the date specified in paragraph (2), the competent authority with registration functions shall maintain a register (in this Part referred to as the “public register”) which shall contain the information set out in Schedule 1 in relation to—
(a) statutory auditors and audit firms; and
(b) third-country auditors and audit entities.
(2) The date referred to in paragraph (1) is the date falling 3 months after the date of making of these Regulations.
Notification of information to competent authority with registration functions
64. (1) An auditor or audit firm or a third-country auditor shall, as soon as may be after he, she or it is approved under these Regulations as a statutory auditor or audit firm, notify the relevant information to the competent authority.
(2) On receipt of that notification and its having carried out any verification of the information as seems to it to be necessary, the competent authority shall notify to the competent authority with registration functions—
(a) the relevant information contained in the first-mentioned notification; and
(b) (i) the individual identification number assigned by it to the auditor, audit firm or third-country auditor under Regulation 19(6); and
(ii) where—
(I) under Regulation 19(6) such a number exists; and
(II) by reason of the circumstances referred to in paragraph (4)(b) the relevant information notified to the competent authority does not include that number,
the number referred to in paragraph 1(c)(ii) or 2(g) of Schedule 1.
(3) The notifications under paragraphs (1) and (2) shall each be made in such form and manner as the competent authority with registration functions specifies.
(4) In this Regulation “relevant information” means the information set out in paragraph 1 or 2, as the case may be, of Schedule 1, other than that set out—
(a) in subparagraph (b) of that paragraph 1 or 2; or
(b) if, due to the simultaneous registration of a statutory audit firm and the statutory auditors that comprise that firm, the number there referred to is not available at that time, in subparagraph (c)(ii) of that paragraph 1 or subparagraph (g) of that paragraph 2.
Prohibition on certain acts unless registered
65. (1) On or after the date specified in paragraph (2), a person shall not—
(a) act as; or
(b) represent himself or herself, or hold himself or herself out, as being,
a person falling within a category of person entered, or entitled to be entered, in the public register unless the person is entitled to be entered, and the name of the person is duly entered, in the public register.
(2) The date referred to in paragraph (1) is the date falling 3 months after the date of making of these Regulations.
(3) A person who contravenes paragraph (1) is guilty of an offence and is liable—
(a) on summary conviction, to a fine not exceeding €5,000, or
(b) on conviction on indictment, to a fine not exceeding €50,000.
(4) If the contravention in respect of which a person is convicted of an offence under paragraph (3) is continued after the conviction, the person is guilty of a further offence for each day that the contravention continues and for each such offence the person is liable—
(a) on summary conviction, to a fine not exceeding €1,000, or
(b) on conviction on indictment, to a fine not exceeding €10,000.
Obligation of statutory auditor or audit firm to notify certain information
66. (1) Each statutory auditor and audit firm shall, as soon as may be but not later than one month after the event, notify the competent authority of any change in the information contained in the public register relating to him, her or it.
(2) On receipt of that notification and its having carried out any verification of the information stated to have changed as seems to it to be necessary, the competent authority shall notify the change in information to the competent authority with registration functions.
(3) The competent authority with registration functions shall, as soon as may be but not later than one month after receipt of the notification referred to in paragraph (2), amend the public register to reflect the change of information so notified.
(4) A person who fails, without reasonable excuse, to comply with paragraph (1) is guilty of an offence and is liable, on summary conviction, to a fine not exceeding €5,000.
Information must be signed
67. (1) Information notified under Regulation 64(1) or 66(1) by a statutory auditor or audit firm shall be signed by the statutory auditor or, as the case may be, a person on behalf of the statutory audit firm.
(2) The signature referred to in paragraph (1) may be an electronic signature (as defined in point 1 of Article 2 of Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures) if the provision of a signature in that form complies with any requirements in that behalf of the competent authority with registration functions of the kind referred to in section 13(2)(a) of the Electronic Commerce Act 2000 (No. 27 of 2000).
(3) If information is notified under Regulation 64(1) or 66(1) without being signed as required by paragraph (1), the statutory auditor or audit firm concerned is guilty of an offence and is liable, on summary conviction, to a fine not exceeding €5,000.
Transitional provision
68. (1) A body of accountants referred to in subsection (3) of section 191 (inserted by Regulation 10) of the Act of 1990 shall, within one month after the commencement of these Regulations, notify to the competent authority with registration functions the relevant information (within the meaning of Regulation 64) in respect of each of its members deemed to have been approved by virtue of Regulation 25(1) or 27(4).
(2) A person referred to in Regulation 25(2) shall, within one month after the commencement of these Regulations, notify to the competent authority with registration functions the relevant information (within the meaning of Regulation 64) in respect of him or her.
(3) A person who fails, without reasonable excuse, to comply with paragraph (1) or (2) is guilty of an offence and is liable, on summary conviction, to a fine not exceeding €5,000.
Language of information to be entered in register
69. The information entered in the public register shall be drawn up in either English or Irish.
PART 7 Independence
Requirement for independence — general
70. When carrying out a statutory audit—
(a) the statutory auditor or audit firm, as the case may be; and
(b) in the latter case, any statutory auditor of the statutory audit firm,
shall be independent of, and not involved in the decision-taking of, the audited entity.
Prohibited relationships — specific provisions to secure independence
71. (1) A statutory auditor or audit firm shall not carry out a statutory audit if there exists a relationship of the following kind between the statutory auditor or audit firm (or a network to which he or she or it belongs) and the audited entity.
(2) That relationship is any direct or indirect financial, business, employment or other relationship (which may include the provision of additional non-audit services) from which an objective, reasonable and informed third party would conclude that the statutory auditor’s or audit firm’s independence is compromised.
(3) If the statutory auditor’s or audit firm’s independence is affected by threats, such as self-review, self-interest, advocacy, familiarity or trust or intimidation, the statutory auditor or audit firm shall apply safeguards in order to mitigate those threats. If the significance of the threats compared to the safeguards applied is such that his, her or its independence is compromised, the statutory auditor or audit firm shall not carry out the statutory audit.
(4) Without prejudice to the generality of the preceding paragraphs, a person shall not act as a statutory auditor of a company if he or she is—
(a) an officer or servant of the company,
(b) a person who has been an officer or servant of the company within a period in respect of which accounts would fall to be audited by the person if he or she were appointed auditor of the company,
(c) a parent, spouse, brother, sister or child of an officer of the company,
(d) a person who is a partner of or in the employment of an officer of the company,
(e) a person who is disqualified under this paragraph for appointment as auditor of any other body corporate that is a subsidiary or holding company of the company or a subsidiary of the company’s holding company, or would be so disqualified if the body corporate were a company,
(f) a person who is disqualified under section 187(2)(f) of the Act of 1990 for appointment as a public auditor of a society that is a subsidiary or holding company of the company or a subsidiary of the company’s holding company, or
(g) a person in whose name a share in the company is registered, whether or not that person is the beneficial owner of the share.
(5) Without prejudice to the generality of paragraphs (1) to (3), a statutory audit firm, regardless of its legal structure, shall not carry out a statutory audit of a company if—
(a) any principal of the audit firm is an officer or servant of the company,
(b) any principal of the audit firm has been an officer or servant of the company within a period in respect of which accounts would fall to be audited by the firm if the firm was appointed auditor of the company,
(c) the firm is disqualified under this paragraph for appointment as auditor of any other body corporate that is a subsidiary or holding company of the company or a subsidiary of the company’s holding company, or would be so disqualified if the body corporate were a company, or
(d) the firm is disqualified under section 187(2)(f) of the Act of 1990 for appointment as a public auditor of a society that is a subsidiary or holding company of the company or a subsidiary of the company’s holding company.
(6) Without prejudice to the generality of paragraphs (1) to (3), a person shall not carry out a statutory audit of a company on behalf of a statutory audit firm if he or she is—
(a) a person in whose name a share in the company is registered, whether or not that person is the beneficial owner of the share; or
(b) a parent, spouse, brother, sister or child of an officer of the company.
(7) In this Regulation “society” means a society registered under the Industrial and Provident Societies Acts 1893 to 1978.
Additional requirements in case of public-interest entities
72. Without prejudice to the generality of Regulation 70 or 71, a statutory auditor or audit firm shall not carry out a statutory audit of a public-interest entity—
(a) in circumstances which involve a case of self-review or self-interest, and
(b) from the circumstances of which case an objective, reasonable and informed third party would conclude that (so as to safeguard the statutory auditor’s or audit firm’s independence) the auditor’s or firm’s not carrying out that audit would be appropriate.
Threats to independence and other information to be recorded
73. A statutory auditor or audit firm shall document in the audit working papers all significant threats to his, her or its independence as well as the safeguards applied to mitigate those threats.
Non-intervention by certain persons in execution of audit
74. Neither—
(a) the owners or shareholders of a statutory audit firm or the owners or shareholders of an affiliated firm; nor
(b) the members of the administrative, management or supervisory body of such a firm or of an affiliated firm,
shall intervene in the execution of a statutory audit in any way which jeopardises the independence and objectivity of the statutory auditor who carries out the statutory audit on behalf of the statutory audit firm.
Restrictions with regard to fees
75. A competent authority shall ensure that its standards include provisions that fees for statutory audits:
(a) are not to be influenced by, or determined by, the provision of additional services to the audited entity; and
(b) are not to be based on any form of contingency.
Additional reporting and other requirements in case of public-interest entities
76. In addition to the other requirements of this Part, a statutory auditor or audit firm that carries out the statutory audit of a public-interest entity shall—
(a) confirm annually, in writing, to the audit committee of the entity his, her or its independence from the public-interest entity;
(b) disclose annually to such audit committee any additional services provided to the public-interest entity; and
(c) discuss with such audit committee the threats to the independence of the auditor or firm and the safeguards applied to mitigate those threats as documented by him, her or it under Regulation 73.
Rotation of key audit partner in cases of public-interest entities
77. (1) In this Regulation—
“7 year period” shall be read in accordance with paragraph (2);
“relevant date” means the date of appointment, being a date falling on or after 29 June 2008—
(a) of the statutory auditor or audit firm (to which the key audit partner or partners referred to in paragraph (2) belongs or belong);
(b) to the entity referred to in that paragraph.
(2) The key audit partner or partners responsible for carrying out a statutory audit of a public-interest entity shall not engage in a statutory audit of the entity at any time that, subject to paragraph (3), is subsequent to the period of 7 years after the relevant date (in paragraphs (3) and (4) referred to as the “7 year period”).
(3) The prohibition imposed by paragraph (2) on the key audit partner or partners concerned engaging in a statutory audit of the entity concerned shall cease to have effect 2 years after the 7 year period, but this is without prejudice to paragraph (4).
(4) This Regulation shall be construed and have effect so that, in the event of any period—
(a) elapsing subsequent to the 7 year period, and
(b) being a period of a duration of 7 years during which the statutory auditor or audit firm referred to in paragraph (1) continues to stand appointed to the public-interest entity concerned,
a like prohibition, and a like cessation of that prohibition, to that provided by paragraphs (2) and (3), respectively, shall apply to key audit partner or partners responsible for carrying out a statutory audit of that entity.
Moratorium on taking up management position in audited public-interest entity
78. There shall not be taken up by—
(a) a statutory auditor who carries out a statutory audit of a public-interest entity; or
(b) the key audit partner who carries out, on behalf of a statutory audit firm, a statutory audit of a public-interest entity,
a key management position in that entity before a period of at least 2 years has elapsed since the day following (should such occur) his or her resignation as a statutory auditor or key audit partner from the audit engagement.
PART 8 Public Oversight and Quality Assurance of Statutory Auditors and Audit Firms
Chapter 1 Public Oversight
Amendment of section 10 of Act of 2003
79. Section 10 of the Act of 2003 is amended—
(a) in subsection (4), by inserting “(whether an individual or otherwise)” after “person” in paragraph (c); and
(b) in subsection (5)—
(i) in paragraph (a), by substituting “Part),” for “Part), or”,
(ii) in paragraph (b), by substituting “section 9(2)(ma),” for “section 9(2)(ma).”, and
(iii) by inserting the following paragraphs after paragraph (b):
“(c) provisions of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010, or
(d) rules adopted by the Supervisory Authority under subsection (3) concerning the matters that relate to its functions under section 9(2)(mb).”.
System of public oversight — responsibility of competent authority with supervisory and other functions
80. (1) In this Regulation “system of public oversight”, in relation to statutory auditors and audit firms, means the system of oversight in the State of such persons constituted by the collective operation of—
(a) the provisions of the Act of 2003 and the rules, regulations and guidelines made or adopted under them by the competent authority with supervisory and other functions;
(b) the provisions of these Regulations; and
(c) the provisions generally of the Companies Acts.
(2) The competent authority with supervisory and other functions shall be the competent authority in the State with respect to the system of public oversight of statutory auditors and audit firms.
(3) As such, and without prejudice to its functions as provided under the Act of 2003 or Regulation 83, the competent authority with supervisory and other functions shall generally superintend—
(a) the approval and registration of statutory auditors and audit firms;
(b) the adoption of standards on professional ethics, internal quality control of audit firms and auditing; and
(c) continuing education, quality assurance, and investigative and disciplinary systems.
Further amendments of Act of 2003
81. The Act of 2003 is further amended—
(a) in section 11—
(i) in paragraph (b) of subsection (1), by substituting “office, is a director,” for “office, is a director.”, and
(ii) by inserting at the end of subsection (1) the following:
“and the persons appointed as such directors shall be persons who are knowledgeable in areas relevant to statutory audit.”;
(b) in section 23, by adding the following subsection:
“(13) For the purposes of this section ‘member’, in addition to the meaning assigned to that expression by section 4(1), includes, in relation to a prescribed accountancy body that is a recognised accountancy body, an individual or firm who or which, though not a member of the recognised accountancy body, is an individual or firm in relation to whom that body may exercise powers under the European Communities (Statutory Audits) (Directive 2006/43/EC) 2010.”; and
(c) in section 24, by adding the following subsection:
“(13) For the purposes of this section ‘member’, in addition to the meaning assigned to that expression by section 4(1), includes, in relation to a prescribed accountancy body that is a recognised accountancy body, an individual or firm who or which, though not a member of the recognised accountancy body, is an individual or firm in relation to whom that body may exercise powers under the European Communities (Statutory Audits) (Directive 2006/43/EC) 2010.”.
Chapter 2 Quality Assurance
Competent authority with supervisory and other functions to engage in oversight of quality assurance
82. (1) In performing their functions under Regulations 83 and 84, the competent authorities shall be subject to public oversight by the competent authority with supervisory and other functions.
(2) The terms and conditions referred to in section 9(2)(b)(i) and (ii) of the Act of 2003 (which relate to the powers, under section 192 of the Act of 1990, of the competent authority with supervisory and other functions) may be attached to the recognition of bodies of accountants for the purpose of facilitating the performance by that competent authority of its function of public oversight of quality assurance under this Chapter as well as for any other lawful purpose.
System of quality assurance to be put in place
83. (1) Each competent authority shall ensure that it has in place a system of quality assurance of—
(a) its members’ activities as statutory auditors and audit firms; and
(b) the activities, as statutory auditors and audit firms, of persons who, though not members of the authority, are persons in relation to whom it may perform functions under these Regulations.
(2) On and from the date specified in paragraph (3), the competent authority with supervisory and other functions shall ensure that it has in place a system of quality assurance of registered third-country auditors and audit entities to whom this Part applies by virtue of Regulation 114(1).
(3) The date referred to in paragraph (2) is the date falling 6 months after the date of the making of these Regulations.
Organisation of quality assurance system
84. (1) A competent authority shall organise its system of quality assurance in such a manner so that:
(a) the system is independent of the reviewed statutory auditors and audit firms;
(b) the funding for the system is secure and free from any possible undue influence by statutory auditors or audit firms;
(c) the system has adequate resources;
(d) the persons who carry out quality assurance reviews have appropriate professional education and relevant experience in statutory audit and financial reporting combined with specific training on quality assurance reviews;
(e) the selection of reviewers for specific quality assurance review assignments is effected in accordance with an objective procedure designed to ensure that there are no conflicts of interest between reviewers and the statutory auditor or audit firm under review;
(f) the scope of quality assurance reviews, supported by adequate testing of selected audit files, includes an assessment of:
(i) compliance with applicable auditing standards and independence requirements;
(ii) the quantity and quality of resources spent;
(iii) the audit fees charged; and
(iv) the internal quality control system of the audit firm;
(g) each quality assurance review is the subject of a written report which includes the main conclusions of the review;
(h) a quality assurance review of each statutory auditor or audit firm takes place:
(i) in the case of a statutory auditor or audit firm that carries out audits of one or more public-interest entities, at least, subject to paragraph (3), every 3 years;
(ii) in the case of a statutory auditor or audit firm that does not carry out audits of any public-interest entity, at least, subject to paragraph (4), every 6 years;
(i) statutory auditors and audit firms take all reasonable steps to ensure that recommendations arising from quality assurance reviews of them are implemented within a reasonable period; and
(j) there is published annually by it the overall results of quality assurance reviews carried out by it in the year in question.
(2) If a statutory auditor or audit firm fails to take all reasonable steps to ensure that recommendations arising from a quality assurance review of him, her or it are implemented within a reasonable period, the competent authority concerned shall take appropriate action, including, where applicable, subjecting the statutory auditor or audit firm, as the case may be, to the system of disciplinary actions or penalties referred to in Regulation 86 and Chapter 3.
(3) For the purpose of paragraph (1)(h)(i), the period of 3 years there mentioned that shall first apply shall be reckoned from a date beginning no earlier than the date of the making of these Regulations.
(4) For the purpose of paragraph (1)(h)(ii), the period of 6 years there mentioned that shall first apply shall be reckoned from a date beginning no earlier than the date of the making of these Regulations.
Quality assurance review deemed to include individual auditors in certain cases
85. For the purpose of Regulation 84(1)(h), a quality assurance review conducted in relation to a statutory audit firm shall be regarded as a quality assurance review of all statutory auditors carrying out audits on behalf of the firm provided that the firm has a common quality assurance policy with which each such statutory auditor is required to comply.
Right of competent authority as regards professional discipline
86. (1) Each competent authority shall have the right to take disciplinary actions or impose penalties in respect of statutory auditors and audit firms and shall have procedures in place to facilitate the taking or imposition of such action or penalties.
(2) The powers, under paragraph (c) of section 9(2) of the Act of 2003, of the competent authority with supervisory and other functions to require changes of the kind, and to approve the matters, referred to in that paragraph (c) may be exercised for the purpose of facilitating the performance by that competent authority of its function of public oversight of quality assurance under this Chapter as well as for any other lawful purpose.
Chapter 3 Systems of investigations and penalties
System of investigation and penalties
87. Each competent authority shall, in respect of those auditors and audit firms in relation to whom, by virtue of Regulation 17, it may perform functions, institute arrangements to ensure that there are effective systems of investigations and penalties to detect, correct and prevent inadequate execution of a statutory audit by them.
Duty of each competent authority with regard to sanctions
88. (1) Each competent authority shall ensure that the contractual and other arrangements that exist between it and its members are such as enable the imposition by it of effective, proportionate and dissuasive penalties in respect of statutory auditors and audit firms in cases where statutory audits are not carried out by them in accordance with these Regulations.
(2) Those contractual and other arrangements shall comply with the requirements of procedural fairness.
(3) By virtue of this Regulation, the contractual and other arrangements referred to in paragraph (1) that subsist for the time being between a competent authority and its members shall operate and have effect so as to enable the imposition by the competent authority—
(a) of penalties of a like character to those; and
(b) in the cases,
referred to in that paragraph in respect of persons who, though not members of the authority, are persons in relation to whom it may, by virtue of Regulation 17, perform functions under these Regulations.
Scope of penalties and publicity in relation to their imposition
89. (1) The penalties referred to in Regulation 88, provision for which must be made by the means referred to in that Regulation, shall, where appropriate, include withdrawal of approval under these Regulations.
(2) Paragraph (1) is without prejudice to Regulations 33 and 34 (conditions for mandatory withdrawal in case of statutory auditor or audit firm).
(3) Unless there do not exist internal appeal procedures of the competent authority as referred to in Regulation 33(7)(a) or 34(7)(a), the reference in paragraph (4) to a competent authority shall be read as a reference to a competent authority acting through the disciplinary committee that deals with matters at first instance.
(4) Without prejudice to Regulation 17(8) and (9), a competent authority may, save where, in its opinion, proceeding in this manner would not be in the public interest, adopt procedures analogous to those in Regulation 33(5) or 34(5) as regards affording the statutory auditor or audit firm an opportunity to rectify the matters that have occasioned the investigation concerned and the proposed exercise of the power of withdrawal of approval referred to in paragraph (1).
(5) If—
(a) there exist internal appeal procedures, as referred to in Regulation 33(7)(a) or 34(7)(a), of the competent authority; and
(b) the investigation and disciplinary procedures of the competent authority provide that a decision of its disciplinary committee referred to in paragraph (3), being a decision of a nature to which this Regulation applies, shall stand suspended or shall not take effect until, as the case may be—
(i) the period for making an appeal under those procedures has expired without such an appeal having been made;
(ii) such an appeal has been made and the decision to withdraw the approval confirmed; or
(iii) such an appeal that has been made is withdrawn,
then, notwithstanding anything in the preceding provisions of this Regulation, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the happening of an event specified in clause (i), (ii) or (iii).
(6) If—
(a) there exist internal appeal procedures, as referred to in Regulation 33(7)(a) or 34(7)(a), of the competent authority; and
(b) the investigation and disciplinary procedures of the competent authority do not provide, as mentioned in paragraph (5)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect,
then, notwithstanding anything in those procedures, the auditor or audit firm to whom that decision relates may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the relevant appellate committee of an appeal that he, she or it is making under those internal appeal procedures and, where such an application is made, paragraphs (9) to (12) apply to that application with—
(i) the substitution of references to an appeal under those internal appeal procedures for references to an appeal under Regulation 35; and
(ii) any other necessary modifications.
(7) If the relevant appellate committee referred to in paragraph (6) is of opinion, having regard to the particular issues that have arisen on that appeal, that, in the interests of justice, the disposal by it of an appeal referred to in that paragraph ought to include procedures analogous to those, as mentioned in paragraph (4), provided by Regulation 33(5) or 34(5) being adopted by it, then, in disposing of that appeal, it shall adopt procedures analogous to those in Regulation 33(5) or 34(5).
(8) The competent authority shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in paragraph (6) is prosecuted promptly and it shall be the duty of that appellate committee to ensure that any such appeal to it is disposed of as expeditiously as may be and, for that purpose, to take all such steps as are open to it to ensure that, in so far as is practicable, there are no avoidable delays at any stage in the determination of such an appeal.
(9) Where a competent authority has made a decision to withdraw the approval of an auditor or audit firm under this Regulation (that is to say a final decision of the competent authority on the matter after the internal appeal procedures (if any) of it have been employed and exhausted), the auditor or audit firm may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the High Court of an appeal under Regulation 35 that he, she or it is making against the withdrawal.
(10) On the hearing of an application under paragraph (9), the High Court may, subject to paragraph (12), as it considers appropriate and having heard the competent authority concerned and, if it wishes to be so heard, the competent authority with supervisory and other functions (which shall have standing to appear and be heard on the application)—
(a) grant an order suspending the operation of the withdrawal; or
(b) refuse to grant such an order,
and an order under subparagraph (a) may provide that the order shall not have effect unless one or more conditions specified in the order are complied with (and such conditions may include conditions requiring the auditor or audit firm not to carry out statutory audits save under the supervision of one or more other statutory auditors or audit firms or not to carry out such audits save in specified circumstances).
(11) The High Court may, on application to it by the auditor or audit firm or competent authority concerned, vary or discharge an order under paragraph (10)(a) if it considers it just to do so.
(12) In considering an application under paragraph (9) or (11), the High Court shall have regard to—
(a) whether, as regards the appeal the applicant is making under Regulation 35 to the High Court, the applicant has a strong case that is likely to succeed before that Court (and, for that purpose, the High Court shall require the applicant to give an indication of the facts that will be relied upon, or of the evidence that will be adduced in the case of facts that are in controversy, by him, her or it on the hearing of that appeal); and
(b) the public interest and, in particular, the public interest in ensuring that there is the minimum of disruption, consistent with law, to the discharge by the competent authority concerned, as a body designated in the State for the purposes of the Directive, of the function of granting and withdrawing approval.
(13) The fact of one or more—
(a) measures having been taken against, or
(b) one or more penalties having been imposed on,
a statutory auditor or audit firm (whether under this Part or Part 4) by a competent authority shall be disclosed by the competent authority to the public and that disclosure shall, if the competent authority considers it appropriate, include such further particulars with respect to the matter as it thinks fit.
(14) Subject to paragraph (15), the manner of such disclosure, and the time at which it is made, shall be such as the competent authority determines to be appropriate.
(15) The competent authority shall establish, and reduce to writing, criteria the purpose of which is to govern the determination by it of the matters referred to in paragraph (14); those criteria shall require the prior approval of the competent authority with supervisory and other functions.
Further amendment of section 24 of Act of 2003
90. Section 24 of the Act of 2003 is further amended—
(a) in paragraph (b) of subsection (7), by substituting “subsection (6),” for “subsection (6).”;
(b) by inserting at the end of subsection (7) the following:
“and the fact of a sanction having been imposed on the member by the Supervisory Authority shall be disclosed by the Authority to the public and that disclosure shall include—
(i) in a case where the member is making an appeal to the High Court against the decision of the Supervisory Authority, an indication that that is so, and
(ii) if the Supervisory Authority considers it appropriate, such further particulars with respect to the matter as it thinks fit.”;
and
(c) by inserting the following after subsection (7):
“(7A) The manner of a disclosure under subsection (7), and the time at which it is made, shall be such as the Supervisory Authority determines to be appropriate.”.
PART 9 Audit Committees
Audit committees in respect of public-interest entities
91. (1) From the date specified in paragraph (2), the board of directors of a public-interest entity shall establish an audit committee in respect of the entity.
(2) The date referred to in paragraph (1) is the date falling 6 months after the date of the making of these Regulations.
(3) The members of the audit committee shall include not less than 2 independent directors of the public-interest entity, that is to say, directors—
(a) the terms of appointment of whom indicate or state that they are being appointed in a non-executive capacity; and
(b) who otherwise possess the requisite degree of independence (particularly with regard to each of them satisfying the condition in paragraph (4)) so as to be able to contribute effectively to the committee’s functions.
(4) The condition referred to in paragraph (3)(b) is that each director there referred to does not have, and at no time during the period of 3 years preceding his or her appointment to the committee did have—
(a) a material business relationship with the public-interest entity, either directly, or as a partner, shareholder, director or senior employee of a body that has such a relationship with the entity; or
(b) a position of employment in the public-interest entity.
(5) One of the directors referred to in paragraph (3) shall be a person who has competence in accounting or auditing.
(6) Without prejudice to the responsibility of the board of directors, the responsibilities of the audit committee shall include:
(a) the monitoring of the financial reporting process;
(b) the monitoring of the effectiveness of the entity’s systems of internal control, internal audit and risk management;
(c) the monitoring of the statutory audit of the annual and consolidated accounts; and
(d) the review and monitoring of the independence of the statutory auditor or audit firm, and in particular the provision of additional services to the audited entity.
(7) Any proposal of the board of directors of a public-interest entity with respect to the appointment of a statutory auditor or audit firm to the entity shall be based on a recommendation made to the board by the audit committee.
(8) The statutory auditor or audit firm shall report to the audit committee of the public-interest entity on key matters arising from the statutory audit of the entity, and, in particular, on material weaknesses in internal control in relation to the financial reporting process.
(9) Subject, in the case of subparagraph (d), to paragraph (10), this Regulation shall not apply to a public-interest entity if it is—
(a) a subsidiary undertaking within the meaning of Article 1 of Directive 83/349/EEC but only if the preceding requirements of this Regulation are complied with by a parent undertaking (within the meaning of that Article) of the first-mentioned undertaking in such a manner as ensures that any statutory audit of the first-mentioned undertaking comes within the purview of the relevant audit committee; or
(b) a collective investment undertaking as defined in Article 1(2) of Directive 85/611/EEC, or
(c) an entity that—
(i) has, as its sole object, the collective investment of capital provided by the public,
(ii) operates on the principle of risk spreading,
(iii) does not seek to take legal or management control over any of the issuers of its underlying investments,
provided that it is authorised by, and subject to the supervision of, a body competent under Community law and has depositary exercising functions equivalent to those under Directive 85/611/EEC, or
(d) an entity that has, as its sole business, the issuing of asset-backed securities as defined in Article 2(5) of Commission Regulation (EC) No. 809/2004, or
(e) a credit institution within the meaning of Article 1(1) of Directive 2000/12/EC which satisfies the following conditions—
(i) its shares are not admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC,
(ii) it has, in a continuous or repeated manner, issued only debt securities, provided that the total nominal amount of all such debt securities remains below €100,000,000; and
(iii) it has not published a prospectus under Directive 2003/71/EC.
(10) An entity that avails itself of the exemption under paragraph (9)(d) shall, by means of a statement to that effect included—
(a) in any annual report published by it; or
(b) in an annual return or other periodic statement delivered by it to the competent authority with registration functions or the Irish Financial Services Regulatory Authority,
set forth the reasons for why it considers the establishment of an audit committee by it is not appropriate and, accordingly, why it has availed itself of that exemption.
(11) Paragraph (7) applies to a proposal of the board of directors (with respect to the appointment of a statutory auditor or audit firm to the public-interest entity) made at any time after the establishment of the audit committee in respect of the entity.
(12) The other provisions of this Regulation with regard to the exercise of any power or the carrying out of any duty by, or in relation to, the audit committee apply with respect to accounts of the public-interest entity for financial years beginning on or after the establishment of the audit committee in respect of the entity.
PART 10 Regulatory arrangements between Member States
Chapter 1 Cooperation with other Member States
Cooperation with other Member States
92. (1) With regard to the cooperation that the State is required to engage in by virtue of Article 33 (cooperation between public oversight systems at Community level) of the Directive, the competent authority with supervisory and other functions is assigned the responsibility in that behalf.
(2) For the purpose of discharging that responsibility, that competent authority shall put in place appropriate mechanisms, including arrangements with competent authorities in other Member States.
Specific requirements with regard to cooperation
93. (1) In this Regulation “counterpart authorities in other Member States” means competent authorities in other Member States with responsibilities corresponding to those of the competent authorities under these Regulations with regard to approval, registration, quality assurance, inspection and discipline.
(2) The competent authorities under these Regulations responsible for approval, registration, quality assurance, inspection and discipline shall co-operate with the counterpart authorities in other Member States whenever necessary for the purpose of those competent authorities (or, as the case may be, the counterpart authorities) carrying out their respective responsibilities under these Regulations or, as the case may be, the laws of the other Member State concerned that implement the Directive.
(3) The competent authorities under these Regulations with the foregoing responsibilities shall render assistance to the counterpart authorities in other Member States and, in particular, shall exchange information and co-operate with them in investigations related to the carrying out of statutory audits.
Confidentiality of information
94. (1) No person shall disclose, except in accordance with law, information that—
(a) is obtained in performing the functions, under any provision of these Regulations, of any of the competent authorities under these Regulations; and
(b) has not otherwise come to the notice of members of the public.
(2) A person who contravenes paragraph (1) is guilty of an offence and is liable—
(a) on summary conviction, to a fine not exceeding €5,000, or
(b) on conviction on indictment, to a fine not exceeding €12,500 or imprisonment for a term not exceeding 12 months or both.
Supplemental provisions in relation to Regulation 94
95. Without limiting Regulation 94, the persons to whom that Regulation applies include the following:
(a) a member or director or former member or director of any board or committee, howsoever called, of any competent authority referred to in that Regulation;
(b) an employee or former employee of any such competent authority; and
(c) a professional or other advisor to any such competent authority, including a former advisor.
Obligation to supply information required for certain purposes and savingconcerning confidential information
96. (1) Each of the competent authorities under these Regulations shall, on request and without undue delay, supply any information required for the purpose referred to in Regulation 93.
(2) Regulation 94 shall not prevent any of those competent authorities from complying with any such request or exchanging confidential information.
Obligation of competent authority to gather information
97. (1) Where necessary, each of the competent authorities under these Regulations, on receiving any request referred to in Regulation 96(1), shall, without undue delay, take the necessary measures to gather the required information.
(2) If a competent authority of whom such a request is made is not able to supply, without undue delay, the required information, it shall notify the competent authority in the other Member State that made the request of—
(a) the fact of the delay; and
(b) the reasons therefor.
Application of Regulation 94 to certain information
98. Regulation 94 shall apply to information received by each of the competent authorities under these Regulations pursuant to the cooperation or exchange of information that is required of competent authorities of Member States by Article 36 of the Directive.
Requesting authority to be notified if its request not complied with
99. (1) If—
(a) a competent authority of whom a request referred to in Regulation 96(1) is made does not comply with the request; and
(b) the case is neither—
(i) just one of a delay in complying with the request to which Regulation 97(2) relates; nor
(ii) one of a refusal to comply with the request on any of the grounds referred to in Regulation 100,
the competent authority shall notify the competent authority in the other Member State that made the request of the reasons for that failure to comply.
(2) If the competent authority referred to in subparagraph (a) of paragraph (1) is not the competent authority with supervisory and other functions, it shall also notify that competent authority of the reasons for the failure referred to in that paragraph.
Grounds for refusing request for information
100. (1) A competent authority may refuse to comply with a request referred to in Regulation 96(1) if, in its opinion—
(a) there are reasonable grounds for believing that supplying the information concerned might adversely affect—
(i) public order,
(ii) the security of the State,
(iii) the defence of the State, or
(iv) the international relations of the State,
or
(b) proceedings in any court in the State have already been initiated in respect of the same actions and against the same statutory auditor or audit firm, the subject of the request; or
(c) a final determination has already been made by the competent authority in respect of the same actions and the same statutory auditor or audit firm, the subject of the request.
(2) If the competent authority referred to in paragraph (1) is not the competent authority with supervisory and other functions, it shall not exercise the power thereunder to refuse to comply with a request save after consultation with that competent authority.
(3) A competent authority that refuses, under paragraph (1), to comply with a request shall notify the competent authority in the other Member State that made the request of the reasons for the refusal.
(4) If the first-mentioned competent authority in paragraph (3) is not the competent authority with supervisory and other functions, it shall also notify that competent authority of the reasons for the refusal referred to in that paragraph.
Use to which information may be put
101. (1) In this Regulation “relevant information” means information that any of the competent authorities under these Regulations receives pursuant to the cooperation or exchange of information that is required of competent authorities of Member States by Article 36 of the Directive.
(2) Each of the competent authorities under these Regulations may use relevant information only for the performance by it of its functions under these Regulations and then only in the context of steps it takes in—
(a) investigating and detecting failures to comply with these Regulations; and
(b) initiating and employing disciplinary procedures, or maintaining proceedings in any court, in respect of any such failures.
(3) Paragraph (2) is without prejudice to any obligations, by virtue of any proceedings being maintained in any court, to which a competent authority is subject as regards the use to which it may put information referred to in that paragraph.
References in Regulations 103 to 105 to counterpart authority
102. (1) References in Regulations 103 to 105 to a counterpart authority in another Member State shall be construed in accordance with Regulation 93.
Counterpart authority to be notified of non-compliance with Directive
103. Where any of the competent authorities under these Regulations forms, on reasonable grounds, the opinion that activities contrary to the provisions of the Directive are being, or have been, carried on on the territory of another Member State, it shall, as soon as possible—
(a) notify the counterpart authority in the other Member State of that opinion; and
(b) include in that notification specific details of the matter and the grounds for its opinion.
Counterpart authority may be requested to carry out investigation
104. (1) In relation to activities that it suspects have been, or are being, carried on contrary to the provisions of the Directive, any of the competent authorities under these Regulations may request a counterpart authority in another Member State to carry out an investigation in the territory of that Member State.
(2) Such a request of a counterpart authority may be accompanied by a further request that one or more of the officers, or members of staff, of the requesting authority be allowed to accompany officers, or members of staff, of the counterpart authority in the course of the investigation.
(3) If the competent authority referred to in paragraph (1) is not the competent authority with supervisory and other functions, it shall notify that competent authority of the making of the request referred to in that paragraph and, if such be the case, the making of the further request referred to in paragraph (2).
Duty of competent authority to take certain action
105. (1) Where any of the competent authorities under these Regulations receives a notification from—
(a) the entity specifically responsible, pursuant to the laws of another Member State that implement Article 36 of the Directive, for ensuring the cooperation referred to in that Article, or
(b) the counterpart authority in another Member State,
that activities contrary to the provisions of the Directive are being, or have been, carried on in the State, it shall take appropriate action under these Regulations or the Act of 2003, as the case may be.
(2) The competent authority shall inform the notifying entity or authority of the outcome of that action, and to the extent possible, of significant developments in the period pending that outcome.
(3) If the competent authority referred to in paragraph (1) is not the competent authority with supervisory and other functions, it shall—
(a) notify that competent authority of the taking by it of the action referred to in that paragraph; and
(b) in addition to so informing, under paragraph (2), the notifying entity or authority of those matters, inform that competent authority of the outcome of that action, and to the extent possible, of significant developments in the period pending that outcome.
Due consideration to be given to counterparty’s request for investigation
106. (1) Each of the competent authorities under these Regulations shall give due consideration to a request made of it, pursuant to the laws of another Member State that implement Article 36 of the Directive, to carry out an investigation in the State.
(2) If the request is acceded to by the competent authority, the investigation shall be subject to—
(a) the overall control of the competent authority; and
(b) unless the competent authority is the competent authority with supervisory and other functions, the supervision of the competent authority with supervisory and other functions.
(3) For the purpose of this Regulation—
(a) the reference in paragraph (1) to a request that is made pursuant to the laws of another Member State that implement Article 36 of the Directive is a reference to such a request, whether or not it is accompanied by a further request (made pursuant to those laws) that one or more of the officers, or members of staff, of the requesting authority be allowed to accompany officers, or members of staff, of the competent authority in the course of the investigation, and
(b) the investigation is subject to the control as mentioned in paragraph (2) even if that further request is acceded to by the competent authority.
(4) If the competent authority referred to in paragraph (1) is not the competent authority with supervisory and other functions, it shall notify that competent authority—
(a) of the making of a request of it referred to in that paragraph; and
(b) if the request is acceded to by it, of the fact of the request being so acceded to.
Grounds for refusing request for investigation
107. (1) Each of the competent authorities under these Regulations may refuse to accede to a request referred to in Regulation 106(1) made of it or a further request of the kind referred to in Regulation 106(3)(a) made of it if, in its opinion—
(a) there are reasonable grounds for believing that acceding to the request might adversely affect—
(i) public order,
(ii) the security of the State,
(iii) the defence of the State, or
(iv) the international relations of the State,
or
(b) proceedings in any court in the State have already been initiated in respect of the same actions and against the same statutory auditor or audit firm, the subject of the request; or
(c) a final determination has already been made by the competent authority in respect of the same actions and the same statutory auditor or audit firm, the subject of the request.
(2) If the competent authority referred to in paragraph (1) is not the competent authority with supervisory and other functions, it shall not exercise the power thereunder to refuse to accede to a request save after consultation with that competent authority.
(3) A competent authority that refuses, under paragraph (1), to accede to a request shall notify the competent authority in the other Member State that made the request of the reasons for the refusal.
(4) If the first-mentioned competent authority in paragraph (3) is not the competent authority with supervisory and other functions, it shall also notify that competent authority of the reasons for the refusal referred to in that paragraph.
Chapter 2 Mutual recognition of regulatory arrangements between Member States
Article 34 of the Directive — clarification of preceding Regulations’ effect
108. To the extent that the preceding provisions of these Regulations do not operate to achieve the following effects in the law of the State, these Regulations operate, and those preceding provisions (notwithstanding anything in them to the contrary) shall be construed as operating, in a manner so that—
(a) the principle set out in Article 34(1) of the Directive is respected, and
(b) the imposition of additional requirements of the kind referred to in Article 34(2) and (3) of the Directive is prohibited.
Chapter 3 Transfer of working papers to third-country competent authorities
Transfer of audit documentation to third-country competent authority
109. (1) Subject to Regulation 110, audit working papers or other documents held by a statutory auditor or audit firm may be transferred to a third-country competent authority only if the competent authority with supervisory and other functions, on a request being made of it in that behalf by the first-mentioned authority, determines that the following conditions are complied with (and authorises such transfer accordingly), namely—
(a) those audit working papers or other documents relate to the audit of a company which—
(i) has issued securities in the third country concerned, or
(ii) forms part of a group of companies that issue statutory consolidated accounts in the third country concerned;
(b) the third-country competent authority meets requirements which have been declared adequate in accordance with Article 47(3) of the Directive;
(c) there are working arrangements on the basis of reciprocity agreed between the competent authority with supervisory and other functions and the third-country competent authority; and
(d) the transfer of personal data to the third country concerned is in accordance with Chapter IV of Directive 95/46/EC.
(2) The working arrangements referred to in paragraph (1)(c) shall ensure that:
(a) justification as to the purpose of the request for audit working papers and other documents is provided by the third-country competent authority concerned;
(b) the audit working papers and other documents are only transferred if—
(i) an obligation similar to that provided by Regulation 94 is provided under the laws of the third country concerned in relation to persons whilst in, and in any period subsequent to their ceasing to be in, the employment of the third-country competent authority;
(ii) the relevant persons in the employment of the third-country competent authority that will deal with the matter provide an undertaking in writing to the competent authority with supervisory and other functions that they—
(I) will comply with their obligation referred to in clause (i), and
(II) deliver up possession of the audit working papers and other documents to the third-country competent authority, and do everything within their power to secure the return of them by that authority to the competent authority with supervisory and other functions, once the performance of the functions referred to in subparagraph (c) in relation to them is completed;
(c) the third-country competent authority uses audit working papers and other documents only for the performance of its functions of public oversight, quality assurance and investigations that meet requirements equivalent to those of Articles 29, 30 and 32 of the Directive;
(d) the request from a third-country competent authority for audit working papers or other documents held by a statutory auditor or audit firm can be refused by the competent authority with supervisory and other functions:
(i) where the provision of those working papers or documents would adversely affect the sovereignty of the Community or any of the following—
(I) public order (whether in the State or elsewhere in the Community),
(II) the security of the State or the Community,
(III) the defence of the State or the Community, or
(IV) the international relations of the State or the Community,
or
(ii) where proceedings in any court in the State have already been initiated in respect of the same actions and against the same persons.
(3) The competent authority with supervisory and other functions has, for the purposes of the performance of its functions under the preceding paragraphs (including the taking of any steps that necessitate the perusal by it of the papers and other documents concerned so as to determine whether the transfer should be refused on any of the grounds referred to in paragraph (2)(d)), the following power.
(4) That power is to require the statutory auditor or audit firm concerned to produce to it the audit working papers and other documents; the statutory auditor or audit firm shall comply with such a requirement made of him, her or it by the competent authority with supervisory and other functions.
(5) As soon as may be after—
(a) if such a determination is made, the making by the competent authority with supervisory and other functions of a determination that the transfer of the papers and other documents be refused on any of the grounds referred to in paragraph (2)(d); or
(b) the papers and other documents are returned by the third-country competent authority to it,
the competent authority with supervisory and other functions shall secure the return to the statutory auditor or audit firm concerned of the audit working papers and other documents.
Derogation from Regulation 109 in exceptional cases
110. By way of derogation from Regulation 109, the competent authority with supervisory and other functions may, in exceptional cases, allow a statutory auditor or audit firm to transfer audit working papers and other documents directly to a third-country competent authority, provided that:
(a) an investigation has been initiated by that competent authority in the third country concerned;
(b) the transfer does not conflict with the obligations with which statutory auditors and audit firms are required to comply in relation to the transfer of audit working papers and other documents to the competent authorities;
(c) there are working arrangements with the third-country competent authority of a reciprocal nature that allow the competent authority with supervisory and other functions direct access to audit working papers and other documents of audit entities in the third country concerned;
(d) the third-country competent authority informs in advance the competent authority with supervisory and other functions of each direct request for information, indicating the reasons therefor;
and
(e) conditions similar to those specified in Regulation 109(2)(a) to (d) are satisfied.
Particulars of working arrangements to be notified
111. (1) Where the competent authority with supervisory and other functions enters into working arrangements with a third-country competent authority in accordance with Regulation 109(1)(c), particulars of those working arrangements shall be published by the first-mentioned competent authority without delay and those particulars shall include—
(a) the name of the third-country competent authority; and
(b) the jurisdiction in which it is established.
(2) Particulars of those working arrangements shall also be notified by the competent authority with supervisory and other functions to the Commission.
PART 11 Third-Country Auditors
Chapter 1 International Aspects
Approval of third-country auditor
112. (1) Without prejudice to Chapter 2 of Part 4, a competent authority may approve a third-country auditor as a statutory auditor if that person has furnished proof that he or she complies with requirements equivalent to those specified in Articles 4 and 6 to 13 of the Directive, but this is subject to paragraph (2).
(2) A third-country auditor shall not be approved under paragraph (1) unless reciprocal arrangements with the third country in question are in place, that is to say arrangements that enable—
(a) by virtue of the law of that third country, and
(b) on fulfilment by the statutory auditor concerned of requirements no more onerous than those specified by this Regulation and Chapter 2 of Part 4 for the third-country auditor’s approval under paragraph (1),
a statutory auditor to carry out audits in that third country.
Chapter 2 Registration and oversight of third-country auditors and audit entities
Registration of third-country auditors and audit entities
113. (1) Subject to paragraphs (5) and (6) and Regulation 119, the competent authority with supervisory and other functions shall, in accordance with the relevant provisions of Part 6 and Schedule 1, cause to be registered in the public register (within the meaning of that Part) every third-country auditor and audit entity that indicates, in writing, to that competent authority his, her or its intention to provide an audit report concerning the annual or group accounts of a company falling within paragraph (2).
(2) The company referred to in paragraph (1) is one—
(a) incorporated outside the Community, not being a collective investment undertaking; and
(b) whose transferable securities are admitted to trading on a regulated market (within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC) in the State.
(3) There shall accompany the written indication by a third-country auditor or audit entity referred to in paragraph (1) a notification, in such form and manner as that competent authority specifies, of the following information (in relation to the auditor or audit entity) to the competent authority with supervisory and other functions.
(4) That information is the information referred to in paragraph 3 of Schedule 1 but does not include the information referred to in paragraph 1(b) or 2(b) (as applied by that paragraph 3) of that Schedule.
(5) Paragraph (1) does not apply if the company referred to in that paragraph is an issuer exclusively of debt securities admitted to trading on a regulated market in a Member State within the meaning of Article 2(1)(b) of Directive 2004/109/EC, the denomination per unit of which is at least €50,000 or, in case of debt securities denominated in another currency, equivalent, at the date of issue, to at least €50,000.
(6) Paragraph (1) does not apply in respect of an audit report—
(a) for a financial year referred to in Regulation 4(a) of the European Communities (Transitional Period Measures in Respect of Third Country Auditors) Regulations 2009 ( S.I. No. 229 of 2009 ) if the audit report is provided by a third-country auditor or audit entity that complies with Regulation 4 of those Regulations; or
(b) provided by a third-country auditor or audit entity before the date that is 3 months after the date of the making of these Regulations.
(7) Regulation 66 shall apply to third-country auditors and audit entities so registered with the substitution of references to the competent authority with supervisory and other functions for references to the competent authority and any other necessary modifications.
(8) Regulation 67 shall apply, with the necessary modifications, to a notification of information by a third-country auditor or audit entity under—
(a) paragraph (3) to the competent authority with supervisory and other functions; and
(b) Regulation 66, as applied by paragraph (7), to that competent authority.
(9) In paragraph (2) “collective investment undertaking” does not include such an undertaking of the closed-ended type.
Application of Part 8 to registered third-country auditors and audit entities
114. (1) Subject to paragraph (2), Part 8 shall apply to a third-country auditor or audit entity registered under Part 6 in pursuance of Regulation 113.
(2) A third-country auditor or audit entity registered under Part 6 in pursuance of Regulation 113 may apply to the competent authority with supervisory and other functions for an exemption from Chapter 2 of Part 8 if a quality assurance review has, under another Member State’s or third country’s system of quality assurance, been carried out in relation to the auditor or audit entity during the 3 years preceding the making of the application.
(3) On the making of that application if—
(a) the competent authority with supervisory and other functions is satisfied that the quality assurance review referred to in paragraph (2) has been carried out as mentioned in that paragraph; and
(b) the system of quality assurance referred to in that paragraph has been assessed as equivalent in accordance with Regulation 119,
that competent authority shall grant the exemption and the third-country auditor or audit entity shall be exempted from Chapter 2 of Part 8 accordingly.
Audit by non-registered auditor or audit entity — consequence
115. Without prejudice to Regulation 119 and unless Regulation 113(5) or (6) applies to it, an audit report provided by a third-country auditor or audit entity concerning the annual or group accounts of a company falling within Regulation 113(2) shall have no legal effect in the State if the third-country auditor or audit entity that provides it is not registered under Part 6.
Conditions for registration of third-country auditor or audit entity
116. The competent authority with supervisory and other functions may cause to be registered a third-country auditor or audit entity pursuant to Regulation 113 only if—
(a) where the applicant for registration is an audit entity (referred to in this Regulation as the “potential registrant”), the applicant satisfies so much of the conditions specified hereafter in this Regulation as are applicable to an entity, and
(b) where the applicant for registration is an auditor (also referred to in this Regulation as the “potential registrant”), the applicant satisfies so much of the conditions specified hereafter in this Regulation as are applicable to an individual,
namely—
(i) the potential registrant meets requirements equivalent to those of Articles 4 and 6 to 10 of the Directive;
(ii) the majority of the members of the administrative or management body of the potential registrant meet requirements equivalent to those of Articles 4 and 6 to 10 of the Directive;
(iii) the third-country auditor carrying out the audit on behalf of the potential registrant meets requirements equivalent to those of Articles 4 and 6 to 10 of the Directive;
(iv) the audits of the annual or group accounts referred to in Regulation 113(1) are carried out in accordance with international auditing standards as referred to in Regulation 54, as well as the requirements referred to in Regulation 41, or with equivalent standards and requirements;
(v) the potential registrant publishes annually on a website, being a website maintained by or on behalf of the potential registrant, a report which includes the information referred to in Regulations 59 and 61 in relation to the year concerned or the potential registrant complies with equivalent disclosure requirements.
Competent authority with supervisory and other functions may assess matter of equivalence for purposes of Regulation 116(iv) in certain circumstances
117. For so long as the Commission has not taken, in accordance with the procedure referred to in Article 48(2) of the Directive, the decision under Article 45(6) thereof in relation to the matter of equivalence of standards and requirements mentioned in Regulation 116(iv), the competent authority with supervisory and other functions may, for the purposes of that provision, make an assessment of that equivalence.
Certain fees chargeable by competent authority with supervisory and other functions
118. (1) The competent authority with supervisory and other functions may charge and impose a fee (of an amount specified from time to time by the Minister sufficient to cover the authority’s administrative expenses in respect of the following) on a third-country auditor or audit entity referred to in Regulation 113(1) in respect of—
(a) the registration; and
(b) the oversight, the quality assurance and the related matters of investigation, discipline and penalties,
effected or provided in relation to the auditor or audit entity under and in accordance with these Regulations.
(2) A fee imposed under paragraph (1) may, in default of payment, be recovered from the third-country auditor or audit entity concerned as a simple contract debt in any court of competent jurisdiction.
Exemptions in case of equivalence
119. (1) A third-country auditor or audit entity may apply to the competent authority with supervisory and other functions for an exemption from all or any of the provisions of Regulations 113 and 114 on the basis that the third-country auditor or audit entity is subject to systems of public oversight, quality assurance and investigations and penalties in the third country concerned that meet requirements equivalent to those of Part 8.
(2) On the making of that application if—
(a) the Commission has, in accordance with Article 46(2) of the Directive, assessed the systems referred to in paragraph (1) as meeting requirements equivalent to those in the corresponding provisions of the Directive; and
(b) the competent authority with supervisory and other functions is satisfied that the law of the third country concerned affords reciprocal rights to a statutory auditor or audit firm with regard to being granted corresponding exemptions under that law,
that competent authority shall grant an exemption from all or any, as it considers appropriate, of the provisions of Regulations 113 and 114 and the third-country auditor or audit entity shall be exempted accordingly.
(3) The competent authority with supervisory and other functions shall notify the Commission of the main elements of its cooperative arrangements with systems of public oversight, quality assurance and investigations and penalties of the third country concerned, arising out of arrangements it has entered into with that third country for the purposes of the reciprocity mentioned in paragraph (2)(b).
PART 12 Miscellaneous
Disclosure of auditors’ remuneration, etc. in accounts
120. (1) The Principal Act is further amended by inserting the following section after section 161C (inserted by Regulation 62):
“Disclosure of remuneration for audit, audit-related and non-audit work.
161D. (1) In this section—
‘group auditor’ means the auditor carrying out the audit of group accounts;
‘relevant undertaking’ means—
(a) a company, or
(b) an undertaking referred to in Regulation 6 of the 1993 Regulations;
‘remuneration’ includes benefits in kind and payments in cash.
(2) Subject to subsection (5), a relevant undertaking shall disclose in the notes to its annual accounts relating to each financial year the following information:
(a) the remuneration for all work in each category specified in subsection (3) that was carried out—
(i) for the relevant undertaking;
(ii) in respect of that financial year,
by the auditor of the relevant undertaking;
(b) the remuneration for all work in each category specified in subsection (3) that was carried out—
(i) for the relevant undertaking;
(ii) in respect of the preceding financial year,
by the auditor of the relevant undertaking;
(c) where all or part of the remuneration referred to in paragraph (a) or (b) is in the form of a benefit in kind, the nature and estimated monetary value of the benefit.
(3) Remuneration shall be disclosed under subsection (2) for each of the following categories of work:
(a) the audit of individual accounts;
(b) other assurance services;
(c) tax advisory services;
(d) other non-audit services.
(4) Where the auditor of a relevant undertaking is a statutory audit firm, any work carried out by a partner in the firm or a statutory auditor on its behalf is considered for the purposes of this section to have been carried out by the audit firm.
(5) A company need not make the disclosure required by subsection (2) where:
(a) the company is to be treated as a small company in accordance with section 8(1) of the Act of 1986, or
(b) the company is to be treated as a medium-sized company in accordance with section 8(1) of the Act of 1986, or
(c) the company is a subsidiary undertaking, the parent of which is required to prepare and does prepare group accounts in accordance with any Regulations mentioned in subsection (7), provided that:
(i) the subsidiary undertaking is included in the group accounts, and
(ii) the information specified in subsection (3) is disclosed in the notes to the group accounts.
(6) Where a company that is to be treated as a medium-sized company in accordance with section 8(1) of the Act of 1986 does not make the disclosure of information required by subsection (2) it shall provide such information to the Supervisory Authority when requested so to do.
(7) A parent undertaking preparing group accounts in accordance with:
(a) the Group Accounts Regulations,
(b) the European Communities (Credit Institutions: Accounts) Regulations, 1992 ( S.I. No. 294 of 1992 ), or
(c) the European Communities (Insurance Undertakings: Accounts) Regulations 1996 ( S.I. No. 23 of 1996 ),
shall disclose in the notes to its consolidated accounts relating to each financial year the following information:
(i) the remuneration for all work in each category specified in subsection (8) that was carried out in respect of that financial year by the group auditor;
(ii) the remuneration for all work in each category specified in subsection (8) that was carried out in respect of the preceding financial year by the group auditor;
(iii) where all or part of the remuneration referred to in paragraph (a) or (b) is in the form of a benefit in kind, the nature and estimated monetary value of the benefit.
(8) Remuneration shall be disclosed under subsection (7) for each of the following categories of work:
(a) the audit of the group accounts;
(b) other assurance services;
(c) tax advisory services;
(d) other non-audit services.
(9) Where more than one auditor (whether a statutory auditor or a statutory audit firm) has been appointed as the auditor of a relevant undertaking in a single financial year, separate disclosure in respect of the remuneration of each of them must be provided in the notes to the company’s individual accounts.
(10) Where a relevant undertaking fails to comply with subsection (2), (3) or (9), each company or other entity that forms all or part of that undertaking shall be guilty of an offence.
(11) For the purpose of applying this section to a partnership that is referred to in Regulation 6 of the 1993 Regulations and that is a relevant undertaking, the partnership is to be treated as though it were a company formed and registered under the Companies Acts.”.
(2) The amendment effected by this Regulation applies to accounts (whether individual or consolidated) for financial years ending on or after the date falling 3 months after the date of the making of these Regulations.
Saving for disciplinary proceedings in being
121. (1) None of the provisions of these Regulations (and, in particular, those amending the Act of 1990 or the Act of 2003) affect disciplinary proceedings in being before the commencement of these Regulations by a recognised accountancy body against any of its members and, accordingly, those proceedings may be continued on after that commencement by that body against the member or members concerned.
(2) If, as a result of such proceedings in relation to a foregoing person, the practising certificate (within the meaning of Part X of the Act of 1990) of the person is withdrawn by the body concerned or the person’s membership of the body is terminated by it, then any deemed approval of the person as a statutory auditor or audit firm by virtue of Regulation 25(1) or 27(4) ceases to have effect.
(3) Where the result of the proceedings concerned is not either of those mentioned in paragraph (2), the powers of the competent authority with supervisory and other functions under section 24 of the Act of 2003 are available to that authority, and may be exercised by it, in relation to the matters, the subject of those proceedings, and the provisions of that section 24 that shall apply for that purpose are those provisions as they stand amended by these Regulations but subject to paragraph (4).
(4) The provisions of that section 24, the basis of which is that it is the law as it stands after the making of these Regulations that governs the disqualification of auditors and audit firms from being able to carry out statutory audits, shall be read subject to such modifications so that the provisions operate on the basis of the law with respect to those matters as it stood before that making and in particular that—
(a) there are no circumstances, under the law as it stands before that making, in which it is mandatory for a recognised accountancy body, by withdrawing a practising certificate (within the meaning of Part X of the Act of 1990) or terminating a person’s membership of the body, to disqualify an auditor or audit firm from being able to carry out statutory audits; and
(b) the standards by reference to which it is determined whether a breach of the kind referred to in subsection (2) of that section 24 has occurred on the part of the auditor or audit firm concerned are those that would have been used for that purpose before that making,
but nothing in this paragraph prejudices the application of the provisions of these Regulations referred to in subsection (11B) of that section 24 in the event that the competent authority with supervisory and other functions withdraws, on foot of its investigation under that section, the approval of the person or firm as a statutory auditor or audit firm.
SCHEDULE 1
Information required, by Part 6, to be supplied and entered in Public Register
Statutory auditors
1. In relation to a statutory auditor, the register required to be maintained by Regulation 63 shall contain at least the following information:
(a) the name and address of the auditor;
(b) the number under which the auditor is entered in that register;
(c) if applicable—
(i) the name and address and the website address (if any) of the statutory audit firm by which the auditor is employed, or with whom he or she is associated as a partner or otherwise; and
(ii) the number under which that statutory audit firm is entered in that register;
(d) the name and address of the competent authority responsible for the regulation of the auditor;
(e) if he or she is so registered with one or more such authorities—
(i) particulars of his or her registration—
(I) as a statutory auditor, with each competent authority of another Member State and the name of the authority; and
(II) as auditor, with one or more third-country competent authorities and the name or names of it or them;
and
(ii) the number under which he or she is registered with each such authority;
(f) without prejudice to subparagraph (e), with regard to the auditor’s status (if such be the case) as a Member State statutory auditor, the name and address of each competent authority responsible, in relation to him or her, for—
(i) approval as referred to in Article 3 of the Directive,
(ii) quality assurance as referred to in Article 29 of the Directive,
(iii) investigations, discipline and penalties as referred to in Article 30 of the Directive, and
(iv) public oversight as referred to in Article 32 of the Directive.
Statutory audit firms
2. In relation to a statutory audit firm, the register required to be maintained by Regulation 63 shall contain at least the following information:
(a) the name and address of the audit firm;
(b) the number under which the audit firm is entered in that register;
(c) the legal form of the audit firm;
(d) the primary contact person in the audit firm and contact details;
(e) the address of each office in the State of the audit firm and the website address (if any) of the audit firm;
(f) the name of every individual employed by or associated as partner or otherwise with the audit firm who is approved as statutory auditor under Part 3;
(g) the number under which that individual is entered in the register;
(h) the name and address of the competent authority responsible for the regulation of the audit firm;
(i) the names and addresses of the owners of, or as appropriate, shareholders in, the audit firm;
(j) the names and addresses of the directors, or other members of, as appropriate—
(i) the board of directors,
(ii) board of management, or
(iii) other administrative or management body,
of the audit firm — but where the audit firm comprises a partnership with no management structure, the provision of the address of each individual named, under subparagraph (f), as partner suffices;
(k) if applicable — the fact of the audit firm’s membership of a network and either—
(i) a list of the names and addresses of member firms and affiliates of the network or,
(ii) an indication of where such information is publicly available;
(l) if the audit firm is so registered with one or more such authorities—
(i) particulars of the firm’s registration—
(I) as a statutory audit firm, with each competent authority of another Member State and the name of the authority; and
(II) as an audit firm, with one or more third-country competent authorities and the name or names of it or them;
and
(ii) the number under which the firm is registered with each such authority;
(m) without prejudice to subparagraph (l), with regard to the audit firm’s status (if such be the case) as a Member State statutory audit firm, the name and address of each competent authority responsible, in relation to it, for—
(i) approval as referred to in Article 3 of the Directive,
(ii) quality assurance as referred to in Article 29 of the Directive,
(iii) investigations, discipline and penalties as referred to in Article 30 of the Directive, and
(iv) public oversight as referred to in Article 32 of the Directive.
Third-country auditors and audit entities
3. (1) In relation to the case provided by Regulation 113 of the registration of a third-country auditor or audit entity, the register required to be maintained by Regulation 63 shall contain at least the information specified in the provisions of paragraph 1 or, as the case may be, 2 (as, in either case, those provisions are applied by subparagraph (2)).
(2) The provisions of paragraph 1 or 2, as the case may be, apply for the purposes of this paragraph save so much of them as are inapplicable in the case of a third-country auditor or audit entity, as appropriate.
Individual identification number and storage of information in electronic form
4. (1) There shall be assigned an individual identification number to each individual, firm and entity that is being entered in the register required to be maintained by Regulation 63, being—
(a) in a case where the information entered in respect of the individual or firm is that provided under Regulation 64, the number notified under paragraph (2)(b)(i) of that Regulation to the competent authority with registration functions;
(b) in any other case, such individual identification number as, subject to subparagraph (2), is determined and allocated by the competent authority with registration functions,
and references in paragraphs 1 and 2 to the number under which any of the foregoing persons is entered in the register shall be read as references to that identification number.
(2) Instead of its allocating a number for the purposes of subparagraph (1)(b) that has been determined by it, the competent authority with registration functions may—
(a) in specifying under any provision of these Regulations the form in which information is to be notified to it for registration (and the provision concerned of these Regulations doesn’t itself provide for the notification of such a number), include in that specification a requirement that the form, as completed, include an identification number allocated to the subject of the notification by the notifier of the information; and
(b) if the number so provided in that form is satisfactory for the purpose of distinguishing the subject from other registrants, allocate, for the purposes of subparagraph (1)(b), that number so provided.
(3) The information contained in that register shall be stored in electronic form and be capable of being accessed by members of the public by electronic means.
Definition of “address”
5. In this Schedule “address”, in relation to an individual, firm or entity, means the individual’s or the firm’s or entity’s usual business address.
SCHEDULE 2 Standards relating to training and qualifications for approval of natural person as statutory auditor
1. A natural person shall have attained university entrance or equivalent level and then—
(a) completed a course of theoretical instruction;
(b) undergone practical training; and
(c) passed an examination of professional competence of university final or equivalent examination level in the State.
2. (1) The examination of professional competence referred to in paragraph 1 shall be such as guarantees the necessary level of theoretical knowledge of subjects relevant to statutory audit and the ability to apply such knowledge in practice. Part at least of that examination shall be written.
(2) The test of theoretical knowledge included in the examination shall cover the following subjects in particular:
(a) general accounting theory and principles;
(b) legal requirements and standards relating to the preparation of annual and consolidated accounts;
(c) international accounting standards;
(d) financial analysis;
(e) cost and management accounting;
(f) risk management and internal control;
(g) auditing and professional skills;
(h) legal requirements and professional standards relating to statutory audit and statutory auditors;
(i) international auditing standards;
(j) professional ethics and independence.
(3) The examination shall also cover at least the following subjects in so far as they are relevant to auditing:
(a) company law and corporate governance;
(b) the law of insolvency and similar procedures;
(c) tax law;
(d) civil and commercial law;
(e) social security law and employment law;
(f) information technology and computer systems;
(g) business, general and financial economics;
(h) mathematics and statistics;
(i) basic principles of the financial management of undertakings.
3. (1) In order to ensure the ability to apply theoretical knowledge in practice, a test of which is included in the examination, a trainee shall complete a minimum of 3 years’ practical training in, inter alia, the auditing of annual accounts, consolidated accounts or similar financial statements. At least two thirds of such practical training shall be completed with a statutory auditor or audit firm approved in any Member State.
(2) All such training shall be carried out with persons who the competent authority is satisfied possess, to an adequate standard, the ability to provide practical training.
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GIVEN under my Official Seal,
20 May 2010.
BATT O’KEEFFE,
Minister for Enterprise, Trade and Innovation.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation.)
These Regulations give effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC on the annual accounts of certain types of companies and 83/349/EEC on consolidated accounts and repealing Council Directive 84/253/EEC on the approval of persons responsible for carrying out the statutory audits of accounting documents.
S.I. No. 685/2011 –
European Communities (Statutory Audits) (Directive 2006/43/EC) (Amendment) Regulations 2011.
I, RICHARD BRUTON, Minister for Jobs, Enterprise and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006, hereby make the following regulations:
Citation
1. These Regulations may be cited as the European Communities (Statutory Audits) (Directive 2006/43/EC) (Amendment) Regulations 2011.
Amendment of Regulation 91 of S.I. No. 220 of 2010
2. Regulation 91 of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 ) is amended by substituting the following paragraphs for paragraphs (3) to (5):
“(3) The members of the audit committee shall include at least one independent director of the public-interest entity, that is to say, a person who—
(a) is a non-executive director of it; and
(b) otherwise possesses the requisite degree of independence (particularly with regard to his or her satisfying the condition in paragraph (4)) so as to be able to contribute effectively to the committees functions.
(4) The condition referred to in paragraph (3)(b) is that the director there referred to does not have, and at no time during the period of 3 years preceding his or her appointment to the committee did have—
(a) a material business relationship with the public-interest entity, either directly, or as a partner, shareholder, director (other than as a non-executive director) or senior employee of a body that has such a relationship with the entity; or
(b) a position of employment in the public-interest entity.
(5) The director referred to in paragraph (3) (or, where there is more than one director of the kind referred to in that paragraph, one of them) shall be a person who has competence in accounting or auditing.
(5A) For the purposes of paragraphs (3) and (4)(a) a non-executive director is a director who is not engaged in the daily management of the public-interest entity or body concerned, as the case may be.”.
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Given under my Official Seal,
21 December 2011.
RICHARD BRUTON,
Minister for Jobs Enterprise and Innovation.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation.)
These Regulations give further effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, by amending Regulation 91 (concerning requirements regarding audit committees in respect of public interest entities) of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 ).
S.I. No. 67/2013 –
European Communities (Statutory Audits) (Directive 2006/43/EC) (Amendment) Regulations 2013.
I, RICHARD BRUTON, Minister for Jobs, Enterprise and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving further effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 20061 and Decision 2011/30/EU of 19 January 20112 , hereby make the following regulations:
1. (1) These Regulations may be cited as the European Communities (Statutory Audits) (Directive 2006/43/EC) (Amendment) Regulations 2013.
(2) These Regulations shall be read as one with the Companies Acts.
2. In these Regulations “Principal Regulations” means the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 ).
3. Regulation 113 of the Principal Regulations is amended—
(a) in paragraph (1), by inserting “in each year” after “cause to be registered”, and
(b) by inserting the following paragraph after paragraph (1):
“(1A) Registration in the public register pursuant to paragraph (1) shall have effect for a period of 12 months from the date on which the registration is effected.”.
4. Regulation 118 of the Principal Regulations is amended by—
(a) in paragraph (1) by substituting “an annual fee” for “a fee”,
(b) in paragraph (1), by substituting the following subparagraph for subparagraph (a):
“(a) the annual registration of such auditor or audit entity that is a statutory auditor or audit firm registered in a public register of a Member State pursuant to Articles 15 to 19 of the Directive;”,
and
(c) in paragraph (1), by inserting the following subparagraph after subparagraph (a):
“(aa) the annual registration assessment and the annual registration of such auditor or audit entity that is not registered in a public register of a Member State pursuant to Articles 15 to 19 of the Directive as a statutory auditor or audit firm; and”.
5. Where, on the day on which these Regulations come into operation, a third-country auditor or audit entity referred to in Regulation 113(1) is registered in accordance with the Principal Regulations that registration shall cease to have effect 12 months from the day on which it was effected.
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GIVEN under my Official Seal,
22 February 2013.
RICHARD BRUTON,
Minister for Jobs, Enterprise and Innovation.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation.)
These Regulations give further effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 and of Commission Decision 2011/30/EU of 19 January 2011.
These Regulations amend—
(i) Regulation 113(1) regarding registration in the State of a third country auditor and audit entity, and
(ii) Regulation 118(1) in relation to the fee charged for such registrations.
These amendments provide for the annual registration and payment of a fee at Regulation 113(1) and 118(1) respectively.
1 OJ 157, 9.6.2006, p.87.
2 OJ L15, 20.1.2011, p.12.
Privacy Statement Accessibility
S.I. No. 174/2013 –
European Communities (Statutory Audits) (Directive 2006/43/EC) (Amendment) (No. 2) Regulations 2013.
I, RICHARD BRUTON, Minister for Jobs, Enterprise and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving further effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 20061 , hereby make the following regulations:
1. (1) These Regulations may be cited as the European Communities (Statutory Audits) (Directive 2006/43/EC) (Amendment) (No. 2) Regulations 2013.
(2) These Regulations shall be read as one with the Companies Acts.
2. In these Regulations “Principal Regulations” means the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 ).
3. Regulation 16 of the Principal Regulations is amended by inserting the following paragraph after paragraph (2):
“(2A) For the avoidance of doubt, in the event that a recognised accountancy body is no longer recognised by the competent authority with supervisory and other functions for the purposes of these Regulations or otherwise ceases to exist, that recognised accountancy body shall no longer be designated as a competent authority for the purposes of these Regulations.”.
4. Regulation 25 of the Principal Regulations is amended—
(a) in paragraph (1) by substituting “paragraphs (2) and (3)” for “paragraph (3)”,
(b) by substituting the following paragraphs for paragraphs (2), (3) and (4):
“(2) The deemed approval of a person, by virtue of paragraph (1), shall cease to have effect if, the person is not—
(a) registered as a Statutory Auditor in the public register as referred to in Part 6 of these Regulations by; and
(b) subject to the regulation of,
a competent authority.
(3) In the case of a person to whom paragraph (1) applies, being a person who is qualified for appointment as auditor of a company pursuant to Part X of the Act of 1990 by virtue of having been authorised by the Minister to be so appointed before 3 February 1983, paragraph (2) shall apply only after a six month period commencing 31 May 2013.
(4) In relation to a person to whom paragraph (1) applies, Regulation 33 shall have effect as if—
(a) in paragraph (3) of that Regulation, the following subparagraph were substituted for subparagraph (b):
“(b) either—
(i) any of the conditions specified in Regulation 24(a) are not being complied with in respect of the auditor; or
(ii) in the case of a person referred to in Regulation 25(3) who has complied with the conditions specified in Regulation 25(2), those conditions cease to be complied with by him or her,”;
and
(b) there were substituted, in paragraph (5), for all the words beginning with “Where, having” and ending immediately before subparagraph (ii) of that paragraph, the following:
“Where, having—
(a) complied with the requirements of procedural fairness in that regard; and
(b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,
the competent authority is satisfied that circumstances referred to in paragraph (3)(a) have arisen or that a statutory auditor has failed to comply with any of the conditions specified in Regulation 24(a) or, in the case of a person referred to in Regulation 25(3) who has complied with the conditions specified in Regulation 25(2), that those conditions have ceased to be complied with by him or her, it shall, subject to paragraph (6), serve a notice in writing on the auditor stating that—
(i) it is satisfied that, as appropriate—
(I) those circumstances have arisen;
(II) such a failure has occurred; or
(III) those conditions have ceased to be complied with,
in relation to the auditor;”.
5. Regulation 64 of the Principal Regulations is amended by inserting the following paragraph after paragraph (4):
“(5) For the avoidance of doubt, in the event that a competent authority is no longer recognised by the competent authority with supervisory and other functions for the purposes of these Regulations or otherwise ceases to exist, the notifications under paragraphs (1) and (2) shall cease to have effect and the competent authority with registration functions shall remove all information contained in such notifications from the public register.”.
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GIVEN under my Official Seal,
14 May 2013.
RICHARD BRUTON,
Minister for Jobs, Enterprise and Innovation.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation)
These Regulations give further effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006. These Regulations amend Regulations 16, 25 and 64 of European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 in order to ensure that a person approved to act as a statutory auditor will be subject to the regulation of a recognised accountancy body.
1 OJ 157, 9.6.2006, p.87.
European Union (Statutory Audits) Regulations 2016.
S.I. No. 312/2016 – European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016.
ARRANGEMENT OF REGULATIONS
PART 1
PRELIMINARY MATTERS
1. Citation, commencement and construction
2. Revocation and savings
3. Application
4. Interpretation — general
PART 2
AMENDMENT OF COMPANIES ACT 2014
5. Definition
6. Amendment of section 2 of Principal Act
7. Amendment of section 35 of Principal Act
8. Amendment of section 322 of Principal Act
9. Amendment of section 336 of Principal Act
10. Amendment of section 337 of Principal Act
11. Amendment of section 380 of Principal Act
12. Amendment of section 390 of Principal Act
13. Amendment of section 394 of Principal Act
14. Amendment of section 900 of Principal Act
15. Amendment of section 904 of Principal Act
16. Amendment of section 905 of Principal Act
17. Amendment of section 906 of Principal Act
18. Amendment of section 907 of Principal Act
19. Amendment of section 918 of Principal Act
20. Amendment of section 919 of Principal Act
21. Amendment of section 930 of Principal Act
22. Amendment of section 932 of Principal Act
23. Supplemental provisions in relation to section 934 (including as concerns its relationship to provisions of 2016 Audits Regulations)
24. Amendment of Principal Act
25. Amendment of section 938 of Principal Act
26. Amendment of section 941 of Principal Act
27. Application to court to confirm decision to impose relevant sanction
28. Amendment of section 1097 of Principal Act
29. Amendment of section 1305 of Principal Act
30. Amendment of section 1441 of Principal Act
31. Amendment of section 1448 of Principal Act
PART 3
DESIGNATION OF COMPETENT AUTHORITY AND ASSIGNMENT OF FUNCTIONS
32. Designation of competent authority
33. Assignment of functions
34. Annual audit programme and activity report
35. Operation of certain provisions with regard to particular recognised accountancy bodies
36. Conflicts of interest to be avoided
PART 4
APPROVAL OF STATUTORY AUDITORS AND AUDIT FIRMS, PROHIBITION ON UNAPPROVED PERSONS ACTING AS AUDITOR, ETC.
Chapter 1
Approval of Statutory Auditors and Audit Firms
37. Applications for approval, general principle as to good repute, etc.
38. Basis on which audit firms approved in other Member States may carry out statutory audits in State
39. Restriction as to persons who may carry out statutory audits
40. Restriction on acting as statutory auditor
41. Restriction on acting as statutory audit firm
42. Offence for contravening Regulation 39, 40 or 41
43. Conditions for approval as statutory auditor
44. Transitional provisions
45. Appropriate qualification for purpose of Regulation 43(a)
46. Conditions for approval as statutory audit firm
47. Powers of Director of Corporate Enforcement
48. Evidence in prosecutions under Regulation 47
Chapter 2
Aptitude Test
49. Aptitude test to be passed
50. Scope of aptitude test
51. Adequate standards to be applied in administration of aptitude test
Chapter 3
Withdrawal of Approval
52. Grounds for mandatory withdrawal of approval in case of statutory auditor
53. Grounds for mandatory withdrawal in case of statutory audit firm
54. Appeals against withdrawal of approval
55. Certain persons to be notified of withdrawal of approval
56. Other persons to be notified of withdrawal of approval
PART 5
STANDARDS AND PROVISIONS APPLICABLE TO STATUTORY AUDITORS AND AUDIT FIRMS
Chapter 1
Appointment of Statutory Auditors or Audit Firms
57. Prohibition of contractual clauses restricting choice of auditors
58. Selection procedures for statutory auditors or audit firms by public-interest entities
59. Appointment of statutory auditors or audit firms by public-interest entities — informing the Supervisory Authority
60. Removal of statutory auditors or audit firms by public-interest entities — supplementary provisions
61. Directors’ report to include date of last appointment of statutory auditor or audit firm
Chapter 2
Standards for Statutory Auditors
62. Continuing education
63. Professional ethics
64. Independence, objectivity and professional scepticism
65. Standards for purposes of Regulations 62 to 64
66. Arrangements for enforcement of standards
Chapter 3
Confidentiality and Professional Secrecy
67. Rules of confidentiality to apply
68. Supplemental provisions in relation to Regulation 67
69. Saving
70. Rules of confidentiality in relation to entities in third countries
71. Incoming statutory auditor or audit firm to be afforded access to information
72. Access by recognised accountancy body to audit documents
73. Access by Supervisory Authority to information and documents held by recognised accountancy bodies or relevant persons
74. Professional privilege
75. No liability for acts done in compliance with Regulations
76. Restriction of section 940 of Companies Act 2014
Chapter 4
Auditing Standards and Audit Reporting
77. Auditing standards to be applied
78. Audit of group accounts — responsibility of group auditor
79. Further responsibility of group auditor
80. Additional report to audit committee
81. Auditors’ reporting obligations under Article 12 of Regulation (EU) No 537/2014
Chapter 5
Record keeping
82. Record keeping
Chapter 6
Objectivity
83. Future viability
PART 6
PUBLIC REGISTER
84. Public register
85. Notification of information to Registrar of Companies
86. Prohibition on certain acts unless registered
87. Obligation of statutory auditor or audit firm to notify certain information
88. Information must be signed
89. Removal of third-country auditor or audit entity registered in accordance with Regulation 135 from public register
90. Language of information to be entered in public register
PART 7
INDEPENDENCE
91. Requirement for independence — general
92. Professional scepticism
93. Prohibited relationships — specific provisions to secure independence
94. Prohibited relationships — financial or beneficial interest
95. Prohibited relationships — mergers and acquisitions
96. Threats to independence and other information to be recorded
97. Preparation for statutory audit and assessment of threats to independence
98. Internal organisation of statutory auditors and audit firms
99. Organisation of work of statutory auditors and audit firms
100. Organisation of work of statutory auditors and audit firms — audit files
101. Restrictions with regard to fees
102. Rotation of key audit partner in cases of public-interest entities
103. Moratorium on taking up certain positions in audited entities
104. Rotation of statutory auditor and audit firms in the case of public-interest entities — extension
105. Rotation — reports by statutory auditor and audit firm in case of public-interest entities
106. Provision of certain prohibited non-audit services by auditors of public-interest entities
PART 8
QUALITY ASSURANCE OF STATUTORY AUDITORS AND AUDIT FIRMS
Chapter 1
Quality assurance
107. Quality assurance by Supervisory Authority of statutory audit of public-interest entities and third-country auditors, etc.
108. System of quality assurance to be put in place
109. Organisation of quality assurance system
110. Quality assurance review deemed to include individual auditors in certain cases
111. Right of recognised accountancy body as regards professional discipline
Chapter 2
Investigations and Sanctions
112. System of investigation and penalties
113. Duty of each recognised accountancy body with regard to sanctions
114. Scope of penalties and publicity in relation to their imposition
PART 9
AUDIT COMMITEES
115. Audit committees for public-interest entities
PART 10
REGULATORY ARRANGEMENTS BETWEEN MEMBER STATES
Chapter 1
Cooperation with other Member States
116. Specific requirements with regard to cooperation
117. Confidentiality of information
118. Supplemental provisions in relation to Regulation 117
119. Obligation to supply information required for certain purposes and saving concerning confidential information
120. Obligation of Supervisory Authority or recognised accountancy body to gather information
121. Application of Regulation 117 to certain information
122. Requesting authority to be notified if its request not complied with
123. Grounds for refusing request for information
124. Use to which information may be put
125. Counterpart authority to be notified of non-compliance with Audit Directive and Regulation (EU) No 537/2014
126. Counterpart authority may be requested to carry out investigation
127. Duty of Supervisory Authority or recognised accountancy body to take certain action
128. Due consideration to be given to counterparty’s request for investigation
129. Grounds for refusing request for investigation
Chapter 2
Mutual Recognition of Regulatory Arrangements between Member States
130. Mutual recognition of regulatory arrangements between Member States
Chapter 3
Transfer of Working Papers to Third-country Competent Authorities
131. Transfer of audit documentation to third-country competent authority
132. Derogation from Regulation 132 in exceptional cases
133. Particulars of working arrangements to be notified
PART 11
THIRD-COUNTRY AUDITORS
Chapter 1
International Aspects
134. Approval of third-country auditor
Chapter 2
Registration and Oversight of Third-country Auditors and Audit Entities
135. Registration of third-country auditors and audit entities
136. Exemption from quality assurance
137. Audit by non-registered auditor or audit entity — consequence
138. Conditions for registration of third-country auditor or audit entity
139. Supervisory Authority may assess matter of equivalence for purposes of Regulation 138(2)(c)
140. Certain fees chargeable by Supervisory Authority
141. Exemptions in case of equivalence
PART 12
MISCELLANEOUS
142. Summary proceedings
143. Savings for disciplinary proceedings in being
144. Amendment of Irish Collective Asset-management Vehicles Act 2015
SCHEDULE 1
Standards relating to training and qualifications for approval of individual as statutory auditor
SCHEDULE 2
Information required, by Part 6, to be Supplied and Entered in Public Register
S.I. No. 312 of 2016
EUROPEAN UNION (STATUTORY AUDITS) (DIRECTIVE 2006/43/EC, AS AMENDED BY DIRECTIVE 2014/56/EU, AND REGULATION (EU) NO 537/2014) REGULATIONS 2016
Notice of the making of this Statutory Instrument was published in
“Iris Oifigiúil” of 17th June, 2016.
I, MARY MITCHELL O’CONNOR, Minister for Jobs, Enterprise and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 20061 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC, as amended by Directive 2014/56/EU of the European Parliament and of the Council of 16 April 20142 amending Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts, and giving effect to certain provisions of Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 20143 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC, hereby make the following regulations:
PART 1
PRELIMINARY MATTERS
Citation, commencement and construction
1. (1) These Regulations may be cited as the European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016.
(2) These Regulations shall come into operation on 17 June 2016.
(3) These Regulations shall be read as one with the Companies Act 2014 (No. 38 of 2014).
Revocation and savings
2. (1) Subject to paragraph (2), the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 ) are revoked.
(2) Subject to Regulation 143(3), the 2010 Audits Regulations, as in force immediately before 17 June 2016—
(a) in so far as they related to the conduct of statutory audits and the duties and powers of statutory auditors and audit firms in relation thereto for financial years commencing before that date, shall continue to apply to the conduct of statutory audits and the duties and powers of statutory auditors and audit firms in relation thereto for those financial years, and
(b) as regards each other matter provision for which was made by those Regulations before that date, shall continue to make such provision before that date.
Application
3. Save where otherwise provided (including provided by Regulation (EU) No 537/2014), these Regulations apply—
(a) in so far as they relate to the conduct of statutory audits and the duties and powers of statutory auditors and audit firms in relation thereto, to the conduct of statutory audits for financial years commencing on or after 17 June 2016, and
(b) as regards each other matter provision for which is made by these Regulations, on and from 17 June 2016.
Interpretation — general
4. (1) In these Regulations—
“2010 Audits Regulations” means the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 revoked by Regulation 2(1);
“AAPA report” means the annual audit programme and activity report referred to in Regulation 34(1);
“additional report to the audit committee” means the report submitted to the audit committee of a public-interest entity by the statutory auditor or audit firm carrying out statutory audits as set out in Article 11 of Regulation (EU) No 537/2014;
“affiliate”, in relation to a statutory audit firm, means any undertaking, regard-less of legal form, which is connected to the statutory audit firm by means of common ownership, control or management;
“approved”, in relation to a statutory auditor or audit firm, means approved under these Regulations;
“aptitude test” means an aptitude test referred to in Regulation 49(1);
“audit committee”, in relation to a public-interest entity, means the audit committee established for the entity under Regulation 115;
“Audit Directive” means Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 as amended by Directive 2014/56/EU of the European Parliament and of the Council of 16 April 2014 on statutory audits of annual accounts and consolidated accounts;
“audit working papers”, in relation to a statutory auditor or audit firm, means material (whether in the form of data stored on paper, film, electronic media or other media or otherwise) prepared by or for, or obtained by the statutory auditor or audit firm in connection with, the performance of the audit concerned, and includes—
(a) the record of audit procedures performed,
(b) relevant audit evidence obtained, and
(c) conclusions reached,
and a reference to audit working papers in relation to a Member State auditor or audit firm, or a third-country auditor or audit entity, shall be read accordingly;
“auditing standards” means the standards adopted by the Supervisory Authority under Regulation 77 in accordance with which statutory audits shall be carried out;
“Commission” means Commission of the European Union;
“counterpart authority” shall be construed in accordance with Regulation 116;
“disciplinary committee” has the same meaning as in section 900 of the Companies Act 2014 ;
“EEA Agreement” has the same meaning as in section 2 of the Companies Act 2014 ;
“EEA state” has the same meaning as in section 2 of the Companies Act 2014 ;
“enactment” has the same meaning as in section 2 of the Companies Act 2014 ;
“financial year”—
(a) in relation to the Supervisory Authority and an audited entity, shall be construed in accordance with section 288 of the Companies Act 2014 , and
(b) in relation to a statutory auditor or audit firm, means—
(i) subject to subparagraph (ii), any period in respect of which a profit and loss account or income statement is prepared by the auditor or audit firm for income tax or other business purposes, or
(ii) in the case of a statutory audit firm that is a company, any period in respect of which accounts under the Companies Act 2014 are prepared by the firm,
whether that period is of a year’s duration or not;
“firm” includes a body corporate;
“group auditor” means the statutory auditor or audit firm carrying out the statu-tory audit of the group accounts concerned;
“home Member State” means the Member State in which a statutory auditor or audit firm is approved in accordance with Article 3(1) of the Audit Directive;
“host Member State” means—
(a) a Member State in which a statutory auditor approved by his or her home Member State seeks to be also approved in accordance with Article 14 of the Audit Directive, or
(b) a Member State in which an audit firm approved by its home Member State seeks to be registered, or is registered, in accordance with Article 3a of the Audit Directive;
“key audit partner” means—
(a) the one or more statutory auditors designated by a statutory audit firm for a particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm,
(b) in the case of a group audit, at least the one or more statutory auditors designated by a statutory audit firm as being primarily responsible for carrying out the statutory audit at the level of the group and the one or more statutory auditors designated as being primarily responsible at the level of material subsidiaries, or
(c) the one or more statutory auditors who sign the audit report;
“medium-sized undertakings” means the undertakings referred to in Article 3(3) of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 20134 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC;
“Member State” means a Member State of the European Union or an EEA state;
“Member State audit firm” means an audit entity approved in accordance with the Audit Directive by the counterpart authority of another Member State to carry out audits of annual or group accounts as required by European Union law;
“Member State auditor” means an auditor approved in accordance with the Audit Directive by a counterpart authority of another Member State to carry out audits of annual or group accounts as required by European Union law;
“Minister” means the Minister for Jobs, Enterprise and Innovation;
“network”, in relation to a statutory auditor or audit firm, means the larger structure:
(a) which is aimed at cooperation and to which the statutory auditor or audit firm belongs;
(b) either—
(i) the clear objective of which is profit or cost-sharing, or
(ii) which shares—
(I) common ownership, control or management,
(II) common quality control policies and procedures,
(III) a common business strategy, or
(IV) the use of a common brand-name or a significant part of pro-fessional resources;
“public-interest entities” means—
(a) entities governed by the law of a Member State whose transferable securities are admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 20045 on markets in financial instruments amending Council Directives 85/611/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EC,
(b) credit institutions as defined in point 1 of Article 3(1) of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 20136 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (but excluding credit institutions referred to in Article 2 of Directive 2013/36/EU), and
(c) insurance undertakings within the meaning of Article 2(1) of Directive 91/674/EEC of 19 December 19917 on the annual accounts and consolidated accounts of insurance undertakings;
“public register” shall be construed in accordance with Regulation 84;
“recognised accountancy body” has the same meaning as in section 900 of the Companies Act 2014 ;
“Regulation (EU) No 537/2014” means Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC;
“small undertakings” means the undertakings referred to in Article 3(2) of Directive 2013/34/EU;
“standards” means those standards, as defined in section 900 of the Companies Act 2014 , of a prescribed accountancy body which is a recognised accountancy body;
“statutory audit” means an audit of individual accounts or group accounts in so far as—
(a) required by European Union law, or
(b) required by national law as regards small undertakings;
“statutory audit firm” means—
(a) an audit firm which is approved in accordance with these Regulations to carry out statutory audits, or
(b) an audit firm which is registered in accordance with Regulation 38 to carry out statutory audits;
“statutory auditor” means an individual who is approved in accordance with these Regulations to carry out statutory audits;
“statutory auditors’ report” means the report made under section 391 of the Companies Act 2014 in the form required by section 336 of that Act;
“Supervisory Authority” has the same meaning as in section 900 of the Companies Act 2014 ;
“third country” means a country or territory that is not a Member State or part of a Member State;
“third-country audit entity” means an entity, regardless of its legal form, which carries out audits of the annual or consolidated financial statements of a company incorporated in a third country, other than an entity which is registered as an audit firm in any Member State as a consequence of approval in accordance with Article 3 of the Audit Directive;
“third-country auditor” means an individual who carries out audits of the annual or consolidated financial statements of a company incorporated in a third country, other than an individual who is registered as a statutory auditor in any Member State as a consequence of approval in accordance with Articles 3 and 44 of the Audit Directive;
“third-country competent authority” means an authority in a third country with responsibilities, as respects auditors and audit entities in that country, equivalent to those of the Supervisory Authority.
(2) A reference in these Regulations to a registered third-country auditor or audit entity is a reference to a third-country auditor or audit entity registered under Chapter 2 of Part 11.
(3) A word or expression that is used in these Regulations and is also used in the Audit Directive shall have in these Regulations the same meaning as it has in the Audit Directive.
(4) The definition of “court” in section 2(1) of the Companies Act 2014 shall, with any necessary modifications, apply to references in these Regulations to a court as that definition applies to references to a court in that Act.
PART 2
AMENDMENT OF COMPANIES ACT 2014
Definition
5. In this Part, “Principal Act” means the Companies Act 2014 .
Amendment of section 2 of Principal Act
6. Section 2 of the Principal Act is amended, in subsection (1)—
(a) in the definition of “statutory auditor”, by the substitution of “2016 Audits Regulations, and includes a firm registered in accordance with Regulation 38 of those Regulations” for “European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 )”, and
(b) by the insertion of the following definition:
“‘2016 Audits Regulations’ means the European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016 (S.I. No. [-] of 2016);”.
Amendment of section 35 of Principal Act
7. Section 35 of the Principal Act is amended by the substitution of the following subsection for subsection (7):
“(7) An electronic filing agent shall not, by virtue of his or her authorisation under this section to act as such, be regarded as an officer or servant of the company concerned for the purposes of Regulation 93(2) or (3) of the 2016 Audits Regulations.”.
Amendment of section 322 of Principal Act
8. Section 322 of the Principal Act is amended, in subsection (4), by the substitution of “2016 Audits Regulations” for “European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 )”.
Amendment of section 336 of Principal Act
9. Section 336 of the Principal Act is amended—
(a) by the substitution of the following subsection for subsection (2):
“(2) The statutory auditors’ report shall be in writing and shall—
(a) include an introduction identifying the entity financial statements, and where appropriate, the group financial statements, that are the subject of the audit and the financial reporting framework that has been applied in their preparation,
(b) include a description of the scope of the audit identifying the auditing standards in accordance with which the audit was conducted, and
(c) identify the place of establishment of the statutory auditors who made the report.”,
(b) by the substitution of the following subsection for subsection (5):
“(5) The statutory auditors’ report shall—
(a) state whether, in their opinion, based on the work undertaken in the course of the audit—
(i) the information given in the directors’ report for the financial year for which statutory financial statements are prepared is consistent with the company’s statutory financial statements in respect of the financial year concerned, and
(ii) the directors’ report has been prepared in accordance with applicable legal requirements,
and
(b) state whether, based on their knowledge and understanding of the company and its environment obtained in the course of the audit, they have identified material misstatements in the directors’ report and, where they have so identified such misstatements, give an indication of the nature of each of such misstatements.”,
(c) by the insertion of the following subsection after subsection (5):
“(5A) The statutory auditors’ report shall provide a statement on any material uncertainty relating to events or conditions that may cast significant doubt about the entity’s ability to continue as a going concern.”,
and
(d) by the insertion of the following subsection after subsection (9):
“(9A)(a) Subject to paragraph (b), where the statutory audit was carried out by more than one statutory auditor, the statutory auditors shall agree on the results of the statutory audit and submit a joint report and opinion.
(b) In the case of disagreement, each statutory auditor shall submit his, her or its opinion in a separate paragraph of the audit report and shall state his, her or its reason for such disagreement.”.
Amendment of section 337 of Principal Act
10. Section 337 of the Principal Act is amended by the substitution of the following subsection for subsection (2):
“(2) Where the auditor is—
(a) a statutory auditor (within the meaning of the 2016 Audits Regulations), the report shall be signed by the statutory auditor (or, where more than one, each statutory auditor), or
(b) a statutory audit firm (within the meaning of the 2016 Audits Regulations), the report shall be signed by—
(i) the statutory auditor (or, where more than one, each statutory auditor) designated by the statutory audit firm for the particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm,
(ii) in the case of a group audit, at least the statutory auditor (or, where more than one, each statutory auditor) designated by the statutory audit firm as being primarily responsible for carrying out the statutory audit at the level of the group,
(iii) where more than one statutory audit firm has been simultaneously engaged, by the statutory auditors designated by the statutory audit firms for the particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm, or
(iv) in the case of a group audit, where more than one statutory audit firm has been simultaneously engaged, by the statutory auditors designated by the statutory audit firms for the particular audit engagement as being primarily responsible for carrying out the statutory audit at the level of the group,
in his or her own name, for and on behalf of the audit firm.”.
Amendment of section 380 of Principal Act
11. Section 380 of the Principal Act is amended, in subsection (5), by the substitution of the following paragraph for paragraph (iii):
“(iii) the person’s becoming disqualified from holding office by virtue of the 2016 Audits Regulations.”.
Amendment of section 390 of Principal Act
12. Section 390 of the Principal Act is amended by the substitution of “2016 Audits Regulations” for “European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 )”.
Amendment of section 394 of Principal Act
13. Section 394 of the Principal Act is amended, in paragraph (a), by the substitution of “2016 Audits Regulations” for “European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 )”.
Amendment of section 900 of Principal Act
14. Section 900 of the Principal Act is amended—
(a) in subsection (1)—
(i) by the deletion of the definition of “2010 Audits Regulations”,
(ii) in the definition of “recognised accountancy body”, by the substitution of “2016 Audits Regulations” for “2010 Audits Regulations”, and
(iii) by the insertion of the following definition:
“‘CEAOB’ has the meaning assigned to it by section 905(3)(c);”,
and
(b) by the insertion of the following subsection after subsection (2):
“(3) Regulation 4 (except the definitions of ‘standards’ and ‘statutory auditor’) of the 2016 Audits Regulations shall apply to the interpretation of this Chapter as that Regulation applies to the interpretation of those Regulations.”.
Amendment of section 904 of Principal Act
15. Section 904 of the Principal Act is amended, in subsection (1)—
(a) in paragraph (c), by the substitution of “IAS Regulation,” for “IAS Regulation, and”,
(b) in paragraph (d), by the substitution of “matters, and” for “matters.”, and
(c) by the insertion of the following paragraph after paragraph (d):
“(e) oversee statutory auditors and the conduct of statutory audits in accordance with the 2016 Audits Regulations and Regulation (EU) No 537/2014 and perform functions under those Regulations and that Regulation.”.
Amendment of section 905 of Principal Act
16. Section 905 of the Principal Act is amended—
(a) in subsection (2)—
(i) by the substitution of the following paragraph for paragraph (a):
“(a) grant recognition to bodies of accountants for the purposes of the 2016 Audits Regulations, Regulation (EU) No 537/2014 and section 1441,”,
(ii) by the substitution of the following paragraphs for paragraph (i):
“(i) monitor the effectiveness of provisions of the 2016 Audits Regulations and Regulation (EU) No 537/2014 relating to the independence of statutory auditors,
(ia) monitor developments in the market for audit services to public-interest entities as required by Regulation (EU) No 537/2014,”,
and
(iii) by the substitution of the following paragraphs for paragraph (n):
“(ma) adopt auditing standards for the purposes of the 2016 Audits Regulations and Regulation (EU) No 537/2014,
(n) oversee, in accordance with the 2016 Audits Regulations and Regulation (EU) No 537/2014, the performance of (and, where permitted by those Regulations, that Regulation or this Act, perform) the following functions with respect to statutory auditors:
(i) the approval and registration of statutory auditors (including the registration of Member State audit firms);
(ii) continuing education;
(iii) quality assurance systems;
(iv) investigative and administrative disciplinary systems,”,
and
(b) by the insertion of the following subsections after subsection (2):
“(3) The Supervisory Authority shall—
(a) cooperate with competent authorities in other Member States to achieve the convergence of the educational qualifications required for the approval of an individual as a statutory auditor,
(b) when engaging in such operation, take into account developments in auditing and the audit profession and, in particular, convergence that has already been achieved by the profession, and
(c) cooperate with the Committee of European Auditing Oversight Bodies (in this Chapter referred to as ‘CEAOB’) established under Article 30 of Regulation (EU) No 537/2014 and the competent authorities referred to in Article 20 of that Regulation in so far as such convergence relates to the statutory audit of public-interest entities.
(4) The Supervisory Authority shall—
(a) cooperate within the framework of the CEAOB with a view to achieving the convergence of the requirements of the aptitude test,
(b) enhance the transparency and predictability of those requirements, and
(c) cooperate with the CEAOB and with the competent authorities referred to in Article 20 of Regulation (EU) No 537/2014 in so far as such convergence relates to statutory audits of public-interest entities.
(5) With regard to the cooperation that the State is required to engage in by virtue of Article 33 of the Audit Directive, the Supervisory Authority is assigned responsibility in that behalf.
(6) For the purpose of discharging the responsibility referred to in subsection (5), the Supervisory Authority shall put in place appropriate mechanisms, including arrangements with competent authorities in other Member States.”.
Amendment of section 906 of Principal Act
17. Section 906 of the Principal Act is amended—
(a) in subsection (3), by the insertion of “(including its functions under Regulation (EU) No 537/2014)” after “its functions”, and
(b) in subsection (5)—
(i) in paragraph (a), by the substitution of “Chapter),” for “Chapter), or”,
(ii) in paragraph (b), by the substitution of “section 905(2)(m),” for “section 905(2)(m).”, and
(iii) by the insertion of the following paragraphs after paragraph (b):
“(c) provisions of the 2016 Audits Regulations or Regulation (EU) No 537/2014, or
(d) rules adopted by the Supervisory Authority under subsection (3) concerning matters that relate to its functions under section 905(2)(n).”.
Amendment of section 907 of Principal Act
18. Section 907 of the Principal Act is amended—
(a) in subsection (2), by the insertion of “subsections (2A) and (2B) and” after “Subject to”, and
(b) by the insertion of the following subsections after subsection (2):
“(2A) On and from 17 June 2016, the Minister shall not appoint a person under subsection (2) as a director unless the Minister is satisfied that the person is knowledgeable in areas relevant to the conduct of statutory audits as specified in Schedule 1 to the 2016 Audits Regulations.
(2B) On and from 17 June 2016, the Minister shall not appoint a person as a director under subsection (2) if the person—
(a) on the proposed date of his or her appointment as a director—
(i) carries out statutory audits,
(ii) holds voting rights in an audit firm,
(iii) is a director or member of an audit firm, or
(iv) is employed by or otherwise contracted with an audit firm,
or
(b) has, at any time during the 3 years immediately preceding the proposed date of his or her appointment as a director—
(i) carried out statutory audits,
(ii) held voting rights in an audit firm,
(iii) was a director or member of an audit firm, or
(iv) was employed by or otherwise contracted with an audit firm.”.
Amendment of section 918 of Principal Act
19. Section 918 of the Principal Act is amended—
(a) by the deletion of subsection (1), and
(b) by the substitution of the following subsection for subsection (3):
“(3) Money received by the Supervisory Authority under this section may be used only for the purposes of meeting expenses properly incurred by it in performing its functions as the competent authority under the 2016 Audits Regulations, Regulation (EU) No 537/2014 or this Act (including a function referred to in section 905(2)(n) that it may perform by virtue of Regulations 33(2) and 33(3)(b) of the 2016 Audit Regulations) in relation to statutory auditors of public-interest entities.”.
Amendment of section 919 of Principal Act
20. Section 919 of the Principal Act is amended—
(a) in subsection (4)—
(i) in paragraph (b), by the deletion of “and”,
(ii) in paragraph (c), by the substitution of “934(7), and” for “934(7).”, and
(iii) by the insertion of the following paragraph after paragraph (c):
“(d) any amounts paid to the Supervisory Authority under section 935C(1)(f)(i) or (ii).”,
and
(b) by the insertion of the following subsection after subsection (5):
“(6) Amounts referred to in subsection (4)(d) may only be used by the Supervisory Authority to fund the performance of its functions under section 935B.”.
Amendment of section 930 of Principal Act
21. Section 930 of the Principal Act is amended, in subsections (1) and (2), by the substitution of “2016 Audits Regulations” for “2010 Audits Regulations”.
Amendment of section 932 of Principal Act
22. Section 932 of the Principal Act is amended by the substitution of the following paragraph for paragraph (a):
“(a) the 2016 Audits Regulations, or”.
Supplemental provisions in relation to section 934 (including as concerns its relationship to provisions of 2016 Audits Regulations)
23. The Principal Act is amended by the substitution of the following section for section 935:
“935.(1) For the avoidance of doubt, the following matters may, without prejudice to the generality of the provisions of section 934, be the subject of an investigation by the Supervisory Authority under that section, namely matters—
(a) in relation to which a recognised accountancy body has decided not to withdraw a person’s approval under the 2016 Audits Regulations as a statutory auditor or audit firm, or
(b) which either—
(i) have not been considered by a recognised accountancy body as grounds for the withdrawal of a person’s approval under those Regulations as a statutory auditor or audit firm, or
(ii) having been considered by it as such grounds, are not considered by it to disclose a prima facie case for proceeding further.
(2) Where—
(a) those matters are the subject of such an investigation by the Supervisory Authority, and
(b) a breach of standards is found by the Supervisory Authority,
section 934(7) shall be read as requiring or enabling (depending on whether the breach of standards found falls within Part 4 or Chapter 2 of Part 8 of the 2016 Audits Regulations) the Supervisory Authority to withdraw the approval under those Regulations of the person concerned as a statutory auditor or audit firm.
(3) Where such an approval is withdrawn by the Supervisory Authority, the following provisions of the 2016 Audits Regulations shall, with any necessary modifications, apply (and not subsections (10) and (11) of section 934) to that withdrawal, namely Regulation 52 (14) to (17) (or, as the case may be, Regulation 53(14) to (17)) and Regulation 54.
(4) Subsection (2) does not prejudice the imposition, in the circumstances concerned, by the Supervisory Authority of another sanction referred to in section 934(7) in addition to a withdrawal of approval (where withdrawal of the approval is mandatory under the 2016 Audits Regulations) or in lieu of a withdrawal of approval (where such withdrawal is not so mandatory).
(5) For the purposes of section 934, ‘member’, in addition to the meaning given to that expression by section 900(1), includes, in relation to a prescribed accountancy body that is a recognised accountancy body, an individual or firm who or which, though not a member of the recognised accountancy body, is an individual or firm in relation to whom that body may exercise powers under the 2016 Audits Regulations.”.
Amendment of Principal Act
24. The Principal Act is amended by the insertion of the following sections after section 935:
“Interpretation of sections 935A to 935D and 941A
935A. (1) In this section and sections 935B to 935D and 941A—
‘client’ includes an individual, a body corporate, an unincorporated body of persons and a partnership;
‘publication sanction’, in relation to a statutory auditor or relevant director, means the publication in accordance with section 935D(1) of the auditor’s or director’s particulars referred to in that section together with the other related particulars referred to in that section;
‘relevant contravention’, in relation to a statutory auditor, means a contravention by the statutory auditor of a provision of—
(a) the 2016 Audits Regulations,
(b) Regulation (EU) No 537/2014, or
(c) section 336, 337 or 935C(3);
‘relevant decision’—
(a) means a decision under section 935B(6) by the Supervisory Authority that a statutory auditor has committed a relevant contravention, and
(b) if, in consequence of that decision—
(i) the Supervisory Authority decides under that section to impose a relevant sanction on the auditor, or
(ii) the Director of Corporate Enforcement decides under that section to impose a relevant sanction on a relevant director,
includes the decision to impose that sanction;
‘relevant director’ means a director or former director of a public-interest entity;
‘relevant person’, in relation to an investigation of a statutory auditor, means—
(a) the statutory auditor,
(b) if the statutory auditor is an individual, a person who is or was an employee or agent of the statutory auditor,
(c) if the statutory auditor is an audit firm, a person who is or was an officer, member, partner, employee or agent of the statutory auditor,
(d) a client or former client of the statutory auditor,
(e) if the client or former client is a body corporate, a person who is or was an officer, employee or agent of the client or former client, or
(f) any person whom the Supervisory Authority reasonably believes has information or documents relating to the investigation other than information or documents the disclosure of which is prohibited or restricted by law;
‘relevant sanction’—
(a) in relation to a statutory auditor, means a sanction referred to in section 935C(1)(a)(i), (b), (c), (d) or (f)(i), and
(b) in relation to a relevant director, means a sanction referred to in section 935C(1)(a)(ii), (e) or (f)(ii);
‘statutory auditor’ includes a former statutory auditor.
(2) A reference in this section and sections 935B to 935D and 941A to the imposition of a relevant sanction on a statutory auditor or relevant director includes a reference to the taking of an administrative measure against the statutory auditor or relevant director.
Investigation of possible relevant contraventions
935B. (1) If, in the Supervisory Authority’s opinion, Regulation 33(2) or (3) of the 2016 Audits Regulations permits it to undertake an investigation into a possible relevant contravention committed by a statutory auditor, the Authority may do so—
(a) following a complaint, or
(b) on its own initiative.
(2) For the purposes of an investigation under this section, the Supervisory Authority may require a relevant person to do one or more of the following:
(a) produce to the Supervisory Authority all books or documents relating to the investigation that are in the relevant person’s possession or control;
(b) attend before the Supervisory Authority;
(c) give the Supervisory Authority any other assistance in connection with the investigation that the relevant person is reasonably able to give.
(3) For the purposes of an investigation under this section, the Supervisory Authority may—
(a) examine on oath, either by word of mouth or on interrogatories in writing, a relevant person,
(b) administer oaths for the purposes of the examination, and
(c) record, in writing, the answers of a person so examined and require that person to sign them.
(4) The Supervisory Authority may certify the refusal or failure to the court if a relevant person refuses or fails to do one or more of the following:
(a) produce to the Supervisory Authority any book or document that it is the person’s duty under this section to produce;
(b) attend before the Supervisory Authority when required to do so under this section;
(c) answer a question put to the person by the Supervisory Authority with respect to the matter under investigation.
(5) On receiving a certificate of refusal or failure concerning a relevant person, the court may enquire into the case and after hearing any evidence that may be adduced, may do one or more of the following:
(a) direct that the relevant person attend or re-attend before the Supervisory Authority or produce particular books or documents or answer particular questions put to him or her by the Supervisory Authority;
(b) direct that the relevant person need not produce particular books or documents or answer particular questions put to him or her by the Supervisory Authority;
(c) make any other ancillary or consequential order or give any other direction that the court thinks fit.
(6)(a) Subject to subsection (12) and section 935C(2), if the Supervisory Authority finds that the statutory auditor has committed a relevant contravention, the Supervisory Authority may impose such relevant sanction on the auditor as the Supervisory Authority considers appropriate in all the relevant circumstances.
(b) Subject to subsection (12) and section 935C(2), if the Supervisory Authority finds that the statutory auditor has committed a relevant contravention, and the Director of Corporate Enforcement finds that a relevant director engaged in conduct giving rise (whether in whole or in part) to that contravention, the Director of Corporate Enforcement may impose such relevant sanction on the relevant director as the Director of Corporate Enforcement considers appropriate in all the relevant circumstances.
(7) Subject to subsection (8), the statutory auditor or relevant director who is the subject of a relevant decision made under subsection (6) may appeal to the court against the decision.
(8) An appeal under subsection (7) shall be brought within 3 months after the date on which the statutory auditor or relevant director concerned was notified of that decision by—
(a) in so far as the relevant decision falls within paragraph (a) or (b)(i) of the definition of ‘relevant decision’, the Supervisory Authority, and
(b) in so far as the relevant decision falls within paragraph (b)(ii) of the definition of ‘relevant decision’, the Director of Corporate Enforcement.
(9) The production of any books or documents under this section by a person who claims a lien on them does not prejudice the lien.
(10) Any information produced or answer given by a relevant person in compliance with a requirement under this section may be used in evidence against the relevant person in any proceedings whatsoever, save proceedings for an offence (other than perjury in respect of such an answer).
(11) A finding or relevant decision of the Supervisory Authority or Director of Corporate Enforcement under this section is not a bar to any civil or criminal proceedings against the statutory auditor or relevant director who is the subject of the finding or relevant decision.
(12) A relevant decision, in so far as it relates to the imposition of a relevant sanction on a statutory auditor or relevant director, shall not take effect unless the relevant decision is confirmed by the court under section 941(2)(a) or 941A(2).
(13) Subsections (14) and (15) apply if—
(a) the Supervisory Authority finds that the statutory auditor has committed a relevant contravention, and
(b) that contravention relates, whether directly or indirectly, to the audit of a public-interest entity.
(14) The Supervisory Authority shall, as soon as is practicable, give the Director of Corporate Enforcement—
(a) particulars of the statutory auditor,
(b) particulars of the relevant contravention, and
(c) particulars of the public-interest entity.
(15) The Supervisory Authority shall, in addition to complying with subsection (14), give the Director of Corporate Enforcement such information and documents and assistance as the Director may reasonably require for the Director to decide whether or not—
(a) to investigate a relevant director, or
(b) to impose, under subsection (6)(b), a relevant sanction on a relevant director,
or both.
Sanctions which Supervisory Authority or Director of Corporate Enforcement may impose
935C. (1) Subject to section 935B(6) and (12) and subsection (2), the Supervisory Authority may impose on a statutory auditor, and the Director of Corporate Enforcement may impose on a relevant director, one or more of the following sanctions in relation to a relevant contravention committed by the statutory auditor:
(a) a direction—
(i) by the Supervisory Authority to the statutory auditor that the auditor cease the conduct giving rise (whether in whole or in part) to the contravention and abstain from any repetition of that conduct, or
(ii) a direction by the Director of Corporate Enforcement to the relevant director that the director cease the conduct giving rise (whether in whole or in part) to the contravention and abstain from any repetition of that conduct;
(b) a direction by the Supervisory Authority to the statutory auditor (being any one or more of a statutory auditor, audit firm or key audit partner) banning him, her or it, for the period specified in the direction (being a period of not more than 3 years’ duration), from carrying out statutory audits or signing statutory auditors’ reports, or both;
(c) a declaration by the Supervisory Authority that the statutory auditors’ report concerned does not meet the requirements of section 336 or 337 or, where applicable, Article 10 of Regulation (EU) No 537/2014;
(d) if the statutory auditor is an audit firm, a direction by the Supervisory Authority to an officer, member or partner of the audit firm banning the officer, member or partner, for the period specified in the direction (being a period of not more than 3 years’ duration), from performing functions in audit firms or public-interest entities;
(e) a direction by the Director of Corporate Enforcement to the relevant director banning the director, for the period specified in the direction (being a period of not more than 3 years’ duration), from performing functions in audit firms or public-interest entities;
(f) a direction—
(i) subject to paragraphs (6), (8), (10) and (12), by the Supervisory Authority to the statutory auditor to pay, as an administrative pecuniary sanction, a sum, as specified in the direction but not exceeding €100,000 in the case of a statutory auditor who is an individual or, in the case of a statutory auditor which is an audit firm, not exceeding €500,000, to the Supervisory Authority, or
(ii) subject to paragraphs (7), (9), (11) and (13), by the Director of Corporate Enforcement to the relevant director to pay, as an administrative pecuniary sanction, a sum, as specified in the direction but not exceeding €100,000, to the Supervisory Authority.
(2) The relevant circumstances referred to in section 935B(6)(a) or (b) include, where appropriate, one or more of the following:
(a) the gravity and duration of the relevant contravention;
(b) the degree of responsibility of the statutory auditor or relevant director;
(c) the financial strength of the statutory auditor or relevant director (for example, as indicated by the total turnover of the statutory auditor if the auditor is not an individual, or, in the case of a statutory auditor who is an individual or in the case of the relevant director, the annual income of the individual or relevant director);
(d) the amount of profits gained or losses avoided by the statutory auditor or relevant director in consequence of the relevant contravention, in so far as they can be determined;
(e) the level of cooperation of the statutory auditor or relevant director with the Supervisory Authority;
(f) previous relevant contraventions committed by the statutory auditor or previous impositions of relevant sanctions on the relevant director.
(3) A person the subject of a direction under subsection (1) shall comply with the direction.
(4) The Supervisory Authority shall immediately communicate to the CEAOB particulars of—
(a) any direction given by the Authority under subsection (1)(b) or (d), and
(b) any direction given by the Director of Corporate Enforcement under subsection (1)(e).
(5) The Supervisory Authority shall, as soon as may be after the end of a year, give to the CEAOB aggregated information in relation to—
(a) all relevant sanctions imposed by it or the Director of Corporate Enforcement during the year in accordance with the 2016 Audits Regulations and this Act, and
(b) all publication sanctions imposed by it during the year in accordance with the 2016 Audits Regulations and this Act.
(6) If the Supervisory Authority decides to impose an administrative pecuniary sanction on a statutory auditor under subsection (1)(f)(i), the Supervisory Authority may not impose an amount—
(a) that would be likely to cause the statutory auditor to cease business, or
(b) that would, if the statutory auditor is an individual, be likely to cause the statutory auditor to be adjudicated bankrupt.
(7) If the Director of Corporate Enforcement decides to impose an administrative pecuniary sanction on a relevant director under subsection (1)(f)(ii), the Director of Corporate Enforcement may not impose an amount that would be likely to cause the relevant director to be adjudicated bankrupt.
(8) If the conduct engaged in by the statutory auditor has given rise (whether in whole or in part) to 2 or more relevant contraventions, the Supervisory Authority may not impose more than one administrative pecuniary sanction under subsection (1)(f)(i) on the statutory auditor in respect of the same conduct.
(9) If the conduct engaged in by the relevant director has given rise (whether in whole or in part) to 2 or more relevant contraventions, the Director of Corporate Enforcement may not impose more than one administrative pecuniary sanction under subsection (1)(f)(ii) on the relevant director in respect of the same conduct.
(10) If the Supervisory Authority imposes an administrative pecuniary sanction under subsection (1)(f)(i) on a statutory auditor and the conduct engaged in by the statutory auditor that has given rise (whether in whole or in part) to the relevant contravention is an offence under the law of the State, the statutory auditor shall not be liable to be prosecuted or punished for the offence under that law.
(11) If the Director of Corporate Enforcement imposes an administrative pecuniary sanction under subsection (1)(f)(ii) on a relevant director and the conduct engaged in by the relevant director that has given rise (whether in whole or in part) to the relevant contravention is an offence under the law of the State, the relevant director shall not be liable to be prosecuted or punished for the offence under that law.
(12) The Supervisory Authority may not impose an administrative pecuniary sanction under subsection (1)(f)(i) on a statutory auditor if—
(a) the statutory auditor has been charged with having committed an offence under a law of the State and has either been found guilty or not guilty of having committed the offence, and
(b) the offence involves the conduct engaged in by the statutory auditor that has given rise (whether in whole or in part) to the relevant contravention.
(13) The Director of Corporate Enforcement may not impose an administrative pecuniary sanction under subsection (1)(f)(ii) on a relevant director if—
(a) the relevant director has been charged with having committed an offence under a law of the State and has either been found guilty or not guilty of having committed the offence, and
(b) the offence involves the conduct engaged in by the relevant director that has given rise (whether in whole or in part) to the relevant contravention.
Publication of relevant sanction imposed, etc
935D. (1) Subject to subsections (2) and (3), the Supervisory Authority shall, in so far as a relevant decision imposes a relevant sanction on a statutory auditor or relevant director, as soon as is practicable after—
(a) that decision has been confirmed by the court under section 941(2)(a) or 941A(2), or
(b) a decision of the court under section 941(2)(b) has been made to impose a different relevant sanction on the statutory auditor or relevant director,
publish on its website particulars of the relevant contravention for which the relevant sanction was imposed, particulars of the relevant sanction imposed and particulars of the statutory auditor or relevant director on whom the relevant sanction was imposed.
(2) Subject to subsection (4), if there is an appeal from the court from a confirmation referred to in subsection (1)(a), or a decision referred to in subsection (1)(b), the Supervisory Authority shall from time to time, as it considers appropriate, publish particulars on its website of the status or outcome of the appeal.
(3) The Supervisory Authority shall publish particulars referred to in subsection (1) on an anonymous basis on its website in any one or more of the following circumstances:
(a) the Supervisory Authority, following an assessment of the proportionality of the publication of those particulars in accordance with subsection (1) in so far as personal data is concerned, is of the opinion that, in relation to the relevant sanction imposed on a statutory auditor who is an individual or on a relevant director, such publication would be disproportionate;
(b) the Supervisory Authority is of the opinion that the publication of those particulars in accordance with subsection (1) would jeopardize the stability of financial markets or an ongoing criminal investigation;
(c) the Supervisory Authority is of the opinion that the publication of those particulars in accordance with subsection (1) would cause disproportionate damage to the statutory auditor or relevant director concerned.
(4) Subsection (2) shall not apply in any case where subsection (3) applies.
(5) The Supervisory Authority shall ensure that particulars published on its website in accordance with subsection (1) or (2) remain on its website for at least 5 years.”.
Amendment of section 938 of Principal Act
25. Section 938 of the Principal Act is amended—
(a) in subsection (1), by the substitution of “, 935 or 935B” for “or 935”,
(b) in subsection (3), by the insertion of “, 935B” after “935”, and
(c) in subsection (4), by the substitution of “, 935 and 935B” for “and 935”.
Amendment of section 941 of Principal Act
26. Section 941 of the Principal Act is amended, in subsection (1), by the substitution of “, 934(10) or 935B(7)” for “or section 934(10)”.
Application to court to confirm decision to impose relevant sanction
27. The Principal Act is amended by the insertion of the following section after section 941:
“941A.(1) Where a statutory auditor or relevant director does not, within the period allowed under section 935B(8), appeal to the court against a relevant decision made by the Supervisory Authority or Director of Corporate Enforcement to impose a relevant sanction on the auditor or director, the Supervisory Authority or Director of Corporate Enforcement, as appropriate, shall, as soon as is practicable after the expiration of that period and on notice to the auditor or director, make an application in a summary manner to the court for confirmation of the relevant decision.
(2) The court shall, on the hearing of an application under subsection (1), confirm the relevant decision the subject of the application unless the court considers that there is good reason not to do so.”.
Amendment of section 1097 of Principal Act
28. Section 1097 of the Principal Act is amended—
(a) by the substitution of “Regulation 115” for “Regulation 91”, and
(b) by the substitution of “2016 Audits Regulations” for “European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010”.
Amendment of section 1305 of Principal Act
29. Section 1305 of the Principal Act is amended, in subsection (3), in paragraph (b), by the substitution of “the Audit Directive (within the meaning of the 2016 Audits Regulations)” for “Directive 2006/43/EC”.
Amendment of section 1441 of Principal Act
30. Section 1441 of the Principal Act is amended, in subsection (3), by the substitution of the following paragraph for paragraph (f):
“(f) a person who is disqualified under Regulation 93 of the 2016 Audits Regulations for appointment as statutory auditor of a company that is a subsidiary or holding company of the society,”.
Amendment of section 1448 of Principal Act
31. Section 1448 of the Principal Act is amended—
(a) by the substitution of the following subsection for subsection (1):
“(1) In this section—
‘third-country audit entity’ has the same meaning as in Regulation 4 of the 2016 Audits Regulations;
‘third-country auditor’ has the same meaning as in Regulation 4 of the 2016 Audits Regulations.”,
and
(b) in subsection (2)—
(i) by the substitution of “sections 935A to 941A shall apply (with such modification to those sections as are specified in the regulations)” for “Chapter 3 of Part 8 of the 2010 Audits Regulations”, and
(ii) by the substitution of “Regulation 135(3) of the 2016 Audits Regulations” for “Regulation 113(2) of the 2010 Audits Regulations”.
PART 3
DESIGNATION OF COMPETENT AUTHORITY AND ASSIGNMENT OF FUNCTIONS
Designation of competent authority
32. (1) Subject to paragraph (2), the Supervisory Authority is designated as the competent authority for the oversight of statutory auditors and audit firms in accordance with the Audit Directive and Regulation (EU) No 537/2014.
(2) Subject to paragraph (4), the Director of Corporate Enforcement is designated as the competent authority with the power to take the administrative measures or impose the sanctions referred to in Article 30 of the Audit Directive (except the sanction referred to in Article 30a (1)(b) of the Audit Directive) in so far as such administrative measures are taken against, or such sanctions are imposed on, directors of public-interest entities.
(3) The Supervisory Authority is designated as the competent authority for the purposes of—
(a) public oversight, quality assurance, investigations and penalties of third-country auditors and audit entities registered under Regulation 135(1), and
(b) public oversight, investigations and penalties of third-country auditors and audit entities referred to in Regulation 135(7), (8) and (9).
(4)(a) Subject to subparagraph (b), to the extent that the Director of Corporate Enforcement is a competent authority by virtue of paragraph (2), a reference in these Regulations (other than this Regulation) to the Supervisory Authority shall include a reference to the Director of Corporate Enforcement.
(b) The Supervisory Authority shall perform the functions under these Regulations that would, but for this paragraph, otherwise fall to be performed by the Director of Corporate Enforcement by virtue of being the competent authority referred to in subparagraph (a).
(c) The Director of Corporate Enforcement shall cooperate with the Supervisory Authority so as to enable the Supervisory Authority to perform the functions referred to in subparagraph (b).
(5) The Supervisory Authority shall, as soon as is practicable on or after 17 June 2016, publish on its website information on the designation of competent authorities effected by this Regulation between the Supervisory Authority and the Director of Corporate Enforcement.
Assignment of functions
33. (1) Subject to paragraph (3), the recognised accountancy bodies shall perform the functions referred to in section 905(2)(n) of the Companies Act 2014 in accordance with these Regulations.
(2) Subject to Regulation 32(2), the Supervisory Authority shall perform the functions referred to in points (a), (b) and (c) of Article 24(1) of Regulation (EU) No 537/2014.
(3) The Supervisory Authority may perform a function (whether in whole or in part or in a particular instance) referred to in section 905(2)(n) of the Companies Act 2014 instead of the recognised accountancy body concerned if—
(a) the Supervisory Authority—
(i) is satisfied that the body has failed to perform that function in the circumstances concerned, and
(ii) is of the opinion that it is in the public interest that it perform that function in those circumstances,
or
(b) without prejudice to the generality of subparagraph (a), in the case of investigative and administrative disciplinary systems referred to at subparagraph (iv) of that section, the Supervisory Authority is of the opinion that it is in the public interest that it perform that function in the circumstances concerned.
(4) The costs incurred by the Supervisory Authority in performing, pursuant to paragraph (3), a function referred to in section 905(2)(n) of the Companies Act 2014 instead of the recognised accountancy body concerned shall be defrayed by that body except where money referred to in section 918(3) of the Companies Act 2014 may be used, in accordance with that section 918(3), to defray such costs; for the purposes of this paragraph, in default of payment of the amount of such costs to the Supervisory Authority, the Authority may recover that amount as a simple contract debt in any court of competent jurisdiction.
(5) The Supervisory Authority shall, as soon as is practicable on or after 17 June 2016, publish on its website information on the assignment of functions effected by this Regulation between the Supervisory Authority and the recognised accountancy bodies.
Annual audit programme and activity report
34. (1) The Supervisory Authority shall, not later than 4 months after the end of each financial year, prepare a report (in these Regulations referred to as the “annual audit programme and activity report”) in accordance with this Regulation on, inter alia, its oversight functions referred to in Regulation 32 performed during that year.
(2) The AAPA report shall contain the following information:
(a) an activity report on the functions performed by the recognised accountancy bodies during the financial year to which the AAPA report relates;
(b) a work programme concerning the oversight functions referred to in Regulation 32 that the Supervisory Authority proposes to perform during the financial year immediately following the financial year to which the AAPA report relates;
(c) an activity report regarding the functions of the Supervisory Authority under Regulation (EU) No 537/2014 during the financial year to which the AAPA report relates;
(d) a work programme regarding the functions of the Supervisory Authority under Regulation (EU) No 537/2014 that the Supervisory Authority proposes to perform during the financial year immediately following the financial year to which the AAPA report relates;
(e) a report for the financial year to which the AAPA report relates on the overall results of the quality assurance system, including—
(i) information on recommendations issued, follow-up on the recommendations, supervisory measures taken and relevant sanctions and publication sanctions (within the meaning of section 935A of the Companies Act 2014 ) imposed, and
(ii) quantitative information and other key performance information on financial resources and staffing, and the efficiency and effectiveness of the quality assurance system.
(3) The AAPA report may form part of the annual report required under section 928 of the Companies Act 2014 in respect of the same financial year to which the AAPA report relates.
(4) The Supervisory Authority shall cause the AAPA report to be published on its website not later than 1 July of the year immediately following the financial year to which the report relates.
Operation of certain provisions with regard to particular recognised accountancy bodies
35. (1) This Regulation applies where the provision referred to in paragraph (2), (3), (4) or (5) uses the expression “recognised accountancy body” without qualification and that provision does not, by its express terms, itself indicate which recognised accountancy body is being referred to.
(2) A provision of these Regulations that confers a function on a recognised accountancy body in relation to a statutory auditor or audit firm shall be read as conferring that function—
(a) in the case of a statutory auditor who is not a member of a statutory audit firm, on the recognised accountancy body of which the statutory auditor is a member,
(b) in the case of statutory auditor who is a member of a statutory audit firm, on the recognised accountancy body of which the statutory audit firm is a member, and
(c) in the case of a statutory audit firm, on the recognised accountancy body of which the statutory audit firm is a member.
(3) With regard to the function conferred by Regulation 37 on a recognised accountancy body in relation to an individual or firm, paragraph (2) applies as if, for each reference in that paragraph to a statutory auditor or audit firm (as the case may be), there were substituted a reference to the individual or firm, as appropriate.
(4) A provision of these Regulations requiring that an act is to be done, or enabling an act to be done, by a person (other than a person referred to in paragraph (5)(b)) in relation to a recognised accountancy body shall be read as requiring or enabling it to be done by the person in relation to—
(a) if the person is not a member of a statutory audit firm, the recognised accountancy body of which the person is a member,
(b) if the person is a member of a statutory audit firm, the recognised accountancy body of which the statutory audit firm is a member, and
(c) if the person is a statutory audit firm, the recognised accountancy body of which the statutory audit firm is a member.
(5) Paragraph (6) applies in the case—
(a) of a provision of the kind referred to in paragraph (2), (3) or (4), and
(b) where the provision falls to be applied to a Member State auditor, a Member State audit firm, a third-country auditor or any other person who or which is not a member of a recognised accountancy body (or, as the case may be, the firm of which the person is a member is not a member of a recognised accountancy body).
(6) The recognised accountancy body that shall perform the function concerned or, as the case may be, in relation to which the act concerned is required or enabled to be done shall be determined—
(a) by reference to arrangements, in writing entered into by the recognised accountancy bodies amongst themselves for the purpose (which arrangements those bodies are empowered by this paragraph to enter into), or
(b) in default of—
(i) such arrangements being entered into, or
(ii) the provision of such arrangments dealing with the particular case falling to be determined,
by the Supervisory Authority.
(7) On a determination being made by the Supervisory Authority for the purposes of paragraph (6)(b), a direction in writing, reflecting the terms of the determination, shall be given by it (which direction the Supervisory Authority is empowered by this paragraph to give).
(8) Arrangements shall not be entered into under paragraph (6)(a) by the recognised accountancy bodies save after consultation by them with the Supervisory Authority.
(9) Subject to paragraph (10), in consequence of the operation of this Regulation, the function of withdrawal of a particular approval of a statutory auditor or audit firm falls to be discharged by a recognised accountancy body (in this Regulation referred to as the “first-mentioned accountancy body”) that is different from the recognised accountancy body (in this Regulation referred to as the “second-mentioned accountancy body”) that granted the approval-
(a) the first-mentioned accountancy body shall notify in writing the second-mentioned accountancy body of the proposal by it to withdraw the approval, and
(b) the second-mentioned accountancy body shall provide such assistance by way of provision of information or clarification of any matter, to the first-mentioned accountancy body as the latter considers it may require so as to inform itself better on any issue bearing on the performance of the function of withdrawal.
(10) The procedures adopted for the purposes of paragraph (9) by the first-mentioned accountancy body and the second-mentioned accountancy body shall be such as will—
(a) avoid any unnecessary delay in the performance of the function of withdrawal, and
(b) respect the requirements of procedural fairness as concerns the auditor or audit firm concerned being able to answer any part of the case made against him, her or it that is informed by those procedures being employed.
(11) In a case falling within paragraphs (9) and (10), if the approval concerned is withdrawn, the first-mentioned accountancy body, in addition to making the notifications required by Regulation 55 and (where it applies) Regulation 56, shall notify the second-mentioned accountancy body of the withdrawal of approval.
Conflicts of interest to be avoided
36. (1) The persons to whom this paragraph applies shall organise themselves in such a manner so that conflicts of interest are avoided in the performance of their respective functions under these Regulations.
(2) Paragraph (1) applies to—
(a) the Supervisory Authority,
(b) the Director of Corporate Enforcement,
(c) the Registrar of Companies, and
(d) the recognised accountancy bodies.
PART 4
APPROVAL OF STATUTORY AUDITORS AND AUDIT FIRMS, PROHIBITION ON UNAPPROVED PERSONS ACTING AS AUDITOR, ETC.
Chapter 1
Approval of Statutory Auditors and Audit Firms
Applications for approval, general principle as to good repute, etc.
37. (1) A recognised accountancy body may, on application made to it by an individual or firm, approve, under these Regulations, the applicant as a statutory auditor or audit firm.
(2) A recognised accountancy body may, on foot of an application under paragraph (1), grant approval under these Regulations only to—
(a) individuals, or
(b) firms,
who or which are of good repute.
(3) A recognised accountancy body may, on application made to it by a third-country auditor and in accordance with Regulation 134, approve, under these Regulations, the applicant as a statutory auditor.
(4) Paragraph (5) applies in the case of an application under paragraph (1)—
(a) by a firm that is a Member State audit firm in the circumstances where it is not seeking registration in accordance with Regulation 38, or
(b) by a Member State auditor.
(5) For the purposes of this Regulation, the fact that the applicant is a Member State audit firm or Member State auditor shall constitute conclusive evidence that the applicant is of good repute unless, arising out of the cooperation referred to in paragraph (6), a counterpart authority in the Member State where the applicant is approved as a statutory audit firm or auditor has notified the Supervisory Authority or a recognised accountancy body that the counterpart authority has reasonable grounds for believing that the good repute of the audit firm or auditor has been seriously compromised.
(6) The cooperation referred to in paragraph (5) is the cooperation that the State is required to engage in by virtue of Chapter VIII of the Audit Directive.
(7) On approving a person as a statutory auditor or audit firm, the recognised accountancy body shall assign an individual identification number to the person and a record in writing shall be maintained by the recognised accountancy body of all such numbers assigned by it under this paragraph.
Basis on which audit firms approved in other Member States may carry out audits in State
38. (1) An audit firm which is approved in another Member State shall be entitled to carry out statutory audits in the State if the key audit partner who carries out those audits on behalf of the audit firm, both at the time of registration (in accordance with paragraph (2)) and at all times during the registration of the firm, complies with the requirements of Regulations 37 to 45.
(2)(a) An audit firm that wishes to carry out statutory audits in the State where the State is not its home Member State shall, before carrying out any such audit, register with the recognised accountancy body with which the key audit partner referred to in paragraph (1) is approved.
(b) The recognised accountancy body shall ensure that an audit firm which complies with paragraph (1) is registered in accordance with the requirements of Part 6 and Schedule 2.
(3)(a) The recognised accountancy body shall register the audit firm if it is satisfied that the audit firm is registered with the counterpart authority in the audit firm’s home Member State.
(b) Where the recognised accountancy body intends to rely on a certificate, issued by the counterpart authority in the home Member State, attesting to the registration of the audit firm in the home Member State, the recognised accountancy body may require that such certificate be issued on a date falling within the 3 months immediately preceding that date on which the recognised accountancy body is given that certificate.
(4) On registering the audit firm, the recognised accountancy body shall assign an individual identification number to the firm and a record in writing shall be maintained by the recognised accountancy body of all such numbers assigned by it under this paragraph.
(5) The recognised accountancy body shall inform the counterpart authority in the home Member State of the registration of the audit firm.
(6) Where the Supervisory Authority or a recognised accountancy body receives a notification from another Member State that an audit firm whose home Member State is the State has registered with the counterpart authority in the host Member State, the Supervisory Authority or recognised accountancy body (as the case may be) shall ensure that the registration is recorded in the public register.
Restriction as to persons who may carry out statutory audits
39. Statutory audits shall be carried out only by—
(a) auditors or audit firms that are approved under these Regulations, or
(b) audit firms registered in accordance with Regulation 38.
Restriction on acting as statutory auditor
40. A person shall not—
(a) act as a statutory auditor,
(b) describe himself or herself as a statutory auditor, or
(c) so hold himself or herself out as to indicate, or be reasonably understood to indicate, that he or she is a statutory auditor,
unless he or she has been approved in accordance with these Regulations.
Restriction on acting as statutory audit firm
41. A firm shall not—
(a) act as a statutory audit firm,
(b) describe itself as a statutory audit firm, or
(c) so hold itself out as to indicate, or be reasonably understood to indicate, that it is a statutory audit firm,
unless it has been approved in accordance with these Regulations or registered in accordance with Regulation 38.
Offence for contravening Regulation 39, 40 or 41
42. A person who contravenes Regulation 39, 40 or 41 shall be guilty of an offence and shall be liable—
(a) on a summary conviction, to a class A fine, or
(b) on conviction on indictment, to a fine not exceeding €50,000 or imprisonment for a term not exceeding 12 months or both.
Conditions for approval as statutory auditor
43. A person shall not be eligible for approval as a statutory auditor unless he or she is—
(a) a member of a recognised accountancy body and holds an appropriate qualification as referred to in Regulation 45,
(b) a Member State auditor and complies with Regulation 49, or
(c) a third-country auditor and complies with Regulations 49 and 134.
Transitional provisions
44. (1) Subject to Regulations 52 and 143, a deemed approval of a person as a statutory auditor referred to in Regulation 25(2) of the 2010 Audits Regulations that was in force immediately before 17 June 2016 shall continue in force under these Regulations as if it were a deemed approval of that person as a statutory auditor under these Regulations.
(2) Subject to Regulations 53 and 143, a deemed approval of a firm as a statutory audit firm under Regulation 27(4) of the 2010 Audits Regulations that was in force immediately before 17 June 2016 shall continue in force under these Regulations as if it were a deemed approval of that firm as a statutory audit firm under these Regulations.
Appropriate qualification for purpose of Regulation 43(a)
45. (1) An individual holds an appropriate qualification, as required by Regulation 43(a), if he or she holds a qualification granted by a recognised accountancy body whose standards relating to training and qualifications for the approval of a person as a statutory auditor are not less than those specified in Schedule 1.
(2) In paragraph (1), “qualification” means a qualification to undertake an audit of individual accounts and group accounts in so far as required by European Union law.
Conditions for approval as statutory audit firm
46. (1) In this Regulation, references to a firm include references to a Member State audit firm if the firm is not seeking registration in accordance with Regulation 38.
(2) A firm shall not be eligible for approval as a statutory audit firm unless—
(a) the individuals who carry out statutory audits in the State on behalf of the firm are approved as statutory auditors in accordance with these Regulations,
(b) the majority of the voting rights in the firm are held by—
(i) individuals who are eligible for approval in the State or in any other Member State as statutory auditors,
(ii) audit firms approved as statutory audit firms in the State or in any other Member State, or
(iii) a combination of such individuals and audit firms,
and
(c) subject to paragraph (3), the majority of the members of the administrative or management body of the firm are—
(i) individuals who are eligible for approval in the State or in any other Member State as statutory auditors,
(ii) audit firms approved as statutory audit firms in the State or in any other Member State, or
(iii) a combination of such individuals and audit firms.
(3) Where the administrative or management body of a firm has no more than 2 members, then, for the purposes of subparagraph (c) of paragraph (2), one of those members shall satisfy at least the requirements of that subparagraph.
Powers of Director of Corporate Enforcement
47. (1) The Director of Corporate Enforcement may demand of a person—
(a) acting as a statutory auditor or audit firm of a company, or
(b) purporting to have obtained approval under these Regulations, or registration in accordance with Regulation 38, to so act,
the production of evidence of the person’s approval under these Regulations or, if applicable, registration in accordance with Regulation 38 in respect of any period during which the person so acted or purported to have obtained such approval.
(2) If the person concerned refuses or fails to produce the evidence referred to in paragraph (1) within 30 days after the date of the demand referred to in that paragraph, or such longer period as the Director of Corporate Enforcement may allow, the person shall be guilty of an offence and shall be liable—
(a) on summary conviction, to a class A fine, or
(b) on conviction on indictment, to a fine not exceeding €12,500.
(3) In a prosecution for an offence under this Regulation, it shall be presumed, until the contrary is shown, that the defendant did not, within 30 days, or any longer period allowed, after the day on which the production was demanded, produce evidence in accordance with paragraph (1).
Evidence in prosecutions under Regulation 47
48. (1) Subject to paragraph (2), in proceedings for an offence under Regulation 47, the production to the court of a certificate purporting to be signed by a person on behalf of a recognised accountancy body and stating that the defendant is not approved under these Regulations or, if applicable, is not registered in accordance with Regulation 38, by that recognised accountancy body shall be sufficient evidence, until the contrary is shown by the defendant, that the defendant is not so approved or registered, as the case may be.
(2) Paragraph (1) shall not apply unless a copy of the certificate concerned is served by the prosecution on the defendant, by registered post, not later than 28 days before the day the certificate is produced in court in the proceedings concerned.
(3) If the defendant in those proceedings intends to contest the statement contained in such a certificate, he or she shall give notice in writing of that intention to the prosecution within 21 days, or such longer period as the court may allow, after the date of receipt by him or her of a copy of the certificate from the prosecution.
Chapter 2
Aptitude Test
Aptitude test to be passed
49. (1) Subject to paragraph (2), a Member State auditor or third-country auditor applying for approval as a statutory auditor in the State is required to sit and pass an aptitude test to demonstrate his or her knowledge of the enactments and practice that are relevant to statutory audits in the State.
(2) Paragraph (1) shall not apply to a Member State auditor or third-country auditor if the recognised accountancy body is satisfied that he or she has otherwise demonstrated sufficient knowledge of the enactments and practice referred to in that paragraph.
(3) The Supervisory Authority shall, at such time as it thinks it appropriate to do so, issue guidelines to each recognised accountancy body as to the specific matters that a recognised accountancy body should have regard to in reaching a decision that it is satisfied that a person has demonstrated, in accordance with paragraph (2), the knowledge referred to in paragraph (1).
(4) A recognised accountancy body may charge and impose a fee (of an amount specified from time to time by the Minister sufficient to cover the body’s administrative expenses in respect of the following) on a Member State auditor or third-country auditor in respect of the administration of an aptitude test under this Regulation in relation to him or her.
(5) A fee imposed under paragraph (4) may, in default of payment, be recovered from the Member State auditor or third-country auditor concerned as a simple contract debt in any court of competent jurisdiction.
Scope of aptitude test
50. (1) The aptitude test shall—
(a) be conducted in either Irish or English, and
(b) cover only the applicant’s adequate knowledge of the enactments and practice that are relevant to statutory audits in the State.
(2) The various matters that shall constitute the contents of the aptitude test shall be decided by the recognised accountancy body after it has received the approval of the Supervisory Authority to the contents of the test.
(3) A recognised accountancy body shall not alter the contents of an aptitude test approved under paragraph (2) unless the alteration concerned has been approved by the Supervisory Authority.
Adequate standards to be applied in administration of aptitude test
51. (1) Subject to paragraph (2), a recognised accountancy body shall apply adequate standards in the administration of the aptitude test.
(2) No standards shall be used by a recognised accountancy body for the purposes of paragraph (1) unless those standards have (with respect to that use) first been approved by the Supervisory Authority.
Chapter 3
Withdrawal of approval
Grounds for mandatory withdrawal of approval in case of statutory auditor
52. (1) The procedures under this Regulation are in addition to those procedures, in the cases to which Regulation 35(9) to (11) apply, that are required by Regulation 35(9) to (11) to be employed.
(2) For the purposes of this Regulation, the cases that can constitute circumstances of an auditor’s good repute being seriously compromised include cases of professional misconduct or want of professional skill on the part of the auditor.
(3) Without prejudice to Regulation 114 and subject to paragraphs (5) to (7), a recognised accountancy body shall withdraw an approval of an auditor under these Regulations if, but only if—
(a) circumstances arise (involving acts or omissions on the part of the auditor) from which the recognised accountancy body can reasonably conclude that the auditor’s good repute is seriously compromised, or
(b) the auditor no longer falls within paragraph (a), (b) or (c) of Regulation 43, or
(c) in the case of a person who is a statutory auditor referred to in Regulation 44(1)—
(i) the auditor no longer falls within paragraph (a) of Regulation 43,
(ii) the auditor is not registered as a statutory auditor in the public register, or
(iii) the auditor is not subject to the regulation of a recognised accountancy body.
(4) Unless there do not exist internal appeal procedures of the recognised accountancy body as referred to in paragraph (9)(a), references in paragraphs (5) to (8) to a recognised accountancy body shall be read as references to a recognised accountancy body acting through the disciplinary committee that deals with matters at first instance.
(5) Subject to paragraph (8), paragraph (6) applies where, having—
(a) complied with the requirements of procedural fairness in that regard, and
(b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,
the recognised accountancy body is satisfied that subparagraph (a), (b) or (c) of paragraph (3) applies in the case of an auditor.
(6) Subject to paragraph (8), the recognised accountancy body shall serve a notice in writing on the auditor stating that—
(a) it is satisfied that subparagraph (a), (b) or (c) of paragraph (3) applies in the case of the auditor,
(b) the auditor must take specified steps to cause subparagraph (a), (b) or (c) of paragraph (3) to cease to apply to him or her within a specified period (which shall be not less than one month), and
(c) if those steps are not taken, it shall withdraw the approval of the auditor.
(7) Where the recognised accountancy body has served a notice under paragraph (6) on a statutory auditor and the auditor has not, before the expiration of the specified period referred to in paragraph (6)(b), taken the steps referred to in paragraph (6)(b), the recognised accountancy body shall withdraw the approval of the auditor under these Regulations.
(8) The procedure specified in paragraph (6) need not be employed if the acts or omissions concerned referred to in subparagraph (a) of paragraph (3) are such as, in the opinion of the recognised accountancy body, constitute professional misconduct or want of professional skill on the part of the auditor of a degree that employing that procedure would not be in the public interest but nothing in this paragraph affects the application of the requirements of procedural fairness to the withdrawal of approval.
(9) If—
(a) there exist applicable internal appeal procedures of the recognised accountancy body, and
(b) the investigation and disciplinary procedures of the recognised accountancy body provide that a decision of its disciplinary committee, being a decision of a nature to which this Regulation applies, shall stand suspended or shall not take effect until, as the case may be—
(i) the period for making an appeal under those procedures has expired without such an appeal having been made,
(ii) such an appeal has been made and the decision to withdraw the approval confirmed, or
(iii) such an appeal that has been made is withdrawn,
then, notwithstanding anything in the preceding provisions of this Regulation, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the happening of an event specified in subparagraph (b)(i), (ii) or (iii).
(10) Paragraph (11) applies if—
(a) there exist applicable internal appeal procedures of the recognised accountancy body, and
(b) the investigation and disciplinary procedures of the recognised accountancy body do not provide, as referred to in paragraph (9)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect.
(11) Notwithstanding the internal appeal procedures referred to in paragraph (10)(a), the auditor to whom the decision referred to in paragraph (9)(b) relates may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the relevant appellate committee of an appeal that he or she is making under those procedures and, where such an application is made, paragraphs (14) to (17) apply to that application with—
(a) the substitution of references to an appeal under those internal appeal procedures for reference to an appeal under Regulation 54, and
(b) any other necessary modifications.
(12) If the relevant appellate committee referred to in paragraph (11) is of the opinion, having regard to the particular issues that have arisen on that appeal, that, in the interests of justice, the disposal by it of an appeal referred to in that paragraph ought to include its proceeding in the manner specified in paragraphs (6) and (7), then, in disposing of that appeal, it shall proceed in the manner so specified.
(13) The recognised accountancy body shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in paragraph (11) is prosecuted promptly and it shall be the duty of that appellate committee to ensure that any such appeal to it is disposed of as expeditiously as may be and, for that purpose, to take all such steps as are open to it to ensure that, in so far as is practicable, there are no avoidable delays at any stage in the determination of such an appeal.
(14) Where a recognised accountancy body has made a decision to withdraw the approval of an auditor under this Regulation (that is to say, a final decision of the recognised accountancy body on the matter after the internal appeal procedures (if any) of it have been employed and exhausted), the auditor may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the High Court of an appeal under Regulation 54 that he or she is making against the withdrawal.
(15) Subject to paragraph (17), on the hearing of an application under paragraph (14), the High Court may, as it considers appropriate and having heard the recognised accountancy body concerned and, if it wishes to be so heard, the Supervisory Authority (which shall have standing to appear and be heard on the application)—
(a) grant an order suspending the operation of the withdrawal, or
(b) refuse to grant such an order,
and an order under subparagraph (a) may provide that the order shall not have effect unless one or more conditions specified in the order are complied with (and such conditions may include conditions requiring the auditor not to carry out statutory audits save under the supervision of another statutory auditor or not to carry out such audits save in specified circumstances).
(16) Subject to paragraph (17), the High Court may, on application to it by the auditor or recognised accountancy body concerned, vary or discharge an order under paragraph (15)(a) if it considers it just to do so.
(17) In considering an application under paragraph (14) or (16), the High Court shall have regard to—
(a) whether, as regards the appeal the applicant is making under Regulation 54 to the High Court, the applicant has a strong case that is likely to succeed before that Court (and, for that purpose, the High Court shall require the applicant to give an indication of the facts that will be relied upon, or of the evidence that will be adduced in the case of facts that are in controversy, by him or her on the hearing of that appeal), and
(b) the public interest and, in particular, the public interest in ensuring that there is the minimum of disruption, consistent with law, to the discharge by the recognised accountancy body concerned, as a body assigned with the function of granting and withdrawing approval.
Grounds for mandatory withdrawal in case of statutory audit firm
53. (1) The procedures under this Regulation are in addition to those procedures, in the cases to which Regulation 35(9) to (11) apply, that are required by Regulation 35(9) to (11) to be employed.
(2) For the purposes of this Regulation, the cases that can constitute circumstances of an audit firm’s good repute being seriously compromised include cases of professional misconduct or want of professional skill on the part of the audit firm or any of the one or more auditors through whom it acts.
(3) Without prejudice to Regulation 114 and subject to paragraphs (5) to (7), a recognised accountancy body shall withdraw an approval of an audit firm under these Regulations if, but only if—
(a) circumstances arise (involving acts or omissions on the part of the audit firm or auditor or auditors through whom it acts) from which the recognised accountancy body can reasonably conclude that the firm’s good repute is seriously compromised,
(b) the audit firm (not being a firm referred to in subparagraph (c)) no longer falls within subparagraphs (a), (b) and (c) of Regulation 46(2), or
(c) in the case of a firm which is a statutory audit firm referred to in Regulation 44(2), the firm no longer falls within subparagraph (a) of Regulation 46(2).
(4) Unless there do not exist internal appeal procedures of the recognised accountancy body as referred to in paragraph (9)(a), references in paragraphs (5) to (8) to a recognised accountancy body shall be read as references to a recognised accountancy body acting through the disciplinary committee that deals with matters at first instance.
(5) Subject to paragraph (8), paragraph (6) applies where, having—
(a) complied with the requirements of procedural fairness in that regard, and
(b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,
the recognised accountancy body is satisfied that subparagraph (a), (b) or (c) of paragraph (3) applies in the case of an audit firm.
(6) Subject to paragraph (8), the recognised accountancy body shall serve a notice in writing on the audit firm stating that—
(a) it is satisfied that subparagraph (a), (b) or (c) of paragraph (3) applies in the case of the audit firm,
(b) the audit firm must take specified steps to cause subparagraph (a), (b) or (c) of paragraph (3) to cease to apply to it within a specified period (which shall not be less than one month), and
(c) if those steps are not taken, it shall withdraw the approval of the firm.
(7) Where the recognised accountancy body has served a notice under paragraph (6) on a statutory audit firm and the firm has not, before the expiration of the specified period referred to in paragraph (6)(b), taken the steps referred to in paragraph (6)(b), the recognised accountancy body shall withdraw the approval of the audit firm under these Regulations.
(8) The procedure specified in paragraph (6) need not be employed if the acts or omissions concerned referred to in subparagraph (a) of paragraph (3) are such as, in the opinion of the recognised accountancy body, constitute professional misconduct or want of professional skill on the part of the audit firm (or the auditor or auditors through whom it acts) of a degree that employing that procedure would not be in the public interest but nothing in this paragraph affects the application of the requirements of procedural fairness to the withdrawal of approval.
(9) If—
(a) there exist applicable internal appeal procedures of the recognised accountancy body, and
(b) the investigation and disciplinary procedures of the recognised accountancy body provide that a decision of its disciplinary committee, being a decision of a nature to which this Regulation applies, shall stand suspended or shall not take effect until, as the case may be—
(i) the period for making an appeal under those procedures has expired without such an appeal having been made,
(ii) such an appeal has been made and the decision to withdraw the approval confirmed, or
(iii) such an appeal that has been made is withdrawn,
then, notwithstanding anything in the preceding provisions of this Regulation, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the happening of an event specified in subparagraph (b)(i), (ii) or (iii).
(10) Paragraph (11) applies if—
(a) there exist applicable internal appeal procedures of the recognised accountancy body, and
(b) the investigation and disciplinary procedures of the recognised accountancy body do not provide, as referred to in paragraph (9)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect.
(11) Notwithstanding the internal appeal procedures referred to in paragraph (10)(a), the audit firm to which the decision referred to in paragraph (9)(b) relates may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the relevant appellate committee of an appeal that it is making under those procedures and, where such an application is made, paragraphs (14) to (17) apply to that application with—
(a) the substitution of references to an appeal under those internal appeal procedures for reference to an appeal under Regulation 54, and
(b) any other necessary modifications.
(12) If the relevant appellate committee referred to in paragraph (11) is of the opinion, having regard to the particular issues that have arisen on that appeal, that, in the interests of justice, the disposal by it of an appeal referred to in that paragraph ought to include its proceeding in the manner specified in paragraphs (6) and (7), then, in disposing of that appeal, it shall proceed in the manner so specified.
(13) The recognised accountancy body shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in paragraph (11) is prosecuted promptly and it shall be the duty of that appellate committee to ensure that any such appeal to it is disposed of as expeditiously as may be and, for that purpose, to take all such steps as are open to it to ensure that, in so far as is practicable, there are no avoidable delays at any stage in the determination of such an appeal.
(14) Where a recognised accountancy body has made a decision to withdraw the approval of an audit firm under this Regulation (that is to say, a final decision of the recognised accountancy body on the matter after the internal appeal procedures (if any) of it have been employed and exhausted), the audit firm may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the High Court of an appeal under Regulation 54 that it is making against the withdrawal.
(15) Subject to paragraph (17), on the hearing of an application under paragraph (14), the High Court may, as it considers appropriate and having heard the recognised accountancy body concerned and, if it wishes to be so heard, the Supervisory Authority (which shall have standing to appear and be heard on the application)—
(a) grant an order suspending the operation of the withdrawal; or
(b) refuse to grant such an order,
and an order under subparagraph (a) may provide that the order shall not have effect unless one or more conditions specified in the order are complied with (and such conditions may include conditions requiring the audit firm not to carry out statutory audits save under the supervision of one or more statutory auditors or one or more statutory audit firms or not to carry out such audits save in specified circumstances).
(16) Subject to paragraph (17), the High Court may, on application to it by the audit firm or recognised accountancy body concerned, vary or discharge an order under paragraph (15)(a) if it considers it just to do so.
(17) In considering an application under paragraph (14) or (16), the High Court shall have regard to—
(a) whether, as regards the appeal the applicant is making under Regulation 54 to the High Court, the applicant has a strong case that is likely to succeed before that Court (and, for that purpose, the High Court shall require the applicant to give an indication of the facts that will be relied upon, or of the evidence that will be adduced in the case of facts that are in controversy, by it on the hearing of that appeal), and
(b) the public interest and, in particular, the public interest in ensuring that there is the minimum of disruption, consistent with law, to the discharge by the recognised accountancy body concerned, as a body assigned with the function of granting and withdrawing approval.
Appeals against withdrawal of approval
54. (1) Subject to paragraph (2), a person may appeal to the High Court against the withdrawal by a recognised accountancy body of approval under these Regulations of the person as a statutory auditor or audit firm.
(2) An appeal shall not lie under paragraph (1) unless and until any applicable internal appeal procedures of the recognised accountancy body have been employed and exhausted by the person referred to in that paragraph.
(3) An appeal under paragraph (1) shall be made within one month—
(a) unless subparagraph (b) applies, after the date of the withdrawal of approval, or
(b) after the confirmation of that withdrawal on foot of the internal appeal procedures of the recognised accountancy body having been employed.
(4) On the hearing of an appeal under paragraph (1), the High Court—
(a) if it is satisfied that the appellant has established that there was not a reasonable basis for the decision of the recognised accountancy body concerned to withdraw the approval, shall cancel the withdrawal of the approval, or
(b) if it is not so satisfied, shall confirm the withdrawal of the approval.
(5) For the purposes of paragraph (4), there is a reasonable basis for the decision of the recognised accountancy body if, taking into account the expertise and specialist knowledge possessed by the recognised accountancy body, the decision (and the process that led to its making) was not vitiated by—
(a) any serious and significant error or a series of such errors,
(b) a mistake of law, or
(c) the evidence, taken as a whole, not supporting the decision.
(6) The High Court may, on the hearing of an appeal under paragraph (1), consider evidence not adduced or hear an argument not made to the recognised accountancy body concerned if the Court is satisfied that—
(a) there are cogent circumstances justifying the failure to adduce the evidence or make the argument to the recognised accountancy body, and
(b) it is just and equitable for the Court to consider the evidence or hear the argument, as the case may be.
(7) A notification of the outcome of an appeal under this Regulation (or of any appeal from a decision of the High Court thereunder) shall be made by the recognised accountancy body concerned to the same persons to whom a notification of a withdrawal of approval must be made by Regulation 55 and (where it applies) Regulation 56.
Certain persons to be notified of withdrawal of approval
55. Without prejudice to Regulation 56, where the approval under these Regulations of a statutory auditor or audit firm is withdrawn for any reason by a recognised accountancy body, that fact and the reasons for the withdrawal shall be communicated by the recognised accountancy body to—
(a) the Supervisory Authority, and
(b) the Registrar of Companies,
as soon as possible, but not later than one month after the date of withdrawal of approval.
Other persons to be notified of withdrawal of approval
56. (1) Where the approval under these Regulations of a statutory auditor is withdrawn for any reason by a recognised accountancy body, the recognised accountancy body shall, in addition to making the communication specified in Regulation 55, notify the relevant competent authorities of the host Member States, where the statutory auditor is also approved and entered in the public registers of those States pursuant to Articles 15 to 19 of the Audit Directive, of the fact of the withdrawal and the reasons for it.
(2) Where the approval under these Regulations of an audit firm is withdrawn for any reason by the recognised accountancy body, the recognised accountancy body shall, in addition to making the communication specified in Regulation 55, notify the relevant competent authorities of the host Member States, where the statutory auditor is also registered and entered in the public registers of those States pursuant to Articles 15 to 19 of the Audit Directive, of the fact of the withdrawal and the reasons for it.
(3) If the approval under these Regulations of a statutory auditor or audit firm is withdrawn by the Supervisory Authority, this Regulation and Regulation 55 (other than paragraph (a) of it) shall apply in relation to the withdrawal as if the references in them to the recognised accountancy body were references to the Supervisory Authority and with any other necessary modifications.
(4) The notifications under this Regulation shall be made as soon as possible, but not later than one month after the date of withdrawal of approval.
PART 5
STANDARDS AND PROVISIONS APPLICABLE TO STATUTORY AUDITORS AND AUDIT FIRMS
Chapter 1
Appointment of Statutory Auditors or Audit Firms
Prohibition of contractual clauses restricting choice of auditors
57. (1) Subject to paragraph (2), a contractual clause which has the effect of restricting the choice by the general meeting of shareholders or members of the audited entity pursuant to Part 6 of the Companies Act 2014 , or any audited entity to whom these Regulations apply, to certain categories or lists of statutory auditors or audit firms as regards the appointment of a particular statutory auditor or audit firm to carry out the statutory audit of that entity shall be prohibited and shall be void.
(2)(a) A contractual clause referred to in paragraph (1) which—
(i) does not fall within Article 16(6) of Regulation (EU) No 537/2014, and
(ii) exists on 17 June 2016,
is void on and from that date.
(b) Paragraph (1) shall not apply to a contractual clause which falls within Article 16(6) of Regulation (EU) No 537/2014 until 17 June 2017.
(c) A contractual clause referred to in paragraph (1) which—
(i) falls within Article 16(6) of Regulation (EU) No 537/2014, and
(ii) exists on 17 June 2017,
is void on and from that date.
(3) An audited entity that is a public-interest entity shall directly and without delay report to the Supervisory Authority any contractual clause referred to in paragraph (1) that purports to affect it and the circumstances which gave rise to that clause.
(4) The Supervisory Authority, on receipt of a report under paragraph (3), may, by virtue of its powers under Part 15 of the Companies Act 2014 , share the report with authorities in the State.
Selection procedures for statutory auditors or audit firms by public-interest entities
58. (1) Subject to paragraph (2), the following selection procedures apply, for financial years commencing on or after 17 June 2016, to the appointment of a statutory auditor or audit firm to a public-interest entity:
(a) the audit committee shall prepare a recommendation for the directors of the entity by carrying out the selection procedure specified in Article 16(3) of Regulation (EU) No 537/2014;
(b) the audit committee shall submit a recommendation to the directors of the entity for the appointment of statutory auditors or audit firms;
(c) the recommendation—
(i) shall be justified and contain at least 2 choices for the audit engagement and shall express a duly justified preference for one of them, and
(ii) shall state (if such be the case) that the recommendation is free from influence by a third party and that, on and from 17 June 2017, no clause of the kind referred to in Regulation 57(1) has been imposed upon it;
(d) the proposal by the directors to the general meeting of shareholders or members of the entity for the appointment of statutory auditors or audit firms—
(i) shall include the recommendation referred to in subparagraph (b) and the preference referred to in subparagraph (c)(i),
(ii) if it departs from the preference of the audit committee, shall justify the reasons for not following the recommendation of the audit committee, and
(iii) shall state if the statutory auditor or audit firm recommended by the directors participated in the selection procedure referred to in paragraph (2)(a).
(2) Paragraph (1) shall not apply if—
(a) a selection procedure in accordance with Article 16(3) of Regulation (EU) No 537/2014 has been carried out in respect of the appointment of the statutory auditor or audit firm in relation to one or more of the preceding 9 financial years, and
(b) the statutory auditor or audit firm appointed by the public-interest entity was appointed for the previous financial year.
(3) Where the public-interest entity is exempt from the requirement for an audit committee under Regulation 115, this Regulation applies to the directors of the public-interest entity.
(4) Where a public-interest entity relies on the provisions of section 382, 384 or 385 of the Companies Act 2014 , the public-interest entity shall, as soon as is practicable, inform the Supervisory Authority of that fact.
(5) The appointment of an auditor is invalid if the appointment contravenes a provision of this Regulation.
(6)(a) Subject to subparagraph (b), a public-interest entity shall keep records demonstrating that the selection procedures referred to in paragraph (1) have been carried out.
(b) The public-interest entity shall keep those records for at least 6 years from the date on which the selection procedures were completed.
(7) A public-interest entity which contravenes paragraph (6)(a) or (b) shall be guilty of an offence and shall be liable, on summary conviction, to a class A fine.
Appointment of statutory auditors or audit firms by public-interest entities — informing the Supervisory Authority
59. (1) Subject to paragraph (2)—
(a) where a statutory auditor or audit firm is first appointed by a public-interest entity on or after 17 June 2016, he, she or it shall inform the Supervisory Authority within one month after the date of such appointment that the statutory auditor or audit firm has been appointed to hold office, and
(b) where a statutory auditor or audit firm which has complied with subparagraph (a) is subsequently appointed by the same or a different public-interest entity, he, she or it shall inform the Supervisory Authority within one month after the date of such appointment that the statutory auditor or audit firm has been appointed to hold office only if, immediately before the time of such appointment, the statutory auditor or audit firm held no such office with any public-interest entity.
(2) The information shall be submitted in such form and manner as the Supervisory Authority specifies and may be used by the Supervisory Authority in the performance of its functions.
(3) A statutory auditor or audit firm who or which contravenes paragraph (1) shall be guilty of an offence and shall be liable—
(a) on summary conviction, to a class A fine, or
(b) on conviction on indictment, to a fine not exceeding €12,500.
Removal of statutory auditors or audit firms by public-interest entities — supplementary provisions
60. (1) In the case of a statutory audit of a public-interest entity—
(a) shareholders representing 5% or more of the voting rights or of the share capital, or
(b) the Supervisory Authority,
may bring a claim before the court for the removal of the statutory auditor or audit firm subject to there being good and substantial grounds for bringing such a claim before the court.
(2) The grounds for bringing the claim before the court must relate to—
(a) the conduct of the auditor or audit firm with regard to the performance of his, her or its duties as auditor of the public-interest entity or otherwise, or
(b) the petitioner’s opinion that it is in the best interests of the public-interest entity to do so.
(3) For the purposes of paragraph (2)—
(a) diverging opinions on accounting treatments or audit procedures cannot constitute the basis for the passing of any resolution for the purposes of that paragraph, and
(b) “bestinterests of the public-interest entity” does not include any illegal or improper motive with regard to avoiding disclosures or detection of any contravention by the entity of these Regulations.
Directors’ report to include date of last appointment of statutory auditor or audit firm
61. (1) The directors’ report shall contain details of the date of appointment of the public-interest entity’s statutory auditor or audit firm.
(2) Where a public-interest entity has sought an extension from the Supervisory Authority under Regulation 105, pursuant to Article 17(6) of Regulation (EU) No 537/2014, the directors’ report shall also contain details of the extension granted.
(3) In this Regulation, “directors’ report” means the directors’ report required by section 325 of the Companies Act 2014 .
Chapter 2
Standards for Statutory Auditors
Continuing education
62. (1) A recognised accountancy body shall attach the condition specified in paragraph (2) to an approval granted by it under these Regulations to a person as statutory auditor.
(2) The condition is one requiring the person to take part in appropriate programmes of continuing education in order to maintain his or her theoretical knowledge, professional skills and values, including, in particular, in relation to auditing, at a sufficiently high level.
(3) In the case of a statutory auditor who is a person in relation to whom a recognised accountancy body may, by virtue of Regulation 35, perform functions under these Regulations but either—
(a) the approval of whom as a statutory auditor has not been granted by that recognised accountancy body, or
(b) the person is a person referred to in Regulation 44(1),
a like obligation to that referred to in paragraph (2) as regards taking part in appropriate programmes of continuing education is, by virtue of this paragraph, imposed on him or her.
Professional ethics
63. A recognised accountancy body shall subject statutory auditors and audit firms to principles of professional ethics, covering at least their public interest function, their integrity and objectivity and their professional competence and due care.
Independence, objectivity and professional scepticism
64. Statutory auditors and audit firms are subject to the independence, objectivity and professional scepticism requirements of Articles 21(2), 22, 22a, 22b, 24, 24a, 24b, 25 and 25a of the Audit Directive as implemented in the State by Regulations 91 to 101 and 103.
Standards for purposes of Regulations 62 to 64
65. (1) A recognised accountancy body shall, in respect of statutory auditors and audit firms—
(a) have adequate standards requiring those auditors and audit firms to comply with the obligations specified in Regulations 62 to 64, and
(b) institute adequate arrangements for the effective monitoring and enforcement of compliance with such standards.
(2) No standards shall be used by a recognised accountancy body for that purpose unless those standards have (with respect to that use) first been approved by the Supervisory Authority in accordance with section 905(2)(c) of the Companies Act 2014 .
Arrangements for enforcement of standards
66. The arrangements for enforcement referred to in Regulation 65(1)(b) shall include, in accordance with Regulations 113 and 114, provision for—
(a) sanctions which include—
(i) at the discretion of the recognised accountancy body, in accordance with Regulation 114, the withdrawal of approval under these Regulations as a statutory auditor or audit firm,
(ii) appropriate penalties,
(iii) appropriate disciplinary measures,
(iv) appropriate regulatory sanctions,
and
(b) making available to the public information relating to the measures taken and the penalties imposed in respect of statutory auditors and audit firms.
Chapter 3
Confidentiality and Professional Secrecy
Rules of confidentiality to apply
67. (1) The rules of confidentiality and secrecy of a recognised accountancy body (of which the statutory auditor or audit firm concerned is a member) shall apply with respect to information and documents to which a statutory auditor or audit firm has access when carrying out a statutory audit.
(2) The statutory auditor or audit firm, as the case may be, shall comply with those rules of confidentiality and secrecy.
(3) In the case of an audit firm registered in accordance with Regulation 38, the rules of confidentiality and secrecy of the recognised accountancy body of which the key audit partner who carries out the statutory audit on behalf of the audit firm is a member shall apply with respect to information and documents to which the audit firm (or a statutory auditor on behalf of the firm) has access when carrying out a statutory audit.
Supplemental provisions in relation to Regulation 67
68. (1) Regulation 67 shall continue to apply with respect to an audit assignment notwithstanding—
(a) that the statutory auditor or audit firm referred to in that Regulation has ceased to be engaged in that audit assignment, or
(b) that the auditor or audit firm referred to in that Regulation ceases to be—
(i) a statutory auditor or audit firm, or
(ii) an auditor or audit firm.
(2) Accordingly, in such a case—
(a) the statutory auditor or, as the case may be, audit firm, or
(b) the former such auditor or, as the case may be, audit firm,
shall continue to comply with the rules of confidentiality and secrecy concerned.
Saving
69. (1) Nothing in Regulation 67 or 68 shall operate to prevent the recognised accountancy body from complying with its obligations under these Regulations or, where applicable, Regulation (EU) No 537/2014.
(2) Nothing in Regulation 67 or 68 shall operate to impede the enforcement of the provisions of these Regulations or, where applicable, Regulation (EU) No 537/2014.
Rules of confidentiality in relation to entities in third countries
70. (1) Where a statutory auditor or audit firm carries out a statutory audit of an undertaking which is part of a group whose parent undertaking is situated in a third country, the confidentiality and professional secrecy rules referred to in Regulation 67(1) shall not impede the transfer by the statutory auditor or the audit firm of relevant documentation concerning the audit work performed to the group auditor situated in a third country if such documentation is necessary for the performance of the audit of consolidated financial statements of the parent undertaking.
(2) A statutory auditor or an audit firm that carries out the statutory audit of an undertaking which has issued securities in a third country, or which forms part of a group issuing statutory consolidated financial statements in a third country, may only transfer the audit working papers or other documents relating to the audit of that entity that he, she or it holds to the competent authorities in the relevant third countries under the conditions set out in Chapter 3 of Part 10.
(3) The transfer of information to the group auditor situated in a third country shall comply with—
(a) Chapter IV of Directive 95/46/EC of the European Parliament and of the Council of 24 October 19958 on the protection of individuals with regard to the processing of personal data and on the free movement of such data, and
(b) national personal data protection rules.
Incoming statutory auditor or audit firm to be afforded access to information
71. Where a statutory auditor or audit firm is replaced by another statutory auditor or audit firm, the former statutory auditor or audit firm shall provide access to all relevant information concerning the audited entity and the most recent audit of that entity to the incoming statutory auditor or audit firm.
Access by recognised accountancy body to audit documents
72. (1) Where it considers it reasonably necessary to do so for the purpose of performing a particular function under these Regulations or, where applicable, under Regulation (EU) No 537/2014, a recognised accountancy body may inspect and make copies of all relevant documents in the possession or control of a statutory auditor or audit firm; for that purpose, it may, by notice in writing served on a statutory auditor or audit firm, require the auditor or firm either (as shall be specified) to—
(a) furnish to it specified documents, or
(b) permit it to have access, under specified circumstances, to all relevant documents in the possession or control of the auditor or firm,
within a specified period.
(2) Without prejudice to the generality of paragraph (1), the powers under that paragraph are exercisable in relation to a statutory auditor or audit firm where a complaint is made to the recognised accountancy body that the statutory auditor or audit firm has contravened a requirement of these Regulations.
(3) Where the powers under paragraph (1) are exercisable, the following additional power may be exercised by the recognised accountancy body if it considers that the exercise of it is reasonably necessary to enable it to clarify any matter arising from its inspection of the documents concerned, namely a power to require the statutory auditor or a member of the audit firm to—
(a) attend before it, and
(b) explain any entry in the documents concerned and otherwise give assistance to it in clarifying the matter concerned.
(4) In this Regulation, “specified” means specified in the notice concerned.
(5) Without prejudice to paragraph (6), a person who fails, without reasonable excuse, to comply with a requirement under paragraph (1) or (3) shall be guilty of an offence and shall be liable—
(a) on summary conviction, to a class A fine, or
(b) on conviction on indictment, to a fine not exceeding €12,500.
(6) Where a person fails to comply with a requirement under paragraph (1) or (3), the recognised accountancy body concerned may apply to the High Court for an order compelling compliance by the person with the requirement, and, on the hearing of such application, the High Court may make such an order or such other order as it thinks just.
Access by Supervisory Authority to information and documents held by recognised accountancy bodies or relevant persons
73. (1) Where it considers it reasonably necessary to do so for the purposes of performing a particular function under these Regulations or Regulation (EU) No 537/2014, the Supervisory Authority may request information and inspect and make copies of all relevant documents in the possession or control of a recognised accountancy body or a relevant person; for that purpose, it may, by notice in writing served on the recognised accountancy body or relevant person, require the recognised accountancy body or relevant person either (as shall be specified) to—
(a) furnish to it specified documents or information, or
(b) permit it to have access, under specified circumstances, to all relevant documents in the possession or control of the recognised accountancy body or relevant person,
within a specified period.
(2) In this Regulation, “relevant person” means—
(a) a member of a recognised accountancy body,
(b) a client or former client of such a member,
(c) if the client or former client is a body corporate, a person who is or was an officer, employee or agent of the client or former client, or
(d) any person whom the Supervisory Authority reasonably believes has information or documents in relation to the particular function other than information or documents the disclosure of which is prohibited or restricted by law.
(3) Without prejudice to the generality of paragraph (1), the powers under that paragraph are exercisable in relation to a recognised accountancy body or relevant person where a complaint is made to the Supervisory Authority that the recognised accountancy body or relevant person has contravened a requirement of these Regulations.
(4) Where the powers under paragraph (1) are exercisable, the following additional power may be exercised by the Supervisory Authority if it considers that the exercise of it is reasonably necessary to enable it to clarify any matter arising from its inspection of the information or documents concerned, namely a power to require an officer of the recognised accountancy body or relevant person to—
(a) attend before it, and
(b) explain any entry in the information or documents concerned and otherwise give assistance to it in clarifying the matter concerned.
(5) In this Regulation, “specified” means specified in the notice concerned.
(6) A person who fails, without reasonable excuse, to comply with a requirement under paragraph (1) or (4) shall be guilty of an offence and shall be liable—
(a) on summary conviction, to a class A fine, or
(b) on conviction on indictment, to a fine not exceeding €12,500.
(7) Nothing in this Regulation derogates from the powers exercisable by the Supervisory Authority in the circumstances, and under the conditions, specified in section 933, 934 or 935B of the Companies Act 2014 .
Professional privilege
74. Nothing in this Chapter compels the disclosure by any person of any information that the person would be entitled to refuse to produce on the grounds of legal professional privilege.
No liability for acts done in compliance with Regulations
75. (1) No professional or legal duty to which a statutory auditor or audit firm is subject by virtue of his, her or its appointment as a statutory auditor or audit firm shall be regarded as contravened by reason of compliance with the obligations imposed by these Regulations.
(2) No liability to the entity audited or being audited, its shareholders, creditors, or other interested parties shall attach to the statutory auditor or audit firm by reason of such compliance.
(3) For the avoidance of doubt, nothing in this Regulation affects the liability of a statutory auditor or audit firm for negligence or breach of duty in the conduct of a statutory audit by him, her or it.
Restriction of section 940 of Companies Act 2014
76. Nothing in section 940 of the Companies Act 2014 shall operate to prevent the Supervisory Authority or a recognised accountancy body from complying with its obligations under these Regulations.
Chapter 4
Auditing Standards and Audit Reporting
Auditing standards to be applied
77. (1) The Supervisory Authority shall adopt the auditing standards to be applied and statutory auditors and audit firms shall carry out statutory audits in accordance with those standards.
(2) On and from the adoption of international auditing standards, statutory auditors and audit firms shall carry out statutory audits in accordance with those standards.
(3) The reference in paragraph (2) to the adoption of international auditing standards is a reference to the adoption by the Commission, in accordance with the procedure referred to in Article 26 of the Audit Directive, of international auditing standards.
(4) For the avoidance of doubt, levies imposed under section 916 of the Companies Act 2014 on that class of prescribed accountancy bodies comprising recognised accountancy bodies may be used for the purpose of meeting expenses properly incurred by the Supervisory Authority in performing its function referred to in section 905(2)(ma) of that Act.
(5) In this Regulation, “standards” include standards on professional ethics and internal quality control in addition to standards on auditing.
Audit of group accounts — responsibility of group auditor
78. (1) Where a statutory audit of the group financial statements of a group of undertakings is carried out—
(a) in relation to the group financial statements, the group auditor shall bear the full responsibility for the statutory auditors’ report, and
(b) where any of the undertakings is a public-interest entity, the group auditor shall bear the full responsibility for ensuring that the requirements of Articles 10 and 11 of Regulation (EU) No 537/2014 are met in relation to the audit carried out on that public-interest entity.
(2) The group auditor shall—
(a) evaluate the audit work carried out by any statutory auditors for the purpose of the group audit, and
(b) document the nature, timing and extent of the work carried out by those auditors, including the group auditor’s review of the relevant parts of audit documentation.
(3) For the purposes of the group audit, auditors may be one or more of the following:
(a) statutory auditors;
(b) statutory audit firms;
(c) Member State auditors;
(d) Member State audit firms;
(e) third-country auditors;
(f) third-country audit entities.
(4) The group auditor shall carry out a review, and maintain documentation of such review, of the work of whoever referred to in paragraph (3) performed audit work for the purposes of the group audit.
(5) The documentation referred to in paragraphs (2)(b) and (4) to be retained by the group auditor shall be such as enables the Supervisory Authority, or the recognised accountancy body where applicable, to conduct a quality assurance inspection or review, as the case may be, under Chapter 1 of Part 8.
(6) The group auditor shall request the agreement of the auditors concerned referred to in paragraph (3)(a) to (f) to transfer relevant documentation during the carrying out of the audit of group financial statements as a condition of the reliance by the group auditor on the work of such auditors.
(7)(a) Where the group auditor is unable to secure an agreement referred to in paragraph (6), he, she or it shall take appropriate measures in order to form an audit opinion and inform the relevant Supervisory Authority or the recognised accountancy body where applicable.
(b) Such measures shall, as appropriate, include carrying out additional statutory audit work, either directly or by outsourcing the additional statutory audit work, in the relevant subsidiary.
(8)(a) The group auditor who is subject to a quality assurance inspection or review or an investigation concerning the statutory audit of the group financial statements of a group of undertakings, shall, when requested, make available to the Supervisory Authority or the recognised accountancy body where applicable the relevant documentation he, she or it retains concerning the audit work performed by the auditors concerned referred to in paragraph (3)(a) to (f) for the purpose of the group audit, including any working papers relevant to the group audit.
(b) The Supervisory Authority may request additional documentation on the audit work performed by a statutory auditor or audit firm for the purpose of the group audit from the competent authorities in other Member States where applicable pursuant to Chapter 1 of Part 10.
Further responsibility of group auditor
79. (1) Subject to paragraph (2), the Supervisory Authority may request additional documentation on the audit work performed by any third-country auditor or third country audit entity on a parent undertaking or on a subsidiary undertaking of a group of undertakings from the relevant competent authorities from third countries through the working arrangements referred to in Regulation 131(1)(c) or 132(c).
(2) Where—
(a) a statutory audit of the group financial statements of a group of undertakings is carried out, and
(b) a parent undertaking or subsidiary undertaking of the group of undertakings is audited by one or more third-country auditors or audit entities that have no working arrangement as referred to in Regulation 131(1)(c) or 132(c),
the group auditor is responsible for ensuring proper delivery, when requested, to the Supervisory Authority of the additional documentation of the audit work performed by those auditors or audit entities, including the working papers relevant to the group audit.
(3) To ensure such delivery, the group auditor shall retain a copy of such audit documentation, or alternatively—
(a) agree with one or more third-country auditors or audit entities concerned arrangements for the group auditor’s proper and unrestricted access, upon request, to the documentation, or
(b) take any other appropriate action.
(4) Where audit working papers cannot, for legal or other reasons, be passed from a third country to the group auditor, the documentation retained by the group auditor shall include—
(a) evidence that he, she or it has undertaken the appropriate procedures in order to gain access to the audit documentation, and
(b) in the case of an impediment other than a legal one arising from legislation of the third country or countries concerned, evidence supporting the existence of such an impediment.
Additional report to audit committee
80. Where a public-interest entity is exempt from the requirement to have an audit committee, as provided for under these Regulations, the additional report to the audit committee shall be submitted to the directors of the public-interest entity.
Auditors’ reporting obligations under Article 12 of Regulation (EU) No 537/2014
81. Reports by statutory auditors or audit firms referred to in Article 12 of Regulation (EU) No 537/2014 shall be submitted to the Supervisory Authority unless they are already required to be submitted to the Central Bank of Ireland under—
(a) Regulation 52 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ),
(b) Regulation 78 of the European Union (Insurance and Reinsurance) Regulations 2015 ( S.I. No. 485 of 2015 ), or
(c) Regulation 134(1) of, or Schedule 16 to, the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 ( S.I. No. 352 of 2011 ).
Chapter 5
Record keeping
Record keeping
82. (1) Statutory auditors and audit firms shall keep the documents and information referred to in Article 15 of Regulation (EU) No 537/2014 for a period of at least 6 years.
(2) Where a transaction, act or operation is the subject of an investigation, inquiry, claim, assessment, appeal or proceeding which has already commenced within that 6 year period, then the relevant documents and information must be retained until such time as the investigation, inquiry, claim, assessment, appeal or proceeding has been concluded or for a period of at least 6 years, whichever is the longer.
Chapter 6
Objectivity
Future viability
83. Without prejudice to the reporting requirements referred to in sections 336, 337 and 391 of the Companies Act 2014 and, where applicable, Articles 10 and 11 of Regulation (EU) No 537/2014, the scope of the statutory audit shall not include assurance on the future viability of the audited entity or on the efficiency or effectiveness with which the directors of the entity have conducted or will conduct the affairs of the entity.
PART 6
PUBLIC REGISTER
Public register
84. (1) Subject to paragraph (2), the Registrar of Companies shall maintain a register (in this Part referred to as the “public register”) which shall contain the information set out in Schedule 2 in relation to—
(a) statutory auditors and audit firms (other than audit firms which fall within paragraph (b) of the definition of “statutory audit firm”),
(b) third-country auditors and audit entities, and
(c) audit firms approved in another Member State which have been registered in accordance with Regulation 38.
(2) The public register referred to in Regulation 63 of the 2010 Audits Regulations, as that register was in being immediately before 17 June 2016, shall, on and from that date, be deemed to be the public register referred to in paragraph (1), and the other provisions of these Regulations (including provisions relating to the removal or alteration of entries in the public register) shall apply to that register accordingly.
Notification of information to Registrar of Companies
85. (1)(a) An auditor or audit firm (other than a statutory audit firm which falls within paragraph (b) of the definition of “statutory audit firm”) shall, as soon as may be after he, she or it is approved under these Regulations as a statutory auditor or audit firm, notify the relevant information to the recognised accountancy body.
(b) A Member State audit firm shall, as soon as may be after it is registered in accordance with Regulation 38, notify the relevant information to the recognised accountancy body.
(c) A third-country auditor shall, as soon as may be after he or she is approved under these Regulations as a statutory auditor, notify the relevant information to the recognised accountancy body.
(2) On receipt of a notification under paragraph (1) and its having carried out any verification of the information as seems to it to be necessary, the recognised accountancy body or the Supervisory Authority, as appropriate, shall notify to the Registrar of Companies—
(a) the relevant information contained in the notification, and
(b)(i) subject to clause (ii), the individual identification number assigned by it to the auditor, audit firm or third-country auditor under Regulation 37(7) or a Member State audit firm under Regulation 38, and
(ii) where—
(I) under Regulations 37(7) or 38 such a number exists, and
(II) by reason of the circumstances referred to in paragraph (b) of the definition of “relevant information” in paragraph (4), the relevant information notified to the recognised accountancy body or Supervisory Authority does not include that number,
the number referred to in paragraph 1(c)(ii) or 2(g) of Schedule 2.
(3) The notifications under paragraph (1) and (2) shall each be made in such form and manner as the Registrar of Companies specifies.
(4) In this Regulation, “relevant information” means the information set out in paragraph 1 or 2, as the case may be, of Schedule 2, other than that set out—
(a) in subparagraph (b) of that paragraph 1 or 2, or
(b) if, due to the simultaneous registration of a statutory audit firm and the statutory auditors that comprise that firm, the number there referred to is not available at that time, in subparagraph (c)(ii) of that paragraph 1 or subparagraph (g) of that paragraph 2.
(5) For the avoidance of doubt, in the event that a recognised accountancy body is no longer recognised by the Supervisory Authority for the purposes of these Regulations or otherwise ceases to exist, the notifications under paragraphs (1) and (2) shall cease to have effect and the Registrar of Companies shall remove all information contained in such notifications from the public register.
Prohibition on certain acts unless registered
86. (1) A person shall not—
(a) act as, or
(b) represent himself, herself or itself, or hold himself, herself or itself out, as being,
a person falling within a category of person entered, or entitled to be entered, in the public register unless the person is entitled to be entered, and the name of the person is duly entered, in the public register.
(2) A person who contravenes paragraph (1) shall be guilty of an offence and shall be liable—
(a) on summary conviction, to a class A fine, or
(b) on conviction on indictment, to a fine not exceeding €50,000.
Obligation of statutory auditor or audit firm to notify certain information
87. (1) Each statutory auditor and audit firm and Member State audit firm shall, as soon as may be but not later than one month after the event, notify the recognised accountancy body of any change in the information contained in the public register relating to him, her or it.
(2) On receipt of a notification under paragraph (1) and its having carried out any verification of the information stated to have changed as seems to it to be necessary, the recognised accountancy body shall notify the change in information to the Registrar of Companies without undue delay.
(3) The Registrar of Companies shall, as soon as may be but not later than one month after receipt of the notification referred to in paragraph (2), amend the public register to reflect the change of information so notified.
(4) A person who fails, without reasonable excuse, to comply with paragraph (1) shall be guilty of an offence and shall be liable, on summary conviction, to a class A fine.
Information must be signed
88. (1) Information notified under Regulation 85(1) or 87(1) by a statutory auditor or audit firm (including a Member State audit firm) shall be signed by the statutory auditor or, as the case may be, a person on behalf of the statutory audit firm.
(2) The signature referred to in paragraph (1) may be an electronic signature (as defined in point 1 of Article 2 of Directive 1999/93/EC9 of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures) if the provision of a signature in that form complies with any requirements in that behalf of the Registrar of Companies of the kind referred to in section 13(2)(a) of the Electronic Commerce Act 2000 (No. 27 of 2000).
(3) If information is notified under Regulation 85(1) or 87(1) without being signed as required by paragraph (1), the statutory auditor or audit firm concerned shall be guilty of an offence and shall be liable, on summary conviction, to a class A fine.
Removal of third-country auditor or audit entity registered in accordance with Regulation 135 from public register
89. (1) Subject to paragraphs (2) and (3), the Supervisory Authority may instruct the Registrar of Companies, in the case of a third-country auditor or audit entity registered pursuant to Regulation 135, to remove the third-country auditor or audit entity from the public register if—
(a) the auditor or audit entity does not provide all the information or clarifications necessary for the renewal of his, her or its registration or does not pay the appropriate fee under Regulation 140, or
(b) the outcome of a quality assurance inspection or investigation and disciplinary process requires it.
(2) A third-country auditor or audit entity the subject of a quality assurance inspection or investigation shall not be removed from the public register until the completion of that inspection or investigation.
(3) The Supervisory Authority shall not give an instruction under paragraph (1) unless it has first given the third-country auditor or audit entity concerned a reasonable opportunity of being heard on the grounds (which the Supervisory Authority shall make known to such auditor or entity) that the Supervisory Authority is minded to give such instruction.
(4) The Supervisory Authority shall, at such times as it thinks it appropriate to do so, issue guidelines with regard to what constitutes a reasonable opportunity referred to in paragraph (3).
(5) The Supervisory Authority may publish on its website the name of the third-country auditor or audit entity that has been removed from the public register in accordance with this Regulation along with the reasons for removal.
Language of information to be entered in public register
90. The information entered in the public register shall be drawn up in either Irish or English.
PART 7
INDEPENDENCE
Requirement for independence — general
91. (1) During the period in which a statutory audit is being carried out—
(a) the statutory auditor or audit firm, as the case may be,
(b) in the latter case, any statutory auditor of the statutory audit firm, and
(c) any individual in a position to directly or indirectly influence the outcome of the statutory audit,
shall be independent of, and not involved in the decision-taking of, the audited entity.
(2) During the period in which a statutory audit is being carried out, a statutory auditor or audit firm, as the case may be, shall take all reasonable steps to ensure that his, her or its independence is not affected by—
(a) any existing or potential conflict of interest, or
(b) any business or other direct or indirect relationship,
involving the statutory auditor or audit firm carrying out the statutory audit.
(3) Paragraph (2) also applies, with any necessary modifications, to—
(a) the network of the statutory auditor or audit firm,
(b) the managers, auditors, employees or any other individuals whose services are placed at the disposal or under the control of the statutory auditor or audit firm,
(c) any person directly or indirectly linked to the statutory auditor or audit firm by control, and
(d) managers, auditors, employees or any other individuals whose services are placed at the disposal or under the control of a person linked to the statutory auditor or audit firm by control.
(4) The obligations referred to in paragraphs (1) and (2) shall be required at least during both the period covered by the financial statements to be audited and the period during which the statutory audit is carried out.
Professional scepticism
92. (1) When carrying out a statutory audit, the statutory auditor or the audit firm shall—
(a) maintain professional scepticism throughout the audit,
(b) maintain professional scepticism when reviewing management estimates relating to fair values, the impairment of assets, provisions, and future cash flow relevant to the audited entity’s ability to continue as a going concern, and
(c) recognise the possibility of a material misstatement due to facts or behaviour indicating irregularities, including fraud or error, notwithstanding the statutory auditor’s or the audit firm’s past experience of the honesty and integrity of the audited entity’s management and of the persons charged with its governance.
(2) For the purposes of this Regulation, “professional scepticism” means an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence.
Prohibited relationships — specific provisions to secure independence
93. (1) A statutory auditor or audit firm shall not carry out a statutory audit if there is any threat of self-review, self-interest, advocacy, familiarity, or intimidation, created by any direct or indirect financial, personal, business, employment or other relationship between—
(a) the statutory auditor or audit firm or network to which he, she or it belongs or any individual in a position to influence the outcome of the statutory audit, and
(b) the audited entity,
as a result of which an objective, reasonable and informed third party, taking into account the safeguards applied, would conclude that the statutory auditor’s or audit firm’s independence is compromised.
(2) Without prejudice to the generality of paragraph (1), a person shall not act as a statutory auditor of an entity if he or she is—
(a) an officer or servant of the entity,
(b) a person who has been an officer or servant of the entity within a period in respect of which accounts would fall to be audited by the person if he or she were appointed auditor of the entity,
(c) a parent, spouse, brother, sister or child of an officer of the entity,
(d) a person who is a partner of or in the employment of an officer of the entity,
(e) a person who is disqualified under this paragraph for appointment as auditor of a body corporate that is a subsidiary or holding company of the entity or a subsidiary of the entity’s holding entity, or would be so disqualified if the body corporate were a company, or
(f) a person in whose name a share in the entity is registered, whether or not that person is the beneficial owner of the share.
(3) Without prejudice to the generality of paragraphs (1) and (2), a statutory audit firm, regardless of its legal structure, shall not carry out a statutory audit of an entity if—
(a) any principal of the audit firm is an officer or servant of the entity,
(b) any principal of the audit firm has been an officer or servant of the entity within a period in respect of which accounts would fall to be audited by the firm if the firm was appointed auditor of the entity, or
(c) the firm is disqualified under this paragraph for appointment as auditor of any other body corporate that is a subsidiary or holding company of the entity or a subsidiary of the entity’s holding company, or would be so disqualified if the body corporate were a company.
(4) Without prejudice to the generality of paragraphs (1) to (3), a person shall not carry out a statutory audit of an entity on behalf of a statutory audit firm if he, or she or it is—
(a) a person in whose name a share in the entity is registered, whether or not that person is the beneficial owner of the share, or
(b) a parent, spouse, brother, sister or child of an officer of the entity.
Prohibited relationships — financial or beneficial interest
94. (1) A statutory auditor, an audit firm, the key audit partner of an audit firm, the employees of the statutory auditor or audit firm, and any other individual whose services are placed at the disposal or under the control of the statutory auditor or audit firm and who is directly involved in statutory audit activities, and persons closely associated with them within the meaning of Article 1(2) of Commission Directive 2004/72/EC of 29 April 200410 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards accepted market practices, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of insiders, the notification of managers’ transactions and the notification of suspicious transactions shall not—
(a) hold or have a material and direct beneficial interest in, or
(b) engage in any transaction in any financial instrument issued, guaranteed, or otherwise supported by,
any audited entity within their area of statutory audit activities, other than interests owned indirectly through diversified collective investment schemes, including managed funds such as pension funds or life assurance.
(2) A statutory auditor, an audit firm, the key audit partner of the audit firm, the employees of the statutory auditor or audit firm, and any other individual referred to in paragraph (1), shall not participate in or otherwise influence the outcome of a statutory audit of any particular audited entity if he, she or it—
(a) owns financial instruments of the audited entity, other than interests owned indirectly through diversified collective investment schemes,
(b) owns financial instruments of any entity related to the audited entity, the ownership of which may cause, or may be generally perceived as causing, a conflict of interest, other than interests owned indirectly through diversified collective investment schemes, or
(c) has had an employment, or a business or other relationship with the audited entity within the period covered by the financial statements to be audited and the period during which the statutory audit is carried out that may cause, or may be generally perceived as causing, a conflict of interest.
(3) A statutory auditor, an audit firm, the key audit partner of the audit firm, the employees of the statutory auditor or audit firm, and any other individual referred to in paragraph (1), shall not solicit or accept pecuniary or non-pecuniary gifts or favours from the audited entity or any entity related to an audited entity unless an objective, reasonable and informed third party would consider the value thereof as trivial or inconsequential.
Prohibited relationships — mergers and acquisitions
95. (1) If, during the period covered by the financial statements, an audited entity is acquired by, merges with, or acquires, another entity, the statutory auditor or audit firm shall identify and evaluate any current or recent interests or relationships, including any non-audit services provided to that entity, which, taking into account available safeguards, could compromise the statutory auditor’s or audit firm’s independence and ability to continue with the statutory audit after the effective date of the merger or acquisition.
(2) As soon as possible, and in any event within 3 months of the merger or acquisition referred to in paragraph (1), the statutory auditor or audit firm shall take all such steps as may be necessary to terminate any current interests or relationships that would compromise his, her or its independence and shall, where possible, adopt safeguards to minimise any threat to his, her or its independence arising from prior and current interests and relationships.
Threats to independence and other information to be recorded
96. A statutory auditor or audit firm shall document in the audit working papers all significant threats to his, her or its independence as well as the safeguards applied to mitigate those threats.
Preparation for statutory audit and assessment of threats to independence
97. A statutory auditor or audit firm shall, before accepting or continuing an engagement for a statutory audit, assess and document the following:
(a) whether he, she or it complies with the requirements set out in Regulations 91 and 93 to 96;
(b) whether there are threats to his, her or its independence and the safeguards applied to mitigate those threats;
(c) whether he, she or it has the competent employees, time and resources needed in order to carry out the statutory audit in an appropriate manner;
(d) whether, in the case of an audit firm, the key audit partner is approved as statutory auditor in the Member State requiring the statutory audit.
Internal organisation of statutory auditors and audit firms
98. (1) A statutory auditor or audit firm shall comply with the following organisational requirements:
(a) the audit firm shall establish appropriate policies and procedures to ensure that no person, including any partner, director, member or shareholder of the audit firm or of a firm in its network, intervenes in the carrying out of a statutory audit in any way which jeopardises the independence and objectivity of the statutory auditor who carries out the statutory audit on behalf of the audit firm;
(b) the statutory auditor or audit firm shall have sound administrative and accounting procedures, internal quality control mechanisms, effective procedures for risk assessment, and effective control and safeguard arrangements for information processing systems;
(c) the statutory auditor or audit firm shall establish appropriate policies and procedures to ensure that his, her or its employees and any other individuals whose services are placed at his, her or its disposal or under his, her or its control, and who are directly involved in the statutory audit activities, have appropriate knowledge and experience for the duties assigned;
(d)(i) the statutory auditor or audit firm shall establish appropriate policies and procedures to ensure that outsourcing of important audit functions is not undertaken in such a way as to impair the quality of the statutory auditor’s or audit firm’s internal quality control and the ability of the competent authorities to supervise the statutory auditor’s or audit firm’s compliance with the obligations laid down in these Regulations and, where applicable, in Regulation (EU) No 537/2014;
(ii) the statutory auditor or audit firm shall ensure that any such outsourcing of audit functions does not affect his, her or its responsibility towards the audited entity;
(e) the statutory auditor or audit firm shall establish appropriate and effective organisational and administrative arrangements to prevent, identify, eliminate or manage and disclose any threats to his, her or its independence as referred to in Regulations 91, 93 to 97 and 103 and Regulation (EU) No 537/2014;
(f) the statutory auditor or audit firm shall establish appropriate policies and procedures for carrying out statutory audits, coaching, supervising and reviewing employees’ activities and organising the structure of the audit file as referred to in Regulation 100;
(g) the statutory auditor or audit firm shall establish an internal quality control system to ensure the quality of the statutory audit so that—
(i) such system covers, at least, the policies and procedures referred to in subparagraph (f), and
(ii) responsibility for such system lies with a person who is qualified as a statutory auditor;
(h) the statutory auditor or audit firm shall use appropriate systems, resources and procedures to ensure continuity and regularity in the carrying out of his, her or its statutory audit activities;
(i) the statutory auditor or audit firm shall also establish appropriate and effective organisational and administrative arrangements for dealing with and recording incidents which have, or may have, serious consequences for the integrity of his, her or its statutory audit activities;
(j) the statutory auditor or audit firm shall have in place adequate remuneration policies, including profit-sharing policies, providing sufficient performance incentives to secure audit quality but the amount of revenue that the statutory auditor or audit firm derives from providing non-audit services to the audited entity shall not form part of the performance evaluation and remuneration of any person involved in, or able to influence the carrying out of, the audit;
(k) the statutory auditor or audit firm shall monitor and evaluate the adequacy and effectiveness of his, her or its systems, internal quality control mechanisms and arrangements established in accordance with these Regulations and, where applicable, Regulation (EU) No 537/2014 and take appropriate measures to address any deficiencies;
(l) the statutory auditor or audit firm shall—
(i) carry out an annual evaluation of the internal quality control system referred to in subparagraph (g), and
(ii) keep records of the findings of that evaluation and any proposed measure to modify the internal quality control system.
(2) A statutory auditor or audit firm shall communicate, in writing, his, her or its policies and procedures referred to in paragraph (1) to the employees of the statutory auditor or audit firm.
(3) A statutory auditor or the audit firm shall take into consideration the scale and complexity of his, her or its activities when complying with the requirements set out in paragraph (1).
(4) A statutory auditor or audit firm shall be able to demonstrate to the recognised accountancy body or Supervisory Authority that the policies and procedures designed to achieve compliance with this Regulation are appropriate given the scale and complexity of activities of the statutory auditor or audit firm.
Organisation of work of statutory auditors and audit firms
99. (1) An audit firm, when carrying out a statutory audit of an entity, shall designate at least one key audit partner who shall be actively involved in the carrying out of the statutory audit.
(2) An audit firm shall—
(a) provide the key audit partner with sufficient resources and with personnel that have the necessary competence and capabilities to discharge his or her duties appropriately, and
(b) ensure that the main criteria in selecting the key audit partner are securing audit quality, independence and competence.
(3) A statutory auditor, when carrying out a statutory audit of an entity, shall devote sufficient time to the engagement and shall assign sufficient resources to enable him or her to carry out his or her duties appropriately.
(4) A statutory auditor or audit firm shall keep records of any contraventions by him, her or it of the provisions of these Regulations and, where applicable, Regulation (EU) No 537/2014.
(5) A statutory auditor or audit firm shall keep records of any consequences of any contravention referred to in paragraph (4), including the measures taken to address such contravention and to modify his, her or its internal quality control system.
(6) A statutory auditor or audit firm shall prepare an annual report containing an overview of any measures taken pursuant to paragraph (5) and, in the case of an audit firm, shall communicate that report internally to the partners or directors, as may be appropriate, of the audit firm.
(7) A statutory auditor or audit firm shall document each request made and advices received where he, she or it asks external experts for advice.
Organisation of work of statutory auditors and audit firms — audit files
100. (1) A statutory auditor or audit firm shall maintain a client account record that includes the following data for each audit client:
(a) the name, address and place of business;
(b) in the case of an audit firm, the names of the key audit partner;
(c) the fees charged for the statutory audit and the fees charged for other services in any financial year.
(2) A statutory auditor or audit firm shall create an audit file for each statutory audit which shall be closed not later than 60 days after the date of signature of the statutory auditors’ report concerned and, where applicable, the reports referred to in Articles 10 and 11 of Regulation (EU) No 537/2014.
(3) A statutory auditor or audit firm shall document and retain at least the data recorded pursuant to Regulation 96, and, where applicable, Articles 6 to 8 of Regulation (EU) No 537/2014 for a period of at least 6 years.
(4) A statutory auditor or audit firm shall retain any other data and documents that are of importance in support of the statutory auditors’ report and, where applicable, the reports referred to in Articles 10 and 11 of Regulation (EU) No 537/2014 and for monitoring compliance with these Regulations and other applicable legal requirements.
(5) A statutory auditor or audit firm shall keep records of any complaints made in writing about the performance of the statutory audits carried out by him, her or it.
Restrictions with regard to fees
101. A recognised accountancy body shall ensure that its standards include provisions that fees for statutory audits—
(a) are not to be influenced by, or determined by, the provision of additional services to the audited entity, and
(b) are not to be based on any form of contingency.
Rotation of key audit partner in cases of public-interest entities
102. The key audit partner responsible for carrying out a statutory audit of a public-interest entity shall cease his or her participation in the statutory audit of the entity not later than 5 years from the date of his or her first appointment to carry out such audit.
Moratorium on taking up certain positions in audited entities
103. (1) There shall not be taken up by—
(a) a statutory auditor who carries out a statutory audit of an entity, or
(b) the key audit partner who carries out, on behalf of an audit firm, a statutory audit of an entity,
any of the positions in that entity, specified in paragraph (2), before a period of at least one year has elapsed since the day following the end of his or her direct involvement as a statutory auditor or key audit partner from the audit engagement.
(2) The specified positions are—
(a) a key management position in the audited entity,
(b) a position on the audit committee, or where such committee does not exist, such body as performs the equivalent functions to the audit committee, of the audited entity, or
(c) a non-executive member position of the audited entity or a member’s position of that entity.
(3) There shall not be taken up by—
(a) a statutory auditor who carries out a statutory audit of a public-interest entity, or
(b) the key audit partner who carries out, on behalf of an audit firm, a statutory audit of a public-interest entity,
any of the positions in that entity, specified in paragraph (4), before a period of at least 2 years has elapsed since the day following the end of his or her direct involvement as a statutory auditor or key audit partner from the audit engagement.
(4) The specified positions are—
(a) a key management position in the audited entity,
(b) a position on the audit committee, or where such committee does not exist, such body as performs the equivalent functions to the audit committee, of the audited entity, or
(c) a non-executive member position of the audited entity or a member’s position of that entity.
(5) Where an employee or partner, other than the key audit partner, of a statutory auditor or audit firm, or any other individual whose services are placed at the disposal or under the control of the statutory auditor or audit firm, and when such employees, partners or other individuals are personally approved as statutory auditors, there shall not be taken up by those employees, partners or other individuals any of the positions referred to in paragraphs (2) and (4), before a period of at least one year has elapsed since the day following (should such occur) his or her involvement in the statutory audit engagement of that audited entity.
Rotation of statutory auditor and audit firms in case of public-interest entities — extension
104. (1) A public-interest entity may, pursuant to Article 17(6) of Regulation (EU) No 537/2014, under exceptional circumstances request the Supervisory Authority for an extension to reappoint a statutory auditor or audit firm for a period of up to 2 years on an exceptional basis.
(2) The grounds for the exceptional basis may be events in the nature of mergers, acquisitions and special investigations but, in any case, it will be a matter for the Supervisory Authority to determine such grounds.
(3) A request shall be made in such form and manner as the Supervisory Authority specifies.
(4) On receipt of a request in the form specified in paragraph (3), the Supervisory Authority shall—
(a) grant the extension as requested,
(b) grant a shorter extension than that requested, or
(c) refuse to grant the extension.
(5) Where the Supervisory Authority, on receipt of a request for an extension, considers that it requires additional information before making a decision under paragraph (4), it shall give notice of that to the public-interest entity that made the request.
(6) The notice referred to in paragraph (5) shall set out the additional information required by the Supervisory Authority.
(7) On receipt of a response to the notice from the public-interest entity containing the additional information referred to in paragraph (5), the Supervisory Authority shall—
(a) grant the extension as requested,
(b) grant a shorter extension than that requested, or
(c) refuse to grant the extension.
(8) Where the Supervisory Authority grants an extension under paragraph (4) or (5), it shall—
(a) do so on an exceptional and case by case basis only, and
(b) publish its decision on its website.
(9) Where the Supervisory Authority refuses to grant an extension under paragraph (4)(c) or (7)(c), it shall provide reasons for its decision to the public-interest entity.
Rotation — reports by statutory auditor and audit firm in case of public-interest entities
105. (1) If there is uncertainty as to the date on which a statutory auditor or audit firm began carrying out consecutive statutory audits for a public-interest entity (for example, due to firm mergers, acquisitions, or changes in ownership structure), the statutory auditor or audit firm shall immediately report such uncertainty to the Supervisory Authority.
(2) The report to the Supervisory Authority referred to at Article 17(8) of Regulation (EU) No 537/2014 shall be made in such form and manner as the Supervisory Authority specifies.
(3) On receipt of a report in the form specified in paragraph (2), the Supervisory Authority shall have the power to—
(a) determine the relevant date for the purposes of paragraph (1), or
(b) request additional information from the statutory auditor or audit firm before making a decision referred to in subparagraph (a).
(4) Where the Supervisory Authority, on receipt of a report, considers that it requires additional information from the statutory auditor or audit firm or public-interest entity before making a decision under paragraph (3)(a), it shall—
(a) give notice of that to the statutory auditor or audit firm or public-interest entity within 2 weeks after the receipt of the report, and
(b) set out, in the notice, the additional information required by the Supervisory Authority.
(5) On receipt of a response to the notice from the statutory auditor or audit firm or public-interest entity containing the additional information referred to in paragraph (4), the Supervisory Authority shall—
(a) determine the relevant date for the purposes of paragraph (1), and
(b) provide reasons for its decision to the statutory auditor or audit firm and public-interest entity.
Provision of certain prohibited non-audit services by auditors of public-interest entities
106. (1) Subject to paragraph (2), a statutory auditor or audit firm carrying out the statutory audit of a public-interest entity, or any member of the network to which the statutory auditor or the audit firm belongs, may provide the following non-audit services to the audited entity, to its parent undertaking or to its controlled undertakings within the European Union:
(a) tax services relating to—
(i) preparation of tax forms,
(ii) identification of public subsidies and tax incentives unless support from the statutory auditor or audit firm in respect of such services is required by law,
(iii) support regarding tax inspections by tax authorities unless support from the statutory auditor or audit firm in respect of such inspections is required by law,
(iv) calculation of direct and indirect tax and deferred tax, or
(v) provision of tax advice;
(b) valuation services, including valuations performed in connection with actuarial services or litigation support services.
(2) The non-audit services referred to in paragraph (1) may only be provided as specified in that paragraph if—
(a) they have no direct or have immaterial effect, separately or in the aggregate, on the audited financial statements,
(b) the estimation of the effect on the audited financial statements is comprehensively documented and explained in the additional report to the audit committee, and
(c) the principles of independence set out in these Regulations are complied with by the statutory auditor or audit firm.
(3) The audit committee shall, at such times as it thinks it appropriate to do so, issue guidelines with regard to the non-audit services referred to in paragraph (1).
PART 8
QUALITY ASSURANCE OF STATUTORY AUDITORS AND AUDIT FIRMS
Chapter 1
Quality Assurance
Quality assurance by Supervisory Authority of statutory audit of public-interest entities and third-country auditors, etc.
107. (1) The Supervisory Authority shall put in place a quality assurance system as set out in Article 26 of Regulation (EU) No 537/2014.
(2) The Supervisory Authority shall ensure that it has in place a quality assurance system of registered third-country auditors and audit entities to whom these Regulations or Regulation (EU) No 537/2014 applies.
(3) Regulations 108 to 110 shall not apply to the statutory audit of annual and consolidated financial statements of public-interest entities unless specified in Regulation (EU) No 537/2014.
(4) The Supervisory Authority may publish on its website the findings and conclusions of individual inspections undertaken as part of the quality assurance system referred to in paragraph (1).
System of quality assurance to be put in place
108. (1) The Supervisory Authority, in accordance with these Regulations, shall oversee the quality assurance system implemented by the recognised accountancy bodies.
(2) A recognised accountancy body shall ensure that it has in place a system of quality assurance of—
(a) the body’s members’ activities as statutory auditors and audit firms of entities not referred to in Regulation 107 (1) and (2), and
(b) the activities, as statutory auditors and audit firms, of persons who, though not members of the recognised accountancy body, are persons in relation to whom the body may perform functions under these Regulations.
Organisation of quality assurance system
109. (1) A recognised accountancy body shall organise its system of quality assurance for audits in such a manner that—
(a) the system is independent of the reviewed statutory auditors and audit firms,
(b) the funding for the system is secure and free from any possible undue influence by statutory auditors or audit firms,
(c) the system has adequate resources,
(d) the persons who carry out quality assurance reviews have appropriate professional education and relevant experience in statutory audit and financial reporting combined with specific training on quality assurance reviews,
(e) the selection of reviewers for specific quality assurance review assignments is effected in accordance with an objective procedure designed to ensure that there are no conflicts of interest between reviewers and the statutory auditor or audit firm under review,
(f) the scope of quality assurance reviews of audits, supported by adequate testing of selected audit files, includes, except where otherwise agreed with the Supervisory Authority, an assessment of—
(i) compliance with applicable auditing standards and independence requirements,
(ii) the quantity and quality of resources spent,
(iii) the audit fees charged, and
(iv) the internal quality control system of the audit firm,
(g) each quality assurance review is the subject of a report in writing which includes the main conclusions of the review,
(h) a quality assurance review of each statutory auditor or audit firm takes place on the basis of an analysis of risk, at least, subject to paragraph (5) and Regulation 110, every 6 years,
(i) statutory auditors and audit firms take all reasonable steps to ensure that recommendations arising from quality assurance reviews of them are implemented within a reasonable period,
(j) there is published annually by it the overall results of quality assurance reviews carried out by it in the year concerned, and
(k) quality assurance reviews are appropriate and proportionate in view of the scale and complexity of the activity of the reviewed statutory auditor or audit firm.
(2) For the purpose of paragraph (1)(e), at least the following criteria shall apply to the selection of reviewers:
(a) reviewers have appropriate professional education and relevant experience in statutory audit and financial reporting combined with specific training on quality assurance reviews;
(b) a person does not act as a reviewer in a quality assurance review of a statutory auditor or audit firm until at least 3 years have elapsed since that person ceased to be a partner or an employee of, or otherwise associated with, that statutory auditor or audit firm;
(c) reviewers must declare (if such be the case) that there are no conflicts of interest between them and the statutory auditor and the audit firm to be reviewed.
(3) For the purpose of paragraph (1)(k), a recognised accountancy body, when undertaking quality assurance reviews of the statutory audits of annual or consolidated financial statements of medium-sized or small undertakings, shall take account of the fact that auditing standards adopted in accordance with Article 26 of the Audit Directive are designed to be applied in a manner that is proportionate to the scale and complexity of the business of the audited entity.
(4) If a statutory auditor or audit firm fails to take all reasonable steps to ensure that recommendations arising from a quality assurance review of him, her or it are implemented within a reasonable period, the recognised accountancy body concerned shall take appropriate action, including, where applicable, subjecting the statutory auditor or audit firm, as the case may be, to the system of disciplinary actions or penalties referred to in these Regulations.
(5) The period of at least 6 years referred to in paragraph (1)(h) shall be a continuation of the system that was in place under the 2010 Audit Regulations when the first quality assurance reviews were required to be completed within 6 years of the date of the making of those Regulations.
Quality assurance review deemed to include individual auditors in certain cases
110. For the purpose of Regulation 109(1)(h), a quality assurance review conducted in relation to a statutory audit firm shall be regarded as a quality assurance review of all statutory auditors carrying out audits on behalf of the firm provided that the firm has a common quality assurance policy with which each such statutory auditor is required to comply.
Right of recognised accountancy body as regards professional discipline
111. A recognised accountancy body shall have the right to take disciplinary actions or impose sanctions in respect of statutory auditors and audit firms who carry out audits and shall have procedures in place to facilitate the taking or imposition of such action or sanctions.
Chapter 2
Investigations and Sanctions
System of investigation and penalties
112. Each recognised accountancy body shall, in respect of those auditors and audit firms in relation to whom, by virtue of Regulation 35, it may perform functions, institute arrangements to ensure that there are effective systems of investigations and penalties to detect, correct and prevent inadequate execution of a statutory audit by them.
Duty of each recognised accountancy body with regard to sanctions
113. (1) Each recognised accountancy body shall ensure that the contractual and other arrangements that exist between it and its members are such as enable the imposition by it of effective, proportionate and dissuasive penalties in respect of statutory auditors and audit firms in cases where statutory audits are not carried out by them in accordance with these Regulations.
(2) The contractual and other arrangements referred to in paragraph (1) shall comply with the requirements of procedural fairness.
(3) By virtue of this Regulation, the contractual and other arrangements referred to in paragraph (1) that subsist for the time being between a recognised accountancy body and its members shall operate and have effect so as to enable the imposition by the recognised accountancy body—
(a) of penalties of a like character to those, and
(b) in the cases,
referred to in that paragraph in respect of persons who, though not members of the recognised accountancy body, are persons in relation to whom it may, by virtue of Regulation 35, perform functions under these Regulations.
Scope of penalties and publicity in relation to their imposition
114. (1) The penalties referred to in Regulation 113, provision for which must be made by the means referred to in that Regulation, shall, where appropriate, include withdrawal of approval under these Regulations or, if applicable, registration under Regulation 38.
(2) Paragraph (1) is without prejudice to Regulations 52 and 53.
(3) Unless there do not exist internal appeal procedures of a recognised accountancy body as referred to in Regulation 52(9)(a) or 53(9)(a), the reference in paragraph (4) to a recognised accountancy body shall be read as a reference to a recognised accountancy body acting through the disciplinary committee that deals with matters at first instance.
(4) Without prejudice to Regulation 35(9) to (11), a recognised accountancy body may, save where, in its opinion, proceeding in this manner would not be in the public interest, adopt procedures analogous to those in Regulation 52(5) to (7) or 53(5) to (7) as regards affording the statutory auditor or audit firm an opportunity to rectify the matters that have occasioned the investigation concerned and the proposed exercise of the power of withdrawal of approval referred to in paragraph (1).
(5) If—
(a) there exist internal appeal procedures, as referred to in Regulation 52(9)(a) or 53(9)(a), of a recognised accountancy body, and
(b) the investigation and disciplinary procedures of the recognised accountancy body provide that a decision of its disciplinary committee referred to in paragraph (3), being a decision of a nature to which this Regulation applies, shall stand suspended or shall not take effect until, as the case may be—
(i) the period for making an appeal under those procedures has expired without such an appeal having been made,
(ii) such an appeal has been made and the decision to withdraw the approval confirmed, or
(iii) such an appeal that has been made is withdrawn,
then, notwithstanding anything in the preceding provisions of this Regulation, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the happening of an event specified in subparagraph (b)(i), (ii) or (iii).
(6) If—
(a) there exist internal appeal procedures, as referred to in Regulation 52(9)(a) or 53(9)(a), of a recognised accountancy body, and
(b) the investigation and disciplinary procedures of the recognised accountancy body do not provide, as referred to in paragraph (5)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect,
then, notwithstanding anything in those procedures, the auditor or audit firm to whom that decision relates may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the relevant appellate committee of an appeal that he, she or it is making under those internal appeal procedures.
(7) Where an application under paragraph (6) is made to the High Court, paragraphs (10) to (13) apply to the application with—
(a) the substitution of references to an appeal under those internal appeal procedures for references to an appeal under Regulation 54,
and
(b) any other necessary modifications.
(8) If the relevant appellate committee referred to in paragraph (6) is of the opinion, having regard to the particular issues that have arisen on that appeal, that, in the interests of justice, the disposal by it of an appeal referred to in that paragraph ought to include procedures analogous to those, as referred to in paragraph (4), provided by Regulation 52(5) to (7) or 53(5) to (7) being adopted by it, then, in disposing of that appeal, it shall adopt procedures analogous to those in Regulation 52(5) to (7) or 53(5) to (7).
(9) A recognised accountancy body shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in paragraph (6) is prosecuted promptly and it shall be the duty of that appellate committee to ensure that any such appeal to it is disposed of as expeditiously as may be and, for that purpose, to take all such steps as are open to it to ensure that, in so far as is practicable, there are no avoidable delays at any stage in the determination of such an appeal.
(10) Where a recognised accountancy body has made a decision to withdraw the approval of an auditor or audit firm under this Regulation (that is to say, a final decision of the recognised accountancy body on the matter after the internal appeal procedures (if any) of it have been employed and exhausted), the auditor or audit firm may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the High Court of an appeal under Regulation 54 that he, she or it is making against the withdrawal.
(11) Subject to paragraph (13), on the hearing of an application under paragraph (10), the High Court may, as it considers appropriate and having heard the recognised accountancy body concerned and, if it wishes to be so heard, the Supervisory Authority (which shall have standing to appear and be heard on the application)—
(a) grant an order suspending the operation of the withdrawal, or
(b) refuse to grant such an order,
and an order under subparagaraph (a) may provide that the order shall not have effect unless one or more conditions specified in the order are complied with (and such conditions may include conditions requiring the auditor or audit firm not to carry out statutory audits save under the supervision of one or more other statutory auditors or audit firms or not to carry out such audits save in specified circumstances).
(12) Subject to paragraph (13), the High Court may, on application to it by the auditor or audit firm or recognised accountancy body concerned, vary or discharge an order under paragraph (11)(a) if it considers it just to do so.
(13) In considering an application under paragraph (10) or (12), the High Court shall have regard to—
(a) whether, as regards the appeal the applicant is making under Regulation 54 to the High Court, the applicant has a strong case that is likely to succeed before that Court (and, for that purpose, the High Court shall require the applicant to give an indication of the facts that will be relied upon, or of the evidence that will be adduced in the case of facts that are in controversy, by him, her or it on the hearing of that appeal), and
(b) the public interest and, in particular, the public interest in ensuring that there is the minimum of disruption, consistent with law, to the discharge by the recognised accountancy body concerned, as a body assigned with the function of granting and withdrawing approval.
(14) The fact of one or more—
(a) measures having been taken against, or
(b) one or more penalties having been imposed on,
a statutory auditor or audit firm by a recognised accountancy body shall be disclosed by the recognised accountancy body to the public and that disclosure shall, if the recognised accountancy body considers it appropriate, include such further particulars with respect to the matter as it thinks fit.
(15) Subject to paragraph (16), the manner of such disclosure, and the time at which it is made, shall be such as the recognised accountancy body determines to be appropriate.
(16) The recognised accountancy body shall establish, in writing, criteria the purpose of which is to govern the determination by it of the matters referred to in paragraph (15); and those criteria shall require the prior approval of the Supervisory Authority.
PART 9
AUDIT COMMITTEES
Audit committees for public-interest entities
115. (1) The directors of each public-interest entity shall establish an audit committee for the entity.
(2) The majority of the members of the audit committee shall be non-executive directors of the public-interest entity, that is to say, directors—
(a) the terms of appointment of whom indicate or state that they are being appointed in a non-executive capacity, and
(b) who otherwise possess the requisite degree of independence (particularly with regard to each of them satisfying the condition in paragraph (3)) so as to be able to contribute effectively to the committee’s functions.
(3) The condition referred to in paragraph (2)(b) is that the director does not have, and at no time during the period of 3 years preceding his or her appointment to the committee did have—
(a) a material business relationship with the public-interest entity, either directly, or as a partner, shareholder, director (other than as a non-executive director) or senior employee of a body that has such a relationship with the entity, or
(b) a position of employment in the public-interest entity.
(4) At least one of the directors referred to in paragraph (2) shall be a person who has competence in accounting or auditing.
(5) For the purposes of paragraphs (2) and (3)(a), a non-executive director is a director who is not engaged in the daily management of the public-interest entity or body concerned, as the case may be.
(6) The members of the audit committee as a whole shall have competence relevant to the sector in which the audited entity is operating.
(7) The chairman of the audit committee shall be appointed by its members and shall be independent of the audited entity.
(8) Any proposal of the directors of a public-interest entity with respect to the appointment of a statutory auditor or audit firm to the entity shall be based on a recommendation made to the directors by the audit committee.
(9) The statutory auditor or audit firm shall report to the audit committee of the public-interest entity on key matters arising from the statutory audit of the entity, and, in particular, on material weaknesses in internal control in relation to the financial reporting process.
(10) Without prejudice to paragraph (1), this Regulation shall not apply to a public-interest entity if it is—
(a) a public-interest entity which is a subsidiary undertaking within the meaning of point 10 of Article 2 of Directive 2013/34/EU if that entity fulfils the requirements set out in paragraphs (1) and (2) and Articles 11(1) and (2) and 16(5) of Regulation (EU) No 537/2014 at group level,
(b) any public-interest entity which is an UCITS as defined in Article 1(2) of Directive 2009/65/EC of the European Parliament and of the Council of 13 July 200911 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) or an alternative investment fund (AIF) as defined in Article 4(1)(a) of Directive 2011/61/EU of the European Parliament and of the Council of 8 June 201112 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010,
(c) subject to paragraph (11), any public-interest entity the sole business of which is to act as an issuer of asset backed securities as defined in point 5 of Article 2 of Commission Regulation (EC) No 809/2004 of 29 April 200413 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements, or
(d) any credit institution within the meaning of point 1 of Article 3(1) of Directive 2013/36/EU whose shares are not admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC and which has, in a continuous or repeated manner, issued only debt securities admitted to trading in a regulated market, provided that the total nominal amount of all such debt securities remains below €100,000,000 and that it has not published a prospectus under Directive 2003/71/EC of the European Parliament and of the Council of 4 November 200314 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC.
(11) An entity that avails itself of the exemption under paragraph (10)(c) shall, by means of a statement to that effect included—
(a) in any annual report published by it, or
(b) in an annual return or other periodic statement delivered by it to the Registrar of Companies or Central Bank of Ireland,
set forth the reasons for why it considers the establishment of an audit committee by it is not appropriate and, accordingly, why it has availed itself of that exemption.
(12) Without prejudice to the responsibility of the directors of the public-interest entity, the responsibilities of the audit committee shall include—
(a) to inform directors of the entity of the outcome of the statutory audit and explain how the statutory audit contributed to the integrity of financial reporting and what the role of the audit committee was in that process,
(b) to monitor the financial reporting process and submit recommendations or proposals to the directors of the entity to ensure its integrity,
(c) to monitor the effectiveness of the entity’s internal quality control and risk management systems and, where applicable, its internal audit, regarding the financial reporting of the entity, without breaching its independence,
(d) to monitor the statutory audit of the annual and consolidated financial statements, in particular, its performance, taking into account any findings and conclusions by the Supervisory Authority pursuant to Article 26(6) of Regulation (EU) No 537/2014,
(e) to review and monitor the independence of the statutory auditors or the audit firms in accordance with Regulations 93 to 98 and Article 6 of Regulation (EU) No 537/2014, and, in particular, the appropriateness of the provision of non-audit services to the audited entity in accordance with Article 5 of that Regulation, and
(f) to be responsible for the procedure for the selection of a statutory auditor or audit firm and recommend the statutory auditor or audit firm to be appointed in accordance with Article 16 of Regulation (EU) No 537/2014 except when Article 16(8) of that Regulation is applied.
(13) Paragraph (8) applies to a proposal of the directors (with respect to the appointment of a statutory auditor or audit firm to a public-interest entity) made at any time after the establishment of the audit committee in respect of the entity.
(14) The other provisions of these Regulations with regard to the performance of a function by the audit committee apply with respect to accounts of the public-interest entity for financial years beginning on or after the establishment of the audit committee in respect of the entity.
(15) A public-interest entity which, without reasonable excuse, contravenes paragraph (11) shall be guilty of an offence and shall be liable—
(a) on summary conviction, to a class A fine, or
(b) on conviction on indictment, to a fine not exceeding €12,500.
PART 10
REGULATORY ARRANGEMENTS BETWEEN MEMBER STATES
Chapter 1
Cooperation with other Member States
Specific requirements with regard to cooperation
116. (1) In this Regulation, “counterpart authorities in other Member States” means competent authorities or bodies in other Member States with functions corresponding to those of the Supervisory Authority, the recognised accountancy bodies and the Registrar of Companies with regard to approval, registration, quality assurance, inspection and discipline under these Regulations or Regulation (EU) No 537/2014.
(2) The Supervisory Authority, the recognised accountancy bodies and the Registrar of Companies with functions relating to approval, registration, quality assurance, inspection and discipline under these Regulations or Regulation (EU) No 537/2014, shall cooperate with the counterpart authorities in other Member States and the relevant European Supervisory Authorities whenever necessary for the purpose of those authorities or bodies (or, as the case may be, the counterpart authorities) carrying out their respective functions under these Regulations or Regulation (EU) No 537/2014 or, as the case may be, the laws of the other Member State concerned that implement the Audit Directive.
(3) The Supervisory Authority, the recognised accountancy bodies and the Registrar of Companies with the foregoing functions under these Regulations or Regulation (EU) No 537/2014 shall render assistance to the counterpart authorities in other Member States and to the relevant European Supervisory Authorities and, in particular, shall exchange information and cooperate with them in investigations relating to the carrying out of statutory audits.
Confidentiality of information
117. (1) No person shall disclose, except in accordance with law, information that—
(a) is obtained in performing functions under any provision of these Regulations or of Regulation (EU) No 537/2014, and
(b) has not otherwise come to the notice of members of the public.
(2) A person who contravenes paragraph (1) shall be guilty of an offence and shall be liable—
(a) on summary conviction, to a class A fine, or
(b) on conviction on indictment, to a fine not exceeding €12,500 or imprisonment for a term not exceeding 12 months or both.
Supplemental provisions in relation to Regulation 117
118. Without limiting Regulation 117, the persons to whom that Regulation applies include the following:
(a) a member or director or former member or director of any board or committee, howsoever called, of the Supervisory Authority, the recognised accountancy bodies or the Registrar of Companies;
(b) an employee or former employee of the Supervisory Authority, the recognised accountancy bodies or the Registrar of Companies;
(c) a professional or other advisor to the Supervisory Authority, the recognised accountancy bodies or the Registrar of Companies, including a former advisor.
Obligation to supply information required for certain purposes and saving concerning confidential information
119. (1) The Supervisory Authority or a recognised accountancy body shall, on request and without undue delay, supply any information required for the purpose referred to in Regulation 116.
(2) Regulation 117 shall not prevent the Supervisory Authority or a recognised accountancy body from complying with any such request or exchanging confidential information.
Obligation of Supervisory Authority or recognised accountancy body to gather information
120. (1) Where necessary, the Supervisory Authority or a recognised accountancy body, on receiving a request referred to in Regulation 119(1), shall, without undue delay, take the necessary measures to gather the required information.
(2) If the Supervisory Authority or a recognised accountancy body of whom a request under paragraph (1) is made is not able to supply, without undue delay, the required information, it shall notify the counterpart authority in the other Member State that made the request of—
(a) the fact of the delay, and
(b) the reasons therefor.
Application of Regulation 117 to certain information
121. Regulation 117 shall apply to information received by the Supervisory Authority, a recognised accountancy body or the Registrar of Companies pursuant to the cooperation or exchange of information that is required of counterpart authorities of Member States by this Chapter.
Requesting authority to be notified if its request not complied with
122. (1) If—
(a) the Supervisory Authority or a recognised accountancy body of whom a request referred to in Regulation 119(1) is made does not comply with the request, and
(b) the case is neither—
(i) just one of a delay in complying with the request to which Regulation 120(2) relates, nor
(ii) one of a refusal to comply with the request on any of the grounds referred to in Regulation 123,
the Supervisory Authority or recognised accountancy body, as appropriate, shall notify the counterpart authority in the other Member State that made the request of the reasons for that failure to comply.
(2) If it is a recognised accountancy body as referred to in paragraph (1)(a), it shall also notify the Supervisory Authority of the reasons for the failure referred to in that paragraph.
Grounds for refusing request for information
123. (1) The Supervisory Authority or a recognised accountancy body may refuse to comply with a request referred to in Regulation 119(1) if, in its opinion—
(a) there are reasonable grounds for believing that supplying the infor-mation concerned might adversely affect—
(i) public order,
(ii) the security of the State,
(iii) the defence of the State, or
(iv) the international relations of the State,
(b) proceedings in any court in the State have already been initiated in respect of the same actions and against the same statutory auditor or audit firm, the subject of the request, or
(c) a final determination has already been made by the Supervisory Authority or recognised accountancy body in respect of the same actions and the same statutory auditor or audit firm, the subject of the request.
(2) A recognised accountancy body shall not exercise the power under paragraph (1) to refuse to comply with a request save after consultation with the Supervisory Authority.
(3) The Supervisory Authority or a recognised accountancy body that refuses, under paragraph (1), to comply with a request shall notify the counterpart authority in the other Member State that made the request of the reasons for the refusal.
(4) A recognised accountancy body, referred to in paragraph (3), shall also notify the Supervisory Authority of the reasons for the refusal referred to in that paragraph.
Use to which information may be put
124. (1) In this Regulation, “relevant information” means information that the Supervisory Authority or a recognised accountancy body receives pursuant to the cooperation or exchange of information that is required of counterpart authorities of Member States in this Chapter.
(2) The Supervisory Authority or a recognised accountancy body may use relevant information only for the performance by it of its functions under these Regulations or Regulation (EU) No 537/2014 and then only in the context of steps it takes in—
(a) investigating and detecting failures to comply with these Regulations or Regulation (EU) No 537/2014, and
(b) initiating and employing disciplinary procedures, or maintaining proceedings in any court, in respect of any such failures.
(3) Paragraph (2) is without prejudice to any obligations, by virtue of any proceedings being maintained in any court, to which the Supervisory Authority or a recognised accountancy body or European Supervisory Authority is subject as regards the use to which it may put information referred to in that paragraph and in the context of administrative or judicial proceedings specifically related to the exercise of those functions.
(4)(a) The Supervisory Authority or a recognised accountancy body may transmit to the counterpart authorities in other Member States responsible for supervising public-interest entities, to central banks, to the European System of Central Banks and to the European Central Bank, in their capacity as monetary authorities, and to the European Systemic Risk Board, confidential information intended for the performance of their respective functions.
(b) Such authorities or bodies shall not be prevented from communicating, to the Supervisory Authority or a recognised accountancy body, information that the Supervisory Authority or recognised accountancy body may need in order to perform its functions under Regulation (EU) No 537/2014.
Counterpart authority to be notified of non-compliance with Audit Directive and Regulation (EU) No 537/2014
125. Where the Supervisory Authority or a recognised accountancy body forms, on reasonable grounds, the opinion that activities contrary to the provisions of the Audit Directive or of Regulation (EU) No 537/2014 are being, or have been, carried out on the territory of another Member State, it shall, as soon as possible—
(a) notify the counterpart authority in the other Member State of that opinion, and
(b) include in that notification specific details of the matter and the grounds for its opinion.
Counterpart authority may be requested to carry out investigation
126. (1) In relation to activities that it suspects have been, or are being, carried on contrary to the provisions of the Audit Directive or Regulation (EU) No 537/2014, the Supervisory Authority or a recognised accountancy body may request a counterpart authority in another Member State to carry out an investigation in the territory of that Member State.
(2) A request under paragraph (1) of a counterpart authority may be accompanied by a further request that one or more of the officers, or members of staff, of the Supervisory Authority or a recognised accountancy body be allowed to accompany officers, or members of staff, of the counterpart authority in the course of the investigation.
(3) A recognised accountancy body shall notify the Supervisory Authority of the making of a request by it under paragraph (1) and, if such be the case, the making of the further request by it under paragraph (2).
Duty of Supervisory Authority or recognised accountancy body to take certain action
127. (1) Where the Supervisory Authority or a recognised accountancy body receives a notification from—
(a) the entity specifically responsible, pursuant to the laws of another Member State that implement Article 36 of the Audit Directive, for ensuring the cooperation referred to in that Article, or
(b) the counterpart authority in another Member State,
that activities contrary to the provisions of the Audit Directive or Regulation (EU) No 537/2014 are being, or have been, carried on in the State, it shall take appropriate action under these Regulations, Regulation (EU) No 537/2014 or the Companies Act 2014 , as appropriate.
(2) The Supervisory Authority or a recognised accountancy body shall inform the notifying entity or authority of the outcome of that action, and to the extent possible, of significant developments in the period pending that outcome.
(3) A recognised accountancy body shall—
(a) notify the Supervisory Authority of the taking by it of the action referred to in paragraph (1), and
(b) in addition to so informing, under paragraph (2), the notifying entity or authority of those matters, inform the Supervisory Authority of the outcome of that action, and to the extent possible, of significant developments in the period pending that outcome.
Due consideration to be given to counterparty’s request for investigation
128. (1) The Supervisory Authority or a recognised accountancy body shall give due consideration to a request made of it, pursuant to the laws of another Member State that implement Article 36 of the Audit Directive, to carry out an investigation in the State.
(2) If a request under paragraph (1) is acceded to by the Supervisory Authority or a recognised accountancy body, the investigation shall be subject to the overall control of the Supervisory Authority or recognised accountancy body that receives the request.
(3) For the purpose of this Regulation—
(a) the reference in paragraph (1) to a request that is made pursuant to the laws of another Member State that implement Article 36 of the Audit Directive is a reference to such a request, whether or not it is accompanied by a further request (made pursuant to those laws) that one or more of the officers, or members of staff, of the requesting authority be allowed to accompany officers, or members of staff, of the Supervisory Authority or a recognised accountancy body in the course of the investigation, and
(b) the investigation is subject to the control as referred to in paragraph (2) even if that further request is acceded to by the Supervisory Authority or a recognised accountancy body.
(4) A recognised accountancy body shall notify the Supervisory Authority—
(a) of the making of a request of it referred to in paragraph (1), and
(b) if the request is acceded to by it, of the fact of the request being so acceded to.
Grounds for refusing request for investigation
129. (1) The Supervisory Authority or a recognised accountancy body may refuse to accede to a request referred to in Regulation 128(1) made of it or a further request of the kind referred to in Regulation 128(3)(a) made of it if, in its opinion—
(a) there are reasonable grounds for believing that acceding to the request might adversely affect—
(i) public order,
(ii) the security of the State,
(iii) the defence of the State, or
(iv) the international relations of the State,
(b) proceedings in any court in the State have already been initiated in respect of the same actions and against the same statutory auditor or audit firm, the subject of the request, or
(c) a final determination has already been made by the Supervisory Authority or a recognised accountancy body in respect of the same actions and the same statutory auditor or audit firm, the subject of the request.
(2) A recognised accountancy body referred to in paragraph (1) shall not exercise the power thereunder to refuse to accede to a request save after consultation with the Supervisory Authority.
(3) The Supervisory Authority or a recognised accountancy body that refuses, under paragraph (1), to accede to a request shall notify the counterpart authority in the other Member State that made the request of the reasons for the refusal.
(4) A recognised accountancy body referred to in paragraph (3) shall also notify the Supervisory Authority of the reasons for the refusal referred to in that paragraph.
Chapter 2
Mutual Recognition of Regulatory Arrangements between Member States
Mutual recognition of regulatory arrangements between Member States
130. To the extent that the preceding provisions of these Regulations, or, where applicable, Regulation (EU) No 537/2014 do not operate to achieve the following effects in the law of the State, these Regulations or Regulation (EU) No 537/2014 and those preceding provisions (notwithstanding anything in them to the contrary) shall be construed as operating, in a manner so that—
(a)(i) the principle of home-country regulation and oversight by the Member State in which the statutory auditor or audit firm is approved and the audited entity has its registered office is respected, and
(ii) without prejudice to subparagraph (i), audit firms approved in one Member State that perform audit services in another Member State in accordance with Regulation 38 shall be subject to quality assurance review in the home Member State and oversight in the host Member State of any audit carried out there,
(b) the imposition of additional requirements on a statutory auditor or audit firm in relation to the statutory audit concerning registration, quality assurance review, auditing standards, professional ethics and independence is prohibited in the case of—
(i) a statutory audit of consolidated financial statements, required by a Member State, of a subsidiary established in another Member State, and
(ii) a company the securities of which are traded on a regulated market in another Member State to that in which it has its registered office, by that Member State, regarding the statutory audit of the annual or consolidated financial statement of that company,
and
(c) a statutory auditor or audit firm, approved under Regulation 37 or 134, which is registered in any Member State and provides audit reports concerning annual or consolidated financial statements in accordance with Regulation 135, the systems of oversight, quality assurance, investigation and sanctions of the Member State where registration took place will apply.
Chapter 3
Transfer of Working Papers to Third-country Competent Authorities
Transfer of audit documentation to third-country competent authority
131. (1) Subject to Regulation 132, audit working papers or other documents held by a statutory auditor or audit firm and inspection or investigation reports relating to the audits concerned may be transferred to a third-country competent authority only if the Supervisory Authority, on a request being made of it in that behalf by the first-mentioned authority, determines that the following conditions are complied with (and authorises such transfer accordingly), namely—
(a) those audit working papers or other documents relate to the audit of a company which—
(i) has issued securities in the third country concerned, or
(ii) forms part of a group of companies that issue statutory group financial statements in the third country concerned,
(b) the third-country competent authority meets requirements which have been declared adequate in accordance with Article 47(3) of the Audit Directive,
(c) there are working arrangements on the basis of reciprocity agreed between the Supervisory Authority and the third-country competent authority, and
(d) the transfer of personal data to the third country concerned is in accordance with Chapter IV of Directive 95/46/EC of the European Parliament and of the Council of 24 October 199515 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.
(2) The working arrangements referred to in paragraph (1)(c) shall ensure that—
(a) justification as to the purpose of the request for audit working papers and other documents is provided by the third-country competent authority concerned,
(b) the audit working papers and other documents are only transferred if—
(i) an obligation similar to that provided by Regulation 117 is provided under the laws of the third country concerned in relation to persons whilst in, and in any period subsequent to their ceasing to be in, the employment of the third-country competent authority,
(ii) the relevant persons in the employment of the third-country competent authority that will deal with the matter provide an undertaking in writing to the Supervisory Authority that they—
(I) will comply with their obligation referred to in clause (i), and
(II) deliver up possession of the audit working papers and other documents to the third-country competent authority, and do everything within their power to secure the return of them by that authority to the Supervisory Authority, once the performance of the functions referred to in subparagraph (c) in relation to them is completed,
and
(iii) the protection of the commercial interests of the audited entity, including its industrial and intellectual property, is not undermined,
(c) the third-country competent authority uses audit working papers and other documents only for the performance of its functions of public oversight, quality assurance and investigations that meet requirements equivalent to those of Articles 29, 30 and 32 of the Audit Directive,
and
(d) the request from a third-country competent authority for audit working papers or other documents held by a statutory auditor or audit firm can be refused by the Supervisory Authority—
(i) where the provision of those working papers or documents would adversely affect the sovereignty of the European Union or any of the following:
(I) public order (whether in the State or elsewhere in the European Union);
(II) the security of the State or the European Union;
(III) the defence of the State or the European Union;
(IV) the international relations of the State or the European Union,
(ii) where proceedings in any court in the State have already been initiated in respect of the same actions and against the same statutory auditor or audit firm, or
(iii) where final judgment in any court in the State has already been passed in respect of the same actions and on the same statutory auditor or audit firm, the subject of the request.
(3) The Supervisory Authority has, for the purposes of the performance of its functions under the preceding paragraphs (including the taking of any steps that necessitate the perusal by it of the papers and other documents concerned so as to determine whether the transfer should be refused on any of the grounds referred to in paragraph (2)(d)), the following power.
(4) That power is to require the statutory auditor or audit firm concerned to produce to it the audit working papers and other documents; the statutory audi-tor or audit firm shall comply with such a requirement made of him, her or it by the Supervisory Authority.
(5) As soon as may be after—
(a) if such a determination is made, the making by the Supervisory Authority of a determination that the transfer of the papers and other documents be refused on any of the grounds referred to in paragraph (2)(d), or
(b) the papers and other documents are returned by the third-country competent authority to it,
the Supervisory Authority shall secure the return to the statutory auditor or audit firm concerned of the audit working papers and other documents.
Derogation from Regulation 132 in exceptional cases
132. By way of derogation from Regulation 131, the Supervisory Authority may, in exceptional cases, allow a statutory auditor or audit firm to transfer audit working papers and other documents directly to a third-country competent authority, provided that—
(a) an investigation has been initiated by that competent authority in the third country concerned,
(b) the transfer does not conflict with the obligations with which statutory auditors and audit firms are required to comply in relation to the transfer of audit working papers and other documents to the Supervisory Authority,
(c) there are working arrangements with the third-country competent authority of a reciprocal nature that allow the Supervisory Authority direct access to audit working papers and other documents of audit entities in the third country concerned,
(d) the third-country competent authority informs in advance the Supervisory Authority of each direct request for information, indicating the reasons therefor, and
(e) conditions similar to those specified in Regulation 131(2)(a) to (d) are satisfied.
Particulars of working arrangements to be notified
133. (1) Where the Supervisory Authority enters into working arrangements with a third-country competent authority in accordance with Regulation 131(1)(c), particulars of those working arrangements shall be published by the Supervisory Authority on its website without delay and those particulars shall include—
(a) the name of the third-country competent authority, and
(b) the jurisdiction in which it is established.
(2) Particulars of those working arrangements shall also be notified by the Supervisory Authority to the Commission.
PART 11
THIRD-COUNTRY AUDITORS
Chapter 1
International Aspects
Approval of third-country auditor
134. (1) Without prejudice to Chapter 2 of Part 4 and subject to paragraph (2), a recognised accountancy body may approve a third-country auditor as a statutory auditor if that person has furnished proof that he or she complies with requirements equivalent to those specified in Regulations 37 and 45.
(2) A third-country auditor shall not be approved under paragraph (1) unless reciprocal arrangements with the third country concerned are in place, that is to say arrangements that enable—
(a) by virtue of the law of that third country, and
(b) on fulfilment by the statutory auditor concerned of requirements no more onerous than those specified by this Regulation and Chapter 2 of Part 4 for the third-country auditor’s approval under paragraph (1),
a statutory auditor to carry out audits in that third country.
Chapter 2
Registration and Oversight of Third-country Auditors and Audit Entities
Registration of third-country auditors and audit entities
135. (1) Subject to paragraphs (6), (7), (8) and (9) and Regulation 141, the Supervisory Authority shall, in accordance with the relevant provisions of Part 6 and Schedule 2, cause to be registered in each year in the public register every third-country auditor and audit entity that indicates, in writing to it, his, her or its intention to provide an audit report concerning the annual or group financial statements of an undertaking falling within paragraph (3).
(2) Registration in the public register pursuant to paragraph (1) shall have effect for a period of 12 months from the date on which the registration is effected.
(3) The undertaking referred to in paragraph (1) is one—
(a) incorporated outside the European Union, not being a collective investment undertaking, and
(b) whose transferable securities are admitted to trading on a regulated market (within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC) in the State.
(4) There shall accompany the indication in writing by a third-country auditor or audit entity referred to in paragraph (1) a notification, in such form and manner as the Supervisory Authority specifies, of the following information (in relation to the auditor or audit entity) to it.
(5) That information is the information referred to in paragraph 3 of Schedule 2 but does not include the information referred to in paragraph 1(b) or 2(b) (as applied by that paragraph 3) of that Schedule.
(6) Paragraph (1) shall not apply if the undertaking referred to in that paragraph is an issuer exclusively of outstanding debt securities for which one of the following applies:
(a) prior to 31 December 2010, the undertaking was admitted to trading on a regulated market in a Member State within the meaning of Article 2(1)(c) of Directive 2004/109/EC of the European Parliament and of the Council of 15 December 200416 on the harmonisation of transparency requirements in relation to information about issues whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC, and the denomination per unit of which is at the date of issue at least €50,000 or, in case of debt securities denominated in another currency, equivalent, at the date of issue, to at least €50,000;
(b) from 31 December 2010, the undertaking was admitted to trading on a regulated market in a Member State within the meaning of Article 2(1)(c) of Directive 2004/109/EC, and the denomination per unit of which is at the date of issue at least €100,000 or, in case of debt securities denominated in another currency, equivalent, at the date of issue, to at least €100,000.
(7) Paragraph (1) shall not apply in respect of an audit report for a financial year referred to in Regulation 4(a) of the European Communities (Transitional Period Measures in Respect of Third Country Auditors) Regulations 2009 ( S.I. No. 229 of 2009 ) if the audit report is provided by a third-country auditor or audit entity that complies with Regulation 4 of those Regulations.
(8) Paragraph (1) shall not apply in respect of an audit report referred to in that paragraph for a financial year starting during the period from 2 July 2010 to 31 July 2012 if—
(a) that audit report is provided by a third-country auditor or audit entity,
(b) that audit report concerns a company referred to in paragraph (2) that is incorporated in a third-country specified in Annex I to Commission Decision 2011/30/EU of 19 January 201117 on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the European Union as amended by Commission Implementing Decision 2013/288/EU of 13 June 201318 amending Decision 2011/30/EU on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third-country auditors and audit entities in the European Union, and
(c) the third-country auditor or audit entity concerned complies with Regulations 4(2) and 7 of the European Union (Third Country Auditors and Audit Entities Equivalence, Transitional Period Measures and Fees) Regulations 2012 ( S.I. No. 312 of 2012 ).
(9) Paragraph (1) shall not apply in respect of an audit report referred to in that paragraph for a financial year starting during the period from 2 July 2010 to 31 July 2015 if—
(a) that audit report is provided by a third-country auditor or audit entity,
(b) that audit report concerns the annual or consolidated accounts of companies referred to in paragraph (2) that are incorporated in a third country or territory specified in Annex II to Commission Decision 2011/30/EU of 19 January 2011 as amended by Commission Implementing Decision 2013/288/EU of 13 June 2013, and
(c) the third-country auditor or audit entity concerned complies with Regulations 4A(2) and 7 of the European Union (Third Country Auditors and Audit Entities Equivalence, Transitional Period and Fees) Regulations 2012.
(10) Regulation 87 shall apply to third-country auditors and audit entities so registered with the substitution of references to the recognised accountancy body for references to the Supervisory Authority and any other necessary modifications.
(11) Regulation 88 shall apply, with any necessary modifications, to a notifi-cation of information by a third-country auditor or audit entity under—
(a) paragraph (4) to the Supervisory Authority; and
(b) Regulation 87, as applied by paragraph (10), to that Authority.
(12) In paragraph (3), “collective investment undertaking” does not include such an undertaking of the closed-ended type.
Exemption from quality assurance
136. (1) A third-country auditor or audit entity registered under Part 6 in pursuance of Regulation 135 may apply to the Supervisory Authority for an exemption from Chapter 1 of Part 8 if a quality assurance review has, under another Member State’s or third country’s system of quality assurance, been carried out in relation to the auditor or audit entity during the 3 years preceding the making of the application.
(2) On the making of that application, if—
(a) the Supervisory Authority is satisfied that the quality assurance review referred to in paragraph (1) has been carried out as referred to in that paragraph, and
(b) the system of quality assurance referred to in that paragraph has been assessed as equivalent in accordance with Regulation 141,
the Supervisory Authority shall grant the exemption and the third-country auditor or audit entity shall be exempted from Chapter 1 of Part 8 accordingly.
Audit by non-registered auditor or audit entity — consequence
137. Without prejudice to Regulation 141 and unless Regulation 135(6), (7), (8) or (9) applies to it, an audit report provided by a third-country auditor or audit entity concerning the annual or group financial statements of a company falling within Regulation 135(3) shall have no legal effect in the State if the third-country auditor or audit entity that provides it is not registered under Part 6.
Conditions for registration of third-country auditor or audit entity
138. (1) The Supervisory Authority may cause to be registered a third-country auditor or audit entity pursuant to Regulation 135 only if—
(a) where the applicant for registration is an audit entity (referred to in this Regulation as the “potential registrant”), the applicant satisfies so much of the conditions specified in paragraph (2) as are applicable to an entity, and
(b) where the applicant for registration is an auditor (also referred to in this Regulation as the “potential registrant”), the applicant satisfies so much of the conditions specified in paragraph (2) as are applicable to an individual.
(2) The conditions are—
(a) the majority of the members of the administrative or management body of the potential registrant meet requirements equivalent to those of Regulations 37 and 45,
(b) the third-country auditor carrying out the audit on behalf of the potential registrant meets requirements equivalent to those of Regulations 37 and 45,
(c) the audits of the annual or group financial statements referred to in Regulation 135(1) are carried out in accordance with international auditing standards as referred to in Regulation 77, as well as the requirements referred to in Regulation 64, or with equivalent standards and requirements, and
(d) the potential registrant publishes annually on a website, being a website maintained by or on behalf of the potential registrant, a report which includes the information referred to in Article 13 of Regulation (EU) No 537/2014 in relation to the year concerned or the potential registrant complies with equivalent disclosure requirements.
Supervisory Authority may assess matter of equivalence for purposes of Regulation 138(2)(c)
139. (1) For so long as the Commission has not taken, in accordance with the procedure referred to in Article 48(2) of the Audit Directive, the decision under Article 45(6) of that Directive in relation to the matter of equivalence of standards and requirements referred to in Regulation 138(2)(c), the Supervisory Authority may, for the purposes of that provision, make an assessment of that equivalence.
(2) When assessing this equivalence, the Supervisory Authority shall use the general equivalence criteria established by the Commission in assessing whether the audits of the financial statements referred to in Regulation 135(1) are carried out in accordance with the standards and requirements referred to in Regulation 138(2)(c).
(3) The general equivalence criteria referred to in paragraph (2) shall apply to all third countries.
Certain fees chargeable by Supervisory Authority
140. (1)(a) For the purposes specified in subparagraph (b), the Supervisory Authority may charge and impose an annual fee (of an amount specified from time to time by the Minister sufficient to cover the Authority’s administrative expenses) on a third-country auditor or audit entity referred to in Regulation 135(1), and subject to paragraph (c), in respect of registration, effected or provided in relation to the auditor or audit entity under and in accordance with these Regulations.
(b) Money received by the Supervisory Authority under this paragraph may be used only for the purposes of covering the Authority’s reasonable administrative expenses in performing its functions and exercising its powers under Regulation 135 and under any other Regulation of these Regulations that contain consequential or incidental provisions on, or in relation to, Regulation 135.
(c) The Supervisory Authority—
(i) shall submit the rationale for the level of fee to the Minister for approval before imposing a fee—
(I) initially when the fee is proposed, and
(II) at any time thereafter that the fee is proposed to be amended,
and
(ii) may charge fees on an annual basis to cover the reasonable administrative costs associated with the following tasks:
(I) the annual registration of such auditor or audit entity that is a statutory auditor or audit firm registered in a public register of a Member State pursuant to Articles 15 to 19 of the Audit Directive;
(II) the annual registration assessment and the annual registration of such auditor or audit entity that is not registered in a public register of a Member State pursuant to Articles 15 to 19 of the Audit Directive as a statutory auditor or audit firm.
(2)(a) For the purposes specified in subparagraph (b), the Supervisory Authority may charge and impose fees, where necessary on an interim basis, having obtained the Minister’s consent and subject to subparagraph (c), on a third-country auditor or audit entity referred to in Regulation 135(1) in respect of the oversight, quality assurance and the related matters of investigation, discipline and penalties, effected or provided in relation to the auditor or audit entity under and in accordance with these Regulations.
(b) Money received by the Supervisory Authority under this paragraph may be used only for the purposes of covering the Authority’s reasonable administrative expenses in performing its functions and exercising its powers under Regulation 32 and Part 8 and under any other Regulation of these Regulations that contain consequential or incidental provisions on, or in relation to, Regulation 32 or Part 8.
(c) The Supervisory Authority—
(i) shall establish criteria, as set out in paragraph (3), for charging and imposing fees on a third-country auditor or audit entity referred to in Regulation 135(1),
(ii) shall submit the criteria to the Minister for approval before imposing fees—
(I) initially when the criteria are established, and
(II) at any time thereafter that the criteria are amended,
(iii) may charge fees on an interim basis to cover the reasonable administrative costs associated with the functions of oversight, quality assurance and the related matters of investigation, discipline and penalties—
(I) before the function is performed,
(II) more than once, if necessary, during the performance of the function, and
(III) when the performance of the function is completed.
(3) Established criteria for charging and imposing fees on an interim basis on a third-country auditor or audit entity referred to in Regulation 135(1) shall be based on costs incurred to cover the Supervisory Authority’s reasonable administrative expenses in relation to—
(a) location (for example flights, accommodation and subsistence),
(b) the testing of the internal quality control system undertaken (for example, the time taken to review audit firms),
(c) the number and nature of the Irish relevant audit clients,
(d) how many third-country auditors are within the firm,
(e) staffing resources, being how many staff are required, at what level and for what period,
(f) expertise required (for example, the use of local consultants to undertake on-site inspections),
(g) the nature and significance of the findings (for example, the time allocated to inspection, drafting the report and follow-up to the recommendations),
(h) associated miscellaneous costs (for example, the translation of audit papers), and
(i) legal and other costs (for example, other third party advices).
(4) Notwithstanding that the particular audit of a public-interest entity has been carried out by a statutory auditor, no fee under this Regulation shall be imposed on the statutory auditor if he or she was designated by a statutory audit firm to carry out the audit, and the fees under this Regulation shall, in those circumstances, be imposed on the statutory audit firm instead.
(5) A fee imposed under paragraph (1) or (2) may, in default of payment, be recovered from the third-country auditor or audit entity concerned as a simple contract debt in any court of competent jurisdiction.
(6) In the case of hardship on behalf of a third-country auditor or audit firm, or where the performance of a function involves particularly complicated work, the Supervisory Authority may agree to charge a lesser fee, compatible with the circumstances of the function.
Exemptions in case of equivalence
141. (1) A third-country auditor or audit entity may apply to the Supervisory Authority for an exemption from all or any of the provisions of Regulations 135 and 136 on the basis that the third-country auditor or audit entity is subject to systems of public oversight, quality assurance and investigations and penalties in the third country concerned that meet requirements equivalent to those of Regulation 32 and Part 8.
(2) On the making of that application, if—
(a) the Commission has, in accordance with Article 46(2) of the Audit Directive, assessed the systems referred to in paragraph (1) as meeting requirements equivalent to those in the corresponding provisions of the Audit Directive, and
(b) the Supervisory Authority is satisfied that the law of the third country concerned affords reciprocal rights to a statutory auditor or audit firm with regard to being granted corresponding exemptions under that law,
the Supervisory Authority may rely on the equivalence decided by the Commission, partially or entirely, and thus to disapply or modify the requirements in Regulations 135 and 136 partially or entirely and the third-country auditor or audit entity shall be partially or entirely exempted accordingly.
(3) The Supervisory Authority shall notify the Commission of the main elements of its cooperative arrangements with systems of public oversight, quality assurance and investigations and penalties of the third country concerned, arising out of arrangements it has entered into with that third country for the purposes of the reciprocity referred to in paragraph (2)(b).
PART 12
MISCELLANEOUS
Summary proceedings
142. Summary proceeding in relation to an offence under these Regulations may be brought and prosecuted by—
(a) the Director of Public Prosecutions, or
(b) the Director of Corporate Enforcement.
Savings for disciplinary proceedings in being
143. (1) None of the provisions of these Regulations (and, in particular, those amending the Companies Act 2014 ) affect disciplinary proceedings in being before 17 June 2016 by a recognised accountancy body against any of its members and, accordingly, those proceedings may be continued on and after that date by that body against the member or members concerned.
(2) If, as a result of proceedings referred to in paragraph (1) in relation to a person referred to in that paragraph, the person’s membership of the recognised accountancy body is terminated by the body or the body’s approval (howsoever expressed) of the person to act as an auditor is withdrawn, then any deemed approval of the person as a statutory auditor or audit firm by virtue of Regulation 44 ceases to have effect.
(3) Where the result of proceedings referred to in paragraph (1) is not either of those referred to in paragraph (2), the powers of the Supervisory Authority under sections 934 and 935 of the Companies Act 2014 (as those sections stand amended by these Regulations) are available to the Authority, and may be exercised by the Authority, in relation to the matters the subject of those proceedings.
Amendment of Irish Collective Asset-management Vehicles Act 2015
144. (1) In this Regulation, “Principal Act” means the Irish Collective Asset-management Vehicles Act 2015 (No. 2 of 2015).
(2) Section 2 of the Principal Act is amended by the substitution of the following definition for the definition of “Audits Regulations”—
“‘Audits Regulations’ means the European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No. 537/2014) Regulations 2016 (S.I. No. [-] of 2016);”.
(3) Section 123 of the Principal Act is amended by the substitution of the following subsection for subsection (1):
“(1) No person other than—
(a) a statutory auditor or audit firm approved in accordance with the Audit Regulations, or
(b) an audit firm registered in accordance with Regulation 38 of the Audits Regulations,
shall be eligible for appointment as an auditor of an ICAV.”.
(4) Section 131 of the Principal Act is amended by the substitution of “Regulation 101” for “Regulation 75”.
SCHEDULE 1
Regulation 45
Standards relating to training and qualifications for approval of individual as statutory auditor
1. An individual shall have attained university entrance or equivalent level and then—
(a) completed a course of theoretical instruction,
(b) undergone practical training, and
(c) passed an examination of professional competence which is of at least the standard required in the State for university final or equivalent examination level.
2. (1) The examination of professional competence referred to in paragraph 1 shall be such as guarantees the necessary level of theoretical knowledge of subjects relevant to statutory audit and the ability to apply such knowledge in practice. Part at least of that examination shall be in writing.
(2) The test of theoretical knowledge included in the examination shall cover the following subjects in particular:
(a) general accounting theory and principles;
(b) legal requirements and standards relating to the preparation of annual and consolidated accounts;
(c) international accounting standards;
(d) financial analysis;
(e) cost and management accounting;
(f) risk management and internal control;
(g) auditing and professional skills;
(h) legal requirements and professional standards relating to statutory audit and statutory auditors;
(i) international auditing standards as referred to in Regulation 77;
(j) professional ethics and independence.
3. The examination shall also cover at least the following subjects in so far as they are relevant to auditing:
(a) company law and corporate governance;
(b) the law of insolvency and similar procedures;
(c) tax law;
(d) civil and commercial law;
(e) social security law and employment law;
(f) information technology and computer systems;
(g) business, general and financial economics;
(h) mathematics and statistics;
(i) basic principles of the financial management of undertakings.
4. (1) In order to ensure the ability to apply theoretical knowledge in practice, a test of which is included in the examination, a trainee shall complete a minimum of 3 years’ practical training in, inter alia, the auditing of annual financial statements, consolidated financial statements or similar financial statements. A substantial part of such practical training must be in statutory audit work and at least two thirds of such practical training shall be completed with a statutory auditor or an audit firm approved in any Member State.
(2) All such training shall be carried out with persons who a recognised accountancy body is satisfied possess, to an adequate standard, the ability to provide practical training.
SCHEDULE 2
Regulation 84
Information required, by Part 6, to be Supplied and Entered in Public Register
Statutory auditors
1. In relation to a statutory auditor, the public register shall contain at least the following information:
(a) the name and address of the auditor;
(b) the number under which the auditor is entered in that register;
(c) if applicable—
(i) the name and address and the website address (if any) of the statutory audit firm by which the auditor is employed, or with whom he or she is associated as a partner or otherwise, and
(ii) the number under which that statutory audit firm is entered in that register;
(d) the name and address of the recognised accountancy body responsible for the regulation of the auditor;
(e) if he or she is so registered with one or more recognised accountancy bodies—
(i) particulars of his or her registration—
(I) as a statutory auditor, with each counterpart authority and the name of the authority, and
(II) as auditor, with one or more third-country competent authorities and the name or names of it or them,
and
(ii) the number under which he or she is registered with each such authority;
(f) without prejudice to subparagraph (e), with regard to the auditor’s status (if such be the case) as a Member State statutory auditor, the name and address of each counterpart authority responsible, in relation to him or her, for—
(i) approval as referred to in Article 3 of the Audit Directive,
(ii) quality assurance as referred to in Article 29 of the Audit Directive and Article 26 of Regulation (EU) No 537/2014,
(iii) investigations and sanctions as referred to in Chapter VII of the Audit Directive and Articles 23 and 24 of Regulation (EU) No 537/2014,
(iv) public oversight as referred to in Article 32 of the Audit Directive, and
(v) performing the functions provided for in Regulation (EU) No 537/2014 and for ensuring the provisions of that Regulation are applied as referred to in Article 20 of that Regulation.
Statutory audit firms and audit firms approved in another Member State
2. In relation to a statutory audit firm, the public register shall contain at least the following information:
(a) the name and address of the audit firm;
(b) the number under which the audit firm is entered in that register;
(c) the legal form of the audit firm;
(d) the primary contact person in the audit firm and contact details;
(e) the address of each office in the State of the audit firm and the website address (if any) of the audit firm;
(f) the name of every individual employed by or associated as partner or otherwise with the audit firm who is approved as statutory auditor under Part 4;
(g) the number under which that individual is entered in the register;
(h) the name and address of the recognised accountancy body responsible for the regulation of the audit firm in the State;
(i) the names and addresses of the owners of, or as appropriate, shareholders in, the audit firm;
(j) the names and addresses of the directors, or other members of, as appropriate—
(i) the board of directors,
(ii) board of management, or
(iii) other administrative or management body,
of the audit firm (but where the audit firm comprises a partnership with no management structure, the provision of the address of each individual named, under subparagraph (f), as partner suffices);
(k) if applicable, the fact of the audit firm’s membership of a network and either—
(i) a list of the names and addresses of member firms and affiliates of the network, or
(ii) an indication of where such information is publicly available;
(l) if the audit firm is so registered with one or more counterpart authorities or third-country competent authorities—
(i) particulars of the firm’s registration—
(I) as a statutory audit firm, with each counterpart authority of another Member State and the name of the authority,
(II) as an audit firm, with one or more third-country competent authorities and the name or names of it or them, and
(III) as an audit firm approved in another Member State, who has registered with the relevant recognised accountancy body in accordance with Article 3a of the Audit Directive,
and
(ii) the number under which the firm is registered with each such authority;
(m) without prejudice to subparagraph (l), with regard to the audit firm’s status (if such be the case) as a Member State statutory audit firm, the name and address of each counterpart authority responsible, in relation to it, for—
(i) approval as referred to in Article 3 of the Audit Directive,
(ii) where the audit firm is registered in the public register of another Member State pursuant to Article 3a of the Audit Directive and Ireland is its home Member State—
(I) the fact that the firm is so registered, and
(II) the name of the host Member State and the counterpart authority in the host Member State,
(iii) quality assurance as referred to in Article 29 of the Audit Directive and Article 26 of Regulation (EU) No 537/2014,
(iv) investigations and sanctions as referred to in Chapter VII of the Audit Directive and Articles 23 and 24 of Regulation (EU) No 537/2014,
(v) public oversight as referred to in Article 32 of the Audit Directive, and
(vi) performing the functions provided for in Regulation (EU) No 537/2014 and for ensuring the provisions of that Regulation are applied as referred to in Article 20 of that Regulation;
(n) where the audit firm is registered in the public register pursuant to Article 3a(3) of the Audit Directive with Ireland as its host Member State—
(i) the fact that the firm is so registered, and
(ii) the name of the home Member State and the counterpart authority in the home Member State.
Third-country auditors and audit entities
3. (1) In relation to the case provided by Regulation 135 of the registration of a third-country auditor or audit entity, the public register shall contain at least the information specified in the provisions of paragraph 1 or, as the case may be, 2 (as, in either case, those provisions are applied by subparagraph (2)).
(2) The provisions of paragraph 1 or 2, as the case may be, apply for the purposes of this paragraph save so much of them as are inapplicable in the case of a third-country auditor or audit entity, as appropriate.
(3) Third-country auditors or audit entities so registered shall be clearly indicated in the register as such and not as statutory auditors or audit firms.
Individual identification number and storage of information in electronic form
4. (1) There shall be assigned an individual identification number to each individual, firm and entity that is being entered in the public register, being—
(a) in a case where the information entered in respect of the individual or firm is that provided under Regulation 85, the number notified under paragraph (2)(b)(i) of that Regulation to the Registrar of Companies,
(b) in any other case, such individual identification number as, subject to subparagraph (2), is determined and allocated by the Registrar of Companies,
and references in paragraphs 1 and 2 to the number under which any of the foregoing persons is entered in the register shall be read as references to that identification number.
(2) Instead of its allocating a number for the purposes of subparagraph (1)(b) that has been determined by it, the Registrar of Companies may—
(a) in specifying under any provision of these Regulations the form in which information is to be notified to it for registration (and the provision concerned of these Regulations does not itself provide for the notification of such a number), include in that specification a requirement that the form, as completed, includes an identification number allocated to the subject of the notification by the notifier of the information, and
(b) if the number so provided in that form is satisfactory for the purpose of distinguishing the subject from other registrants, allocate, for the purposes of subparagraph (1)(b), that number so provided.
(3) The information contained in that register shall be stored in electronic form and be capable of being accessed by members of the public by electronic means.
Definition of “address”
5. In this Schedule, “address”, in relation to an individual, firm or entity, means the individual’s, firm’s or entity’s usual business address.
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GIVEN under my Official Seal,
15 June 2016.
MARY MITCHELL O’CONNOR,
Minister for Jobs, Enterprise and Innovation.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation.)
These Regulations give effect to (i) Directive 2014/56/EU of the European Parliament and of the Council of 16 April 2014 amending Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts and (ii) certain provisions of Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC.
Consequential amendments to the Companies Act 2014 are included in these Regulations.
These Regulations replace the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 ).
1 OJ L 157, 9.6.2006, p. 87
2 OJ L 158, 27.5.2014, p. 196
3 OJ L 158, 27.5.2014, p. 77
4 OJ L182, 29.6.2013, p. 19
5 OJ L145, 30.4.2004, p.1
6 OJ L176, 27.6.2013, p.338
7 OJ L374, 31.12.91, p.7
8 OJ L 281, 23.11.1995, p. 31
9 OJ No. L 13, 19.1.2000, p.12
10 OJ L162, 30.4.2004, p. 70
11 OJ L302, 17.11.2009, p. 32
12 OJ L174, 1.7.2011, p. 1
13 OJ L149, 30.4.2004, p. 1
14 OJ L345, 31.12.2003, p.64
15 OJ L281, 23.11.1995, p. 31
16 OJ No. L 390, 31.12.2004, p.38
17 OJ No. L 15, 20.1.2011, p.12
18 OJ No. L 163, 15.6.2013, p.26