Companies (Statutory Audits) Act 2018
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Statutory audits | ||
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51. The Principal Act is amended by the insertion of the following Part after Part 26: | ||
“PART 27 | ||
Statutory Audits | ||
Chapter 1 | ||
Preliminary and interpretation | ||
Interpretation (Part 27 and Schedules 19 and 20) | ||
1461. (1) In this Part and Schedules 19 and 20— | ||
‘2010 Audits Regulations’ means the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 ) revoked by Regulation 2(1) of the 2016 Audits Regulations; | ||
‘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. 312 of 2016 ) revoked by section 3 (6) of the Companies (Statutory Audits) Act 2018; | ||
‘AAPA report’ shall be read in accordance with section 930B(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 referred to in Article 11 of Regulation (EU) No 537/2014; | ||
‘approved’, in relation to a statutory auditor or audit firm, means approved under this Part; | ||
‘aptitude test’ means an aptitude test referred to in section 1476(1); | ||
‘audit committee’, in relation to a public-interest entity, means the audit committee established for the entity under section 1551; | ||
‘Audit Directive’ means Directive 2006/43/EC of the European Parliament and of the Council of 17 May 20065 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 20146 amending Directive 2006/43/EC 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 third-country audit entity, shall be read accordingly; | ||
‘auditing standards’ means the standards adopted by the Supervisory Authority under section 1526 in accordance with which statutory audits shall be carried out; | ||
‘client’ has the meaning assigned to it by section 934(1); | ||
‘Commission’ means Commission of the European Union; | ||
‘counterpart authority’ shall be construed in accordance with section 1553; | ||
‘disciplinary committee’ has the meaning assigned to it by section 900; | ||
‘financial year’— | ||
(a) in relation to the Supervisory Authority and an audited undertaking, shall be read in accordance with section 288, and | ||
(b) in relation to a statutory auditor or audit firm, means 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, whether that period is of a year’s duration or not; | ||
‘firm’ includes a body corporate; | ||
‘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 accounts or consolidated accounts as required by European Union law; | ||
‘Member State auditor’ means an auditor approved in accordance with the Audit Directive by the counterpart authority of another Member State to carry out audits of accounts or consolidated accounts as required by European Union law; | ||
‘penalty’ includes a sanction and a measure; | ||
‘public-interest entities’ means undertakings that— | ||
(a) have transferable securities admitted to trading on a regulated market of any Member State, | ||
(b) are credit institutions, | ||
(c) are insurance undertakings, or | ||
(d) are undertakings that are otherwise designated, by or under any other enactment, to be entities referred to in point (d) of Article 2(13) of the Audit Directive; | ||
‘public register’ shall be read in accordance with section 1484; | ||
‘recognised accountancy body’ has the meaning assigned to it by section 900; | ||
‘Regulation (EU) No 537/2014’ means Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 20147 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC; | ||
‘relevant contravention’ has the meaning assigned to it by section 900; | ||
‘relevant provisions’ has the meaning assigned to it by section 900; | ||
‘relevant sanction’ (except in Chapter 9) has the meaning assigned to it by section 900; | ||
‘standards’ means those standards, as defined in section 900, of a prescribed accountancy body which is a recognised accountancy body; | ||
‘statutory audit’ means an audit of entity financial statements or group financial statements in so far as— | ||
(a) required by European Union law, or | ||
(b) required by national law as regards small companies; | ||
‘statutory audit firm’ means— | ||
(a) an audit firm which is approved in accordance with this Part to carry out statutory audits, or | ||
(b) an audit firm which is registered in accordance with section 1465 to carry out statutory audits; | ||
‘statutory auditor’ means an individual who is approved in accordance with this Part 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 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 this Part or in Schedule 19 or 20 to a registered third-country auditor or third-country audit entity is a reference to a third-country auditor or third-country audit entity registered under Chapter 21. | ||
(3) A word or expression that is used in this Part or in Schedule 19 or 20 and is also used in the Audit Directive shall have in this Part and that Schedule the same meaning as it has in the Audit Directive. | ||
(4) A word or expression that is used in this Part or in Schedule 19 or 20 and is also used in Regulation (EU) No 537/2014 shall have in this Part and that Schedule the same meaning as it has in that Regulation. | ||
Savings | ||
1462. (1) Subject to Chapter 22, the 2016 Audits Regulations, as in force immediately before the date of commencement of section 3 (6) of the Companies (Statutory Audits) Act 2018— | ||
(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 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. | ||
(2) For the purposes only of enabling the 2016 Audits Regulations to operate, for the financial years referred to in subsection (1), on and after the date referred to in that subsection, as those Regulations operated immediately before that date, a reference in those Regulations to this Act or a provision of this Act shall be read as a reference to this Act or such provision, as the case may be, as in force immediately before that date. | ||
Application | ||
1463. Save where otherwise provided (including provided by Regulation (EU) No 537/2014), this Part applies— | ||
(a) in so far as it relates 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 referred to in section 1462(1), and | ||
(b) as regards each other matter provision for which is made by this Part, on and from that date. | ||
Chapter 2 | ||
Approval of statutory auditors and audit firms | ||
Applications for approval, general principle as to good repute, etc. | ||
1464. (1) A recognised accountancy body may, on application made to it by an individual or a firm, approve, under this Part, the applicant as a statutory auditor or audit firm. | ||
(2) A recognised accountancy body may, on foot of an application under subsection (1), grant approval under this Part only to— | ||
(a) individuals, or | ||
(b) firms, | ||
who are of good repute. | ||
(3) A recognised accountancy body may, on application made to it by a third-country auditor and in accordance with Chapter 20, approve, under this Part, the applicant as a statutory auditor. | ||
(4) Subsection (5) applies in the case of an application under subsection (1)— | ||
(a) by a firm that is a Member State audit firm in the circumstances where it is not seeking registration in accordance with section 1465, or | ||
(b) by a Member State auditor. | ||
(5) For the purposes of this section, 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 that the State is required to engage in by virtue of Part VIII of the Audit Directive, the 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) On approving a person as a statutory auditor or audit firm, a recognised accountancy body shall assign an individual identification number to the person. | ||
(7) The recognised accountancy body shall maintain a record in writing of all numbers assigned by it under subsection (6). | ||
Basis on which audit firms approved in other Member States may carry out audits in State | ||
1465. (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 subsection (2)) and at all times during the registration of the firm, complies with the requirements of sections 1464 to 1472. | ||
(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 by which the key audit partner referred to in subsection (1) is approved. | ||
(b) The recognised accountancy body shall ensure that an audit firm which complies with subsection (1) is registered in accordance with the requirements of Chapter 5 and Schedule 20. | ||
(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. | ||
(5) The recognised accountancy body shall maintain a record in writing of all numbers assigned by it under subsection (4). | ||
(6) The recognised accountancy body shall inform the counterpart authority in the home Member State of the registration of the audit firm. | ||
(7) Where 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 recognised accountancy body shall ensure that the registration is recorded in the public register. | ||
Restriction as to persons who may carry out statutory audits | ||
1466. Statutory audits shall be carried out only by— | ||
(a) auditors or audit firms that are approved under this Part, or | ||
(b) audit firms registered in accordance with section 1465. | ||
Restriction on acting as statutory auditor | ||
1467. 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 this Part. | ||
Restriction on acting as statutory audit firm | ||
1468. 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 this Part or registered in accordance with section 1465. | ||
Offence for contravening section 1466, 1467 or 1468 | ||
1469. A person who contravenes section 1466, 1467 or 1468 shall be guilty of a category 2 offence. | ||
Conditions for approval as statutory auditor | ||
1470. 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 section 1472, | ||
(b) a Member State auditor and complies with section 1476, or | ||
(c) a third-country auditor and complies with section 1476 and Chapter 20. | ||
Transitional provisions applicable to certain deemed approvals under Regulation 44 of 2016 Audits Regulations | ||
1471. (1) Subject to sections 1479, 1582 and 1583, a deemed approval of a person as a statutory auditor continued in force under the 2016 Audits Regulations by virtue of Regulation 44(1) of those Regulations and in force immediately before the commencement of section 3 (6) of the Companies (Statutory Audits) Act 2018 shall continue in force under this Part as if it were a deemed approval of that person as a statutory auditor under this Part. | ||
(2) Subject to sections 1480, 1582 and 1583, a deemed approval of a firm as a statutory audit firm continued in force under the 2016 Audits Regulations by virtue of Regulation 44(2) of those Regulations and in force immediately before the commencement of section 3 (6) of the Companies (Statutory Audits) Act 2018 shall continue in force under this Part as if it were a deemed approval of that firm as a statutory audit firm under this Part. | ||
Appropriate qualification for purpose of section 1470(a) | ||
1472. (1) An individual holds an appropriate qualification, as required by section 1470(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 19. | ||
(2) In subsection (1), ‘qualification’ means a qualification to undertake an audit of entity financial statements and group financial statements in so far as required by European Union law. | ||
(3) A recognised accountancy body may exempt in writing a person who has passed a university or equivalent examination, or who holds a university degree or equivalent qualification, in one or more of the subjects referred to in the test of theoretical knowledge specified in Schedule 19 if the body is satisfied that the passing of that examination, or the holding of that university degree or equivalent qualification, renders it unnecessary for the person to undergo that test in so far as those subjects are concerned. | ||
(4) The Supervisory Authority shall, at such times as it thinks it appropriate to do so, issue guidelines to recognised accountancy bodies as to the specific matters that should be given regard to in reaching a decision under subsection (3) whether or not to grant an exemption under that subsection to a person. | ||
Conditions for approval as statutory audit firm | ||
1473. (1) In this section, references to a firm include references to a Member State audit firm if the firm is not seeking registration in accordance with section 1465. | ||
(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 this Part, | ||
(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 subsection (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 subsection (2)(c), one of those members shall satisfy at least the requirements of that subsection. | ||
Powers of Director | ||
1474. (1) The Director may demand of a person— | ||
(a) acting as a statutory auditor or audit firm of an undertaking, or | ||
(b) purporting to have obtained approval under this Part, or registration in accordance with section 1465, to so act, | ||
the production of evidence of the person’s approval under this Part or, if applicable, registration in accordance with section 1465 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 subsection (1) within 30 days after the date of the demand referred to in that subsection, or such longer period as the Director may allow, the person shall be guilty of a category 3 offence. | ||
(3) In a prosecution for an offence under this section, 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 subsection (1). | ||
Evidence in prosecutions under section 1474 | ||
1475. (1) Subject to subsection (2), in proceedings for an offence under section 1474, 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 this Part or, if applicable, is not registered in accordance with section 1465, 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) Subsection (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 3 | ||
Aptitude test | ||
Aptitude test to be passed | ||
1476. (1) Subject to subsection (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) Subsection (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 subsection. | ||
(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 should be given regard to in reaching a decision under subsection (2) whether or not a person has demonstrated the knowledge referred to in subsection (1). | ||
(4) A recognised accountancy body may charge and impose on a Member State auditor or third-country auditor a fee (of an amount specified from time to time by the Minister sufficient to meet the body’s administrative expenses in respect of the following) in respect of the administration of an aptitude test under this section in relation to him or her. | ||
(5) A fee imposed under subsection (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. | ||
(6) The amount of a fee imposed under Regulation 49(4) of the 2016 Audits Regulations as those Regulations were in force immediately before the date of commencement of section 3 (6) of the Companies (Statutory Audits) Act 2018 shall be the amount of the fee imposed under subsection (4) until such time as the Minister exercises his or her power under that subsection to specify a different amount of such fee. | ||
Scope of aptitude test | ||
1477. (1) The aptitude test shall— | ||
(a) be conducted in either the Irish language or the English language, and | ||
(b) relate only to the applicant’s adequate knowledge of the enactments and practice that are relevant to statutory audits in the State. | ||
(2) Subject to subsection (3), 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 subsection (2) unless such alteration has been approved by the Supervisory Authority. | ||
Adequate standards to be applied in administration of aptitude test | ||
1478. (1) Subject to subsection (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 subsection (1) unless those standards have (with respect to that use) first been approved by the Supervisory Authority. | ||
Chapter 4 | ||
Withdrawal of approval | ||
Grounds for mandatory withdrawal of approval in case of statutory auditor | ||
1479. (1) For the purposes of this section, 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. | ||
(2) Without prejudice to section 1502 and subject to subsections (4) to (6), a recognised accountancy body shall withdraw an approval of an auditor under this Part if, but only if— | ||
(a) circumstances arise (involving acts or omissions on the part of the auditor) from which a recognised accountancy body can reasonably conclude that the auditor’s good repute is seriously compromised, | ||
(b) the auditor no longer falls within section 1470(a), (b) or (c), or | ||
(c) in the case of a person who is a statutory auditor referred to in section 1471(1)— | ||
(i) the auditor no longer falls within section 1470(a), | ||
(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. | ||
(3) Unless there do not exist internal appeal procedures of a recognised accountancy body as referred to in subsection (8)(a), references in subsections (4) to (7) 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. | ||
(4) Subject to subsection (7), subsection (5) 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, | ||
a recognised accountancy body is satisfied that subsection (2)(a), (b) or (c) applies in the case of an auditor. | ||
(5) Subject to subsection (7), the recognised accountancy body shall serve a notice in writing on the auditor stating that— | ||
(a) it is satisfied that subsection (2)(a), (b) or (c) applies in the case of the auditor, | ||
(b) the auditor shall take specified steps to cause subsection (2)(a), (b) or (c) 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. | ||
(6) Where the recognised accountancy body has served a notice under subsection (5) on a statutory auditor and the auditor has not, before the expiration of the specified period referred to in subsection (5)(b), taken the steps referred to in subsection (5)(b), the recognised accountancy body shall withdraw the approval of the auditor under this Part. | ||
(7) The procedure specified in subsection (5) need not be employed if the acts or omissions concerned referred to in subsection (2)(a) 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 subsection affects the application of the requirements of procedural fairness to the withdrawal of approval. | ||
(8) 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 section 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 section, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the occurrence of an event specified in paragraph (b)(i), (ii) or (iii). | ||
(9) Subsection (10) 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 subsection (8)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect. | ||
(10) Notwithstanding the internal appeal procedures referred to in subsection (9)(a), the auditor to whom the decision referred to in subsection (8)(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, subsections (13) to (15) apply to that application with— | ||
(a) the substitution of references to an appeal under those internal appeal procedures for reference to an appeal under section 1481, and | ||
(b) any other necessary modifications. | ||
(11) If the relevant appellate committee referred to in subsection (10) 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 subsection ought to include its proceeding in the manner specified in subsections (5) and (6), then, in disposing of that appeal, it shall proceed in the manner so specified. | ||
(12) The recognised accountancy body shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in subsection (10) 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. | ||
(13) Where the recognised accountancy body has made a decision to withdraw the approval of an auditor under this Part (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 section 1481 that he or she is making against the withdrawal. | ||
(14) On the hearing of an application under subsection (13), the High Court may, as it considers appropriate and having heard the recognised accountancy body 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 paragraph (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). | ||
(15) The High Court may, on application to it by the auditor or the recognised accountancy body concerned, vary or discharge an order under subsection (14)(a) if it considers it just to do so. | ||
(16) The procedures under this section are in addition to those procedures in the cases to which section 930C(10) to (12) apply, that are required by section 930C(10) to (12) to be employed. | ||
Grounds for mandatory withdrawal in case of statutory audit firm | ||
1480. (1) For the purposes of this section, the cases that can constitute circumstances of a statutory 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. | ||
(2) Without prejudice to section 1502 and subject to subsections (4) to (6), the recognised accountancy body shall withdraw an approval of an audit firm under this Part 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 paragraph (c)) no longer falls within section 1473(2)(a), (b) and (c), or | ||
(c) in the case of a firm which is a statutory audit firm referred to in section 1471(2), the firm no longer falls within section 1473(2)(a). | ||
(3) Unless there do not exist internal appeal procedures of the recognised accountancy body as referred to in subsection (8)(a), references in subsections (4) to (7) 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. | ||
(4) Subject to subsection (7), subsection (5) 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 subsection (2)(a), (b) or (c) applies in the case of an audit firm. | ||
(5) Subject to subsection (7), the recognised accountancy body shall serve a notice in writing on the audit firm stating that— | ||
(a) it is satisfied that subsection (2)(a), (b) or (c) applies in the case of the audit firm, | ||
(b) the audit firm shall take specified steps to cause subsection (2)(a), (b) or (c) 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. | ||
(6) Where the recognised accountancy body has served a notice under subsection (5) on a statutory audit firm and the firm has not, before the expiration of the specified period referred to in subsection (5)(b), taken the steps referred to in subsection (5)(b), the recognised accountancy body shall withdraw the approval of the audit firm under this Part. | ||
(7) The procedure specified in subsection (5) need not be employed if the acts or omissions concerned referred to in subsection (2)(a) 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 subsection affects the application of the requirements of procedural fairness to the withdrawal of approval. | ||
(8) 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 section 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 section, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the occurrence of an event specified in paragraph (b)(i), (ii) or (iii). | ||
(9) Subsection (10) 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 subsection (8)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect. | ||
(10) Notwithstanding the internal appeal procedures referred to in subsection (9)(a), the audit firm to which the decision referred to in subsection (8)(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, subsections (13) to (15) apply to that application with— | ||
(a) the substitution of references to an appeal under those internal appeal procedures for reference to an appeal under section 1481, and | ||
(b) any other necessary modifications. | ||
(11) If the relevant appellate committee referred to in subsection (10) 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 subsection ought to include its proceeding in the manner specified in subsections (5) and (6), then, in disposing of that appeal, it shall proceed in the manner so specified. | ||
(12) The recognised accountancy body shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in subsection (10) 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. | ||
(13) Where the recognised accountancy body has made a decision to withdraw the approval of an audit firm under this section (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 section 1481 that it is making against the withdrawal. | ||
(14) On the hearing of an application under subsection (13), the High Court may, as it considers appropriate and having heard the recognised accountancy body 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 paragraph (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). | ||
(15) The High Court may, on application to it by the audit firm or the recognised accountancy body concerned, vary or discharge an order under subsection (14)(a) if it considers it just to do so. | ||
(16) The procedures under this section are in addition to those procedures in the cases to which section 930C(10) to (12) apply, that are required by section 930C(10) to (12) to be employed. | ||
Appeals against withdrawal of approval | ||
1481. (1) Subject to subsection (2), a person may appeal to the High Court against the withdrawal by the recognised accountancy body of approval under this Part of the person as a statutory auditor or audit firm. | ||
(2) An appeal shall not lie under subsection (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 subsection. | ||
(3) An appeal under subsection (1) shall be made within one month— | ||
(a) unless paragraph (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 subsection (1), the High Court may— | ||
(a) cancel the withdrawal of the approval, or | ||
(b) confirm the withdrawal of the approval. | ||
(5) The High Court may, on the hearing of an appeal under subsection (1), consider evidence not adduced or hear an argument not made to the recognised accountancy body 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. | ||
(6) A notification of the outcome of an appeal under this section (or of any appeal from a decision of the High Court thereunder) shall be made by the recognised accountancy body to the same persons to whom a notification of a withdrawal of approval shall be made by section 1482 and (where it applies) section 1483. | ||
Certain persons to be notified of withdrawal of approval | ||
1482. Without prejudice to section 1483, where the approval under this Part 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, | ||
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 | ||
1483. (1) Where the approval under this Part 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 section 1482, 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 this Part of an audit firm is withdrawn for any reason by a recognised accountancy body, the recognised accountancy body shall, in addition to making the communication specified in section 1482, notify the relevant competent authorities of the host Member States, where the audit firm 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 this Part of a statutory auditor or audit firm is withdrawn by the Supervisory Authority, this section and section 1482 (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 section shall be made as soon as possible, but not later than one month after the date of withdrawal of approval. | ||
Chapter 5 | ||
Public register | ||
Public register | ||
1484. (1) Subject to subsection (2) and sections 887(2), 934C(2)(h), 1506(1)(h), 1573 and 1575, the Registrar shall maintain a particular register (in this Part referred to as the ‘public register’) which shall contain the information set out in Schedule 20 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 third-country audit entities, and | ||
(c) audit firms approved in another Member State which have been registered in accordance with section 1465. | ||
(2) Subject to sections 1582 and 1583, the public register referred to in Regulation 84 of the 2016 Audits Regulations, as that register was in being immediately before the date of commencement of section 3 (6) of the Companies (Statutory Audits) Act 2018, shall, on and from that date, be deemed to be the public register referred to in subsection (1), and the other provisions of this Part (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 | ||
1485. (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 or she is approved under this Part 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 section 1465, 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 this Part as a statutory auditor, notify the relevant information to the recognised accountancy body. | ||
(2) On receipt of a notification under subsection (1) and its having carried out any verification of the information as seems to it to be necessary, the recognised accountancy body, as appropriate, shall notify to the Registrar— | ||
(a) the relevant information contained in the notification, and | ||
(b) (i) subject to subparagraph (ii), the individual identification number assigned by it to the auditor, audit firm or third-country auditor under section 1464(6) or a Member State audit firm under section 1465(4), and | ||
(ii) where— | ||
(I) under section 1464(6) or 1465(4) such a number exists, and | ||
(II) by reason of the circumstances referred to in paragraph (b) of the definition of ‘relevant information’ in subsection (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 20. | ||
(3) The notifications under subsections (1) and (2) shall each be made in such form and manner as the Registrar specifies. | ||
(4) In this section, ‘relevant information’ means the information set out in paragraph 1 or 2, as the case may be, of Schedule 20, 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 the relevant provisions or otherwise ceases to exist, the notifications under subsections (1) and (2) shall cease to have effect and the Registrar shall remove all information contained in such notifications from the public register. | ||
Prohibition on certain acts unless registered | ||
1486. (1) 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 persons 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 subsection (1) shall be guilty of a category 2 offence. | ||
Obligation of statutory auditor or audit firm to notify certain information | ||
1487. (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 or her. | ||
(2) On receipt of a notification under subsection (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 without undue delay. | ||
(3) The Registrar shall, as soon as may be but not later than one month after receipt of the notification referred to in subsection (2), amend the public register to reflect the change of information so notified. | ||
(4) A person who, without reasonable excuse, contravenes subsection (1) shall be guilty of a category 4 offence. | ||
Information shall be signed | ||
1488. (1) Information notified under section 1485(1) or 1487(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 subsection (1) may be an electronic signature (within the meaning of Article 3(10) of Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 20148 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC) if the provision of a signature in that form complies with any requirements in that behalf of the Registrar of the kind referred to in section 13 (2)(a) of the Electronic Commerce Act 2000 . | ||
(3) If information is notified under section 1485(1) or 1487(1) without being signed as required by subsection (1), the person concerned shall be guilty of a category 4 offence. | ||
Chapter 6 | ||
Standards for statutory auditors | ||
Continuing education | ||
1489. (1) It shall, by virtue of this section alone, be a condition of a statutory auditor’s approval (or, in the case of a statutory auditor referred to in section 1471, deemed approval) granted under this Part (or under any predecessor to this Part) that he or she shall 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. | ||
(2) The Supervisory Authority shall, at such times as it thinks it appropriate to do so, issue guidelines to the recognised accountancy bodies with regard to what constitutes compliance with the condition referred to in subsection (1). | ||
Professional ethics | ||
1490. A recognised accountancy body shall subject statutory auditors and audit firms to principles of professional ethics, including at least their public interest function, their integrity and objectivity and their professional competence and due care. | ||
Independence, objectivity and professional scepticism | ||
1491. Statutory auditors and audit firms are subject to the independence, objectivity and professional scepticism requirements of sections 1533 to 1544 and 1547. | ||
Standards for purposes of sections 1489 to 1491 | ||
1492. (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 sections 1489 to 1491, 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). | ||
Arrangements for enforcement of standards | ||
1493. The arrangements for enforcement referred to in section 1492(1)(b) shall include, in accordance with sections 1501 and 1502, provision for— | ||
(a) sanctions which include— | ||
(i) at the discretion of the recognised accountancy body, in accordance with section 1501, the withdrawal of approval under this Part 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 7 | ||
Quality assurance | ||
Quality assurance by Supervisory Authority of statutory audit of public-interest entities and third-country auditors, etc. | ||
1494. (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 third-country audit entities to whom this Part or Regulation (EU) No 537/2014 applies. | ||
(3) Sections 1496 and 1497 shall not apply to the statutory audit of entity and group 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 subsection (1). | ||
System of quality assurance to be put in place | ||
1495. (1) The Supervisory Authority, in accordance with this Part, 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 section 1494(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 the relevant provisions. | ||
Organisation of quality assurance system | ||
1496. (1) A recognised accountancy body shall organise its quality assurance system 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 reviews 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 subsection (5) and section 1497, 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 subsection (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 shall 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 subsection (1)(k), a recognised accountancy body, when undertaking quality assurance reviews of the statutory audits of entity or group financial statements of medium or small companies, 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 undertaking. | ||
(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 or her are implemented within a reasonable period, the recognised accountancy body 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 the relevant provisions. | ||
(5) The period of at least 6 years referred to in subsection (1)(h) shall be a continuation of the system that was in place under the 2010 Audits Regulations when the first quality assurance reviews were required to be completed and as that system was continued by the 2016 Audits Regulations. | ||
Quality assurance review deemed to include individual auditors in certain cases | ||
1497. For the purpose of section 1496(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 | ||
1498. 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 8 | ||
Investigations and sanctions | ||
System of investigation and penalties | ||
1499. (1) Subject to subsection (2), each recognised accountancy body shall, in respect of those auditors and audit firms in relation to whom, by virtue of section 930C, it may perform functions, institute arrangements to ensure that there are effective systems of investigations and penalties to detect, correct and prevent the inadequate execution of a statutory audit by those statutory auditors and audit firms. | ||
(2) Subsection (1) shall not be construed to empower a recognised accountancy body referred to in that subsection to impose a penalty on a statutory auditor or audit firm of a public-interest entity in the case of a relevant contravention committed by that auditor or audit firm that relates (whether in whole or in part) to that entity. | ||
Privileges, etc. | ||
1500. (1) A witness before a recognised accountancy body is entitled to the same immunities and privileges as a witness before the High Court. | ||
(2) Nothing in the arrangements referred to in section 1499(1) 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 or authorises the inspection or copying of any document containing such information that is in the person’s possession or control. | ||
(3) Any information produced or answer given by a person (howsoever described) in compliance with arrangements referred to in section 1499(1) may be used in evidence against the person in any proceedings whatsoever, save proceedings for an offence (other than perjury in respect of such an answer). | ||
(4) A finding or decision of a recognised accountancy body under arrangements referred to in section 1499(1) is not a bar to any civil or criminal proceedings against the person (howsoever described) who is the subject of the finding or decision. | ||
Duty of each recognised accountancy body with regard to sanctions | ||
1501. (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 the relevant provisions. | ||
(2) The contractual and other arrangements referred to in subsection (1) shall comply with the requirements of procedural fairness. | ||
(3) By virtue of this section, the contractual and other arrangements referred to in subsection (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 referred to in that subsection, and | ||
(b) in the cases referred to in that subsection, | ||
in respect of persons who, though not members of the recognised accountancy body, are persons in relation to whom it may, by virtue of section 930C, perform functions under the relevant provisions. | ||
Scope of penalties and publicity in relation to their imposition | ||
1502. (1) The penalties referred to in section 1501, provision for which shall be made by the means referred to in that section, shall, where appropriate, include withdrawal of approval under this Part or, if applicable, withdrawal of registration under section 1465 and a temporary prohibition referred to in point (c) of Article 30a(1) of the Audit Directive and a temporary prohibition (in so far as it relates to a member of an audit firm) referred to in point (e) of that Article. | ||
(2) Subsection (1) is without prejudice to sections 1479 and 1480. | ||
(3) Unless there do not exist internal appeal procedures of a recognised accountancy body as referred to in section 1479(8)(a) or 1480(8)(a), the reference in subsection (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 section 930C(10) to (12), 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 section 1479(4) to (6) or 1480(4) to (6) 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 subsection (1). | ||
(5) If— | ||
(a) there exist internal appeal procedures, as referred to in section 1479(8)(a) or 1480(8)(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 subsection (3), being a decision of a nature to which this section 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 section, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the occurrence of an event specified in paragraph (b)(i), (ii) or (iii). | ||
(6) If— | ||
(a) there exist internal appeal procedures, as referred to in section 1479(8)(a) or 1480(8)(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 subsection (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 or she is making under those internal appeal procedures. | ||
(7) Where an application under subsection (6) is made to the High Court, subsections (10) to (12) apply to the application with— | ||
(a) the substitution of references to an appeal under those internal appeal procedures for references to an appeal under section 1481, and | ||
(b) any other necessary modifications. | ||
(8) If the relevant appellate committee referred to in subsection (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 subsection ought to include procedures analogous to those, as referred to in subsection (4), provided by section 1479(4) to (6) or 1480(4) to (6) being adopted by it, then, in disposing of that appeal, it shall adopt procedures analogous to those in section 1479(4) to (6) or 1480(4) to (6). | ||
(9) A recognised accountancy body shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in subsection (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 section (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 section 1481 that he or she is making against the withdrawal. | ||
(11) On the hearing of an application under subsection (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 paragraph (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) 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 subsection (11)(a) if it considers it just to do so. | ||
(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 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. | ||
(14) Subject to subsection (15), 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. | ||
(15) 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 subsection (14), and those criteria shall require the prior approval of the Supervisory Authority. | ||
Chapter 9 | ||
Actions to be taken after decision by recognised accountancy body that statutory auditor or audit firm of public-interest entity has committed relevant contravention | ||
Definitions (Chapter 9) | ||
1503. In this Chapter— | ||
‘contravention concerned’, in relation to a specified person, means the relevant contravention committed by the specified person in consequence of which the relevant decision was made; | ||
‘monetary sanction’ means the monetary sanction referred to in section 1506(1)(g); | ||
‘public notice of relevant sanction imposed’, in relation to a specified person, means the publication in accordance with section 1508(1) of the specified person’s particulars referred to in that section together with the other particulars referred to in that section; | ||
‘relevant decision’, in relation to a specified person, means a decision under section 1504(6) by the Supervisory Authority to impose a relevant sanction on the specified person for the relevant contravention committed by the specified person; | ||
‘relevant sanction’ means a sanction referred to in section 1506(1); | ||
‘specified person’ means the statutory auditor or audit firm the subject of a relevant decision. | ||
Initial actions to be taken after decision by recognised accountancy body that statutory auditor or audit firm of public-interest entity has committed relevant contravention | ||
1504. (1) Without prejudice to the generality of sections 933, 934 and 934E and subject to subsection (9), this section applies where— | ||
(a) a recognised accountancy body has completed an investigation of a statutory auditor or audit firm of a public-interest entity and— | ||
(i) has found that the auditor or audit firm has committed a relevant contravention that relates (whether in whole or in part) to that entity, and | ||
(ii) would, but for section 1499(2), be minded to impose a penalty on the auditor or audit firm for that contravention, | ||
and | ||
(b) the period within which an appeal (if any) referred to in Chapter 8 may be made against the decision referred to in paragraph (a) has expired without any such appeal having been made or, if such an appeal has been made, that decision has been confirmed or the appeal has been withdrawn. | ||
(2) The recognised accountancy body shall, as soon as is practicable after this section applies to a statutory auditor or audit firm of a public-interest entity and a relevant contravention committed by the auditor or audit firm, give the Supervisory Authority— | ||
(a) particulars of the auditor or audit firm, the public-interest entity and the relevant contravention, | ||
(b) copies of any reports arising out of the investigation, together with copies of any other documents relevant to the investigation, that explain how the recognised accountancy body conducted the investigation and reached the decision referred to in subsection (1)(a), and | ||
(c) particulars of the penalty referred to in subsection (1)(a)(ii). | ||
(3) Where the Supervisory Authority receives from the recognised accountancy body the particulars and copies referred to in subsection (2) but is not satisfied that it has sufficient information to perform its functions under subsections (5) to (8), it may, by notice in writing given to the recognised accountancy body, require the body to provide it with such further information specified in the notice within the period (being a period of not less than 30 days from the body’s receipt of the notice) specified in the notice. | ||
(4) The recognised accountancy body shall comply with a notice under subsection (3) given to it. | ||
(5) Subsection (6) applies where the Supervisory Authority receives from the recognised accountancy body the particulars and copies referred to in subsection (2) (and, if applicable, any further information required by a notice under subsection (3) given to that body) and, after considering those particulars and copies (and, if applicable, that further information), it is satisfied that the statutory auditor or audit firm has committed the relevant contravention and the Supervisory Authority is minded to impose a relevant sanction on the auditor or auditor firm for that contravention. | ||
(6) Subject to section 1511(3) and (4), the Supervisory Authority may impose a relevant sanction on the statutory auditor or audit firm of the public-interest entity for the relevant contravention and, for that purpose, it shall have regard to (but is not bound by) the penalty referred to in subsection (1)(a)(ii). | ||
(7) Where under subsection (6) the Supervisory Authority imposes a relevant sanction on the statutory auditor or audit firm of the public-interest entity for the relevant contravention, it shall, as soon as is practicable after so imposing such sanction, by notice in writing given to the recognised accountancy body, give particulars of the sanction imposed. | ||
(8) Where the Supervisory Authority is not satisfied as referred to in subsection (5), it shall, as soon as practicable after reaching that decision, by notice in writing given to the recognised accountancy body, advise the body that it is not so satisfied and the reasons therefor. | ||
(9) (a) Subject to paragraph (b), where a recognised accountancy body is minded to commence an investigation of a statutory auditor or audit firm in respect of a statutory audit of a public-interest entity, it shall, before commencing such investigation and in the interests of assisting the Supervisory Authority to make a decision as to whether or not, instead of the investigation, it would be more appropriate for the Supervisory Authority to take action under section 934 or 934E, give the Supervisory Authority particulars of the auditor or audit firm and the public-interest entity and the grounds on which it is so minded. | ||
(b) The recognised accountancy body shall not commence an investigation referred to in paragraph (a) until it has the consent in writing of the Supervisory Authority to do so. | ||
Appeal against relevant decision | ||
1505. (1) Subject to subsection (2), the specified person may appeal to the High Court against the relevant decision. | ||
(2) An appeal under subsection (1) shall be brought within 3 months after the date on which the specified person was notified by the Supervisory Authority of the relevant decision. | ||
Sanctions which Supervisory Authority may impose on specified person | ||
1506. (1) Subject to section 1507, the Supervisory Authority may impose on the specified person one or more of the following sanctions in relation to the contravention concerned: | ||
(a) a direction by the Supervisory Authority to the specified person that he or she cease the conduct giving rise (whether in whole or in part) to the contravention and to abstain from any repetition of that conduct; | ||
(b) a direction by the Supervisory Authority to the specified person to remediate the conduct giving rise (whether in whole or in part) to the contravention; | ||
(c) a reprimand or severe reprimand by the Supervisory Authority to the specified person in relation to the conduct giving rise (whether in whole or in part) to the contravention; | ||
(d) 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; | ||
(e) a direction by the Supervisory Authority to the specified person (being any one or more of a statutory auditor or key audit partner) prohibiting him or her, for the period specified in the direction (which may be up to and including an indefinite period), from carrying out statutory audits or signing statutory auditors’ reports, or both; | ||
(f) if the specified person is an audit firm, a direction by the Supervisory Authority to the firm, or to an officer, member or partner of the firm, or to both, prohibiting the firm or, as the case may be, the officer, member or partner, for the period specified in the direction (which may be up to and including an indefinite period) from performing functions— | ||
(i) in the case of the firm, as an audit firm, or | ||
(ii) in the case of the officer, member or partner, in audit firms or public-interest entities; | ||
(g) subject to section 1509, a direction by the Supervisory Authority to the specified person to pay an amount, as specified in the direction but not exceeding— | ||
(i) €100,000 in the case of a specified person who is an individual, or | ||
(ii) in the case of a specified person which is an audit firm, €100,000 multiplied by the number of statutory auditors in the firm at the time that the relevant contravention occurred (and irrespective of whether any particular statutory auditor was or was not a party to the relevant contravention), | ||
to the Supervisory Authority; | ||
(h) an order excluding the specified person from having his or her particulars entered, or continuing to be entered, in the public register in respect of one or more recognised accountancy bodies. | ||
(2) In default of payment of an amount referred to in subsection (1)(g), the Supervisory Authority may recover that amount as a simple contract debt in any court of competent jurisdiction. | ||
(3) A person the subject of a direction under subsection (1) shall comply with the direction. | ||
(4) Where applicable, the Supervisory Authority shall direct the recognised accountancy body of which the specified person is a member to take any necessary action on foot of the imposition of a relevant sanction on the person and that body shall comply with the direction. | ||
Relevant circumstances to be considered in imposing relevant sanctions on specified person | ||
1507. In imposing a relevant sanction on a specified person, the Supervisory Authority shall consider the following circumstances: | ||
(a) the gravity and duration of the contravention concerned; | ||
(b) the degree of responsibility of the specified person; | ||
(c) the financial strength of the specified person (including, in the case of a specified person who is not an individual, the total turnover of the specified person or, in the case of a specified person who is an individual, the annual income of the individual); | ||
(d) the amount of profits gained or losses avoided by the specified person in consequence of the contravention concerned, in so far as they can be determined; | ||
(e) the level of cooperation of the specified person with the Supervisory Authority and the recognised accountancy body of which the specified person is a member; | ||
(f) previous relevant contraventions committed by the specified person. | ||
Publication of relevant sanction imposed on specified person, etc. | ||
1508. (1) Subject to subsections (2) and (3), the Supervisory Authority shall, in so far as a relevant decision imposes a relevant sanction on a specified person, as soon as is practicable after— | ||
(a) that decision has been confirmed by the High Court as referred to in section 1511(3), or | ||
(b) a decision of the High Court under section 1511(2)(b) has been made to impose a different relevant sanction on the specified person, | ||
publish on its website particulars of the contravention concerned, particulars of the relevant sanction imposed and particulars of the specified person on whom the relevant sanction was imposed. | ||
(2) Subject to subsection (4), if there is an appeal from the High Court from a confirmation referred to in subsection (1)(a), or a decision referred to in subsection (1)(b), the Supervisory Authority shall as soon as may be, as it considers appropriate, publish particulars on its website of the status or outcome of the appeal. | ||
(3) The Supervisory Authority shall publish the particulars, comprising a public notice of relevant sanction imposed, 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 are concerned, is of the opinion that, in relation to the relevant sanction imposed on a specified person who is an individual, 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 jeopardise 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 specified person. | ||
(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. | ||
Limitations on imposing monetary sanctions on specified person | ||
1509. (1) If the Supervisory Authority decides to impose a monetary sanction on a specified person, the Supervisory Authority shall not impose an amount— | ||
(a) that would be likely to cause the specified person to cease business, or | ||
(b) that would, if the specified person is an individual, be likely to cause the person to be adjudicated bankrupt. | ||
(2) If the conduct engaged in by the specified person has given rise (whether in whole or in part) to 2 or more contraventions concerned, the Supervisory Authority shall not impose more than one monetary sanction on the person in respect of the same conduct. | ||
Specified person not to be liable to be penalised twice for same relevant contravention | ||
1510. (1) If the Supervisory Authority imposes a monetary sanction on a specified person and the conduct engaged in by the person that has given rise (whether in whole or in part) to the contravention concerned is an offence under the law of the State, the person shall not be liable to be prosecuted or punished for the offence under that law. | ||
(2) The Supervisory Authority shall not impose a monetary sanction on a specified person if— | ||
(a) the person 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 person that has given rise (whether in whole or in part) to the contravention concerned. | ||
Appeals to and orders of High Court, including orders confirming relevant decisions of Supervisory Authority | ||
1511. (1) In an appeal under section 1505, the High Court may consider any evidence adduced or argument made, whether or not adduced or made to the Supervisory Authority or recognised accountancy body concerned. | ||
(2) On the hearing of such an appeal, the High Court may make any order or give any direction as it thinks fit, including an order— | ||
(a) confirming the decision under appeal, or | ||
(b) modifying or annulling the decision. | ||
(3) A relevant decision does not take effect until that decision is confirmed by the High Court either— | ||
(a) on appeal under section 1505, or | ||
(b) on application by the Supervisory Authority under subsection (4). | ||
(4) On application by motion on notice by the Supervisory Authority for an order confirming a relevant decision, the High Court may make an order confirming the decision or may refuse to make such an order. | ||
Chapter 10 | ||
Appointment of statutory auditors or audit firms | ||
Prohibition of contractual clauses restricting choice of auditors | ||
1512. (1) Section 380(6) shall, with any necessary modifications, apply to an audited undertaking which is not a company and to which this Part applies as that section applies to an audited undertaking which is a company and to which this Part applies. | ||
(2) An audited undertaking that is a public-interest entity shall directly and without delay report to the Supervisory Authority any contractual clause referred to in section 380(6) that purports to affect it and the circumstances which gave rise to that clause. | ||
(3) The Supervisory Authority, on receipt of a report under subsection (2), may share the report with— | ||
(a) the Director, | ||
(b) the Revenue Commissioners, | ||
(c) the Workplace Relations Commission, | ||
(d) the Central Bank, or | ||
(e) any body responsible for the regulation of the public-interest entity. | ||
Selection procedures for statutory auditors or audit firms by public-interest entities | ||
1513. (1) Subject to subsection (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 section 380(6) 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 paragraph (b) and the preference referred to in paragraph (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 subsection (2)(a). | ||
(2) Subsection (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 section 1551, this section 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, the public-interest entity shall, as soon as is practicable, inform the Supervisory Authority of that fact. | ||
(5) The appointment of an auditor or audit firm shall be invalid if the appointment contravenes a provision of this section. | ||
(6) (a) Subject to paragraph (b), a public-interest entity shall keep records demonstrating that the selection procedures referred to in subsection (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 person who contravenes subsection (6)(a) or (b) shall be guilty of a category 4 offence. | ||
Appointment of statutory auditors or audit firms by public-interest entities - informing the Supervisory Authority | ||
1514. (1) Subject to subsection (2)— | ||
(a) where a statutory auditor or audit firm is first appointed by a public-interest entity on or after 17 June 2016, the statutory auditor or audit firm 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 paragraph (a) is subsequently appointed by the same or a different public-interest entity, the statutory auditor or audit firm 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 person who contravenes subsection (1) shall be guilty of a category 3 offence. | ||
Removal of statutory auditors or audit firms by public-interest entities - supplementary provisions | ||
1515. (1) In the case of a statutory audit of a public-interest entity— | ||
(a) shareholders representing 5 per cent or more of the voting rights or of the share capital, or | ||
(b) the Supervisory Authority, | ||
may bring a claim before the High 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 High Court shall relate to— | ||
(a) the conduct of the auditor or audit firm with regard to the performance of his or her 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 subsection (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 subsection, and | ||
(b) ‘best interests of the public-interest entity’ shall not include any illegal or improper motive with regard to avoiding disclosures or detection of any contravention by the entity of this Act. | ||
Directors’ report to include date of last appointment of statutory auditor or audit firm | ||
1516. (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 section 1548, 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 section, ‘directors’ report’ means the directors’ report required by section 325. | ||
Chapter 11 | ||
Confidentiality and professional secrecy | ||
Rules of confidentiality to apply | ||
1517. (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 section 1465, 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 section 1517 | ||
1518. (1) Section 1517 shall continue to apply with respect to the carrying out of a statutory audit notwithstanding— | ||
(a) that the statutory auditor or audit firm referred to in that section has ceased to be engaged in that audit, or | ||
(b) that the auditor or audit firm referred to in that section 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 | ||
1519. (1) Nothing in section 1517 or 1518 shall operate to prevent the recognised accountancy body from complying with its obligations under the relevant provisions. | ||
(2) Nothing in section 1517 or 1518 shall operate to impede the enforcement of the relevant provisions. | ||
Rules of confidentiality in relation to entities in third countries | ||
1520. (1) Where a statutory auditor or audit firm carries out a statutory audit of an undertaking which is part of a group whose holding undertaking is situated in a third country, the confidentiality and professional secrecy rules referred to in section 1517(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 holding 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 undertaking that he or she holds to the competent authorities in the relevant third countries under the conditions set out in Chapter 19. | ||
(3) The transfer of information to the group auditor situated in a third country shall comply with the Data Protection Acts 1988 to 2018 and Regulation (EU) 2016/679. | ||
Incoming statutory auditor or audit firm to be afforded access to information | ||
1521. 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 undertaking and the most recent audit of that undertaking to the incoming statutory auditor or audit firm. | ||
Access by recognised accountancy body to audit documents | ||
1522. (1) Where it considers it reasonably necessary to do so for the purpose of performing a particular function under the relevant provisions, 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 subsection (1), the powers under that subsection are exercisable in relation to a statutory auditor or audit firm where a complaint is made to a recognised accountancy body that the statutory auditor or audit firm has contravened a requirement of the relevant provisions. | ||
(3) Where the powers under subsection (1) are exercisable, the following additional power may be exercised by a 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 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 section, ‘specified’ means specified in the notice concerned. | ||
(5) Without prejudice to subsection (6), if a person fails, without reasonable excuse, to comply with a requirement under subsection (1) or (3), the person shall be guilty of a category 3 offence. | ||
(6) Where a person fails to comply with a requirement under subsection (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 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 | ||
1523. (1) Where it considers it reasonably necessary to do so for the purposes of performing a particular function under the relevant provisions, 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 section, ‘relevant person’ means— | ||
(a) a member of a recognised accountancy body, | ||
(b) a client or former client of the 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 subsection (1), the powers under that subsection 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 the relevant provisions. | ||
(4) Where the powers under subsection (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 section, ‘specified’ means specified in the notice concerned. | ||
(6) If a person fails, without reasonable excuse, to comply with a requirement under subsection (1) or (4), the person shall be guilty of a category 3 offence. | ||
(7) Nothing in this section derogates from the powers exercisable by the Supervisory Authority in the circumstances, and under the conditions, specified in section 933 or 934. | ||
Professional privilege | ||
1524. 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 obligations imposed by relevant provisions | ||
1525. (1) No professional or legal duty to which a statutory auditor or audit firm is subject by virtue of his or her appointment as a statutory auditor or audit firm shall be regarded as contravened by reason of compliance with the obligations imposed by the relevant provisions. | ||
(2) No liability to the undertaking 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 section 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 or her. | ||
Chapter 12 | ||
Auditing standards and audit reporting | ||
Auditing standards to be applied | ||
1526. (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 subsection (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) The Supervisory Authority may prescribe by regulations audit procedures or requirements, in addition to the international auditing standards adopted by the Commission under Article 26 of the Directive, only— | ||
(a) if those audit procedures or requirements are necessary in order to give effect to legal requirements in the State relating to the scope of statutory audits, or | ||
(b) to the extent necessary to add to the credibility and quality of financial statements. | ||
(5) The Supervisory Authority shall communicate the audit procedures or requirements referred to in subsection (4) to the Commission at least 3 months before their entry into force or, in the case of requirements already existing at the time of adoption of an international auditing standard, at the latest within 3 months of the adoption of the relevant international auditing standard. | ||
(6) In the case of the statutory audit of small companies, the Supervisory Authority may provide that the application of the auditing standards referred to in subsection (1) is to be proportionate to the scale and complexity of the activities of such companies and may take the measures necessary in order to ensure the proportionate application of the auditing standards to the statutory audits of small companies. | ||
(7) In this section, ‘standards’ include standards on professional ethics and internal quality control in addition to standards on auditing. | ||
Audit of group accounts - responsibility of group auditor | ||
1527. (1) Where a statutory audit of the group financial statements of a group 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 the holding undertaking 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 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 subsection (3) performed audit work for the purposes of the group audit. | ||
(5) The documentation referred to in subsections (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 7. | ||
(6) The group auditor shall request the agreement of the auditors concerned referred to in subsection (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 subsection (6), he or she 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 shall, when requested, make available to the Supervisory Authority or the recognised accountancy body where applicable the relevant documentation he or she retains concerning the audit work performed by the auditors concerned referred to in subsection (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 17. | ||
Further responsibility of group auditor | ||
1528. (1) Subject to subsection (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 holding undertaking or on a subsidiary undertaking of a group from the relevant competent authorities from third countries through the working arrangements referred to in section 1568(1)(c) or 1569(c). | ||
(2) Where— | ||
(a) a statutory audit of the group financial statements of a group is carried out, and | ||
(b) a holding undertaking or subsidiary undertaking of the group is audited by one or more third-country auditors or third-country audit entities that have no working arrangements as referred to in section 1568(1)(c) or 1569(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 audit 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 third-country 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 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 the existence of such an impediment. | ||
Additional report to audit committee | ||
1529. (1) Where a public-interest entity is exempt from the requirement to have an audit committee, as provided for under this Part, the additional report to the audit committee shall be submitted to the directors of the public-interest entity. | ||
(2) Subject to subsection (1), the audit committee of a public-interest entity shall submit the additional report to the audit committee to the directors of the public-interest entity. | ||
(3) The Supervisory Authority may set out additional requirements to those listed in points (a) to (p) of Article 11(2) of Regulation (EU) No 537/2014 in relation to the content of the additional report to the audit committee, or directors, as applicable, only where this provides further information to the audit committee on the audit work undertaken. | ||
(4) The audit committee (or, if there is no audit committee, the directors of the public-interest entity) shall disclose the additional report to any of the following persons upon request where the information is required in order for the person to perform the person’s functions: | ||
(a) the Supervisory Authority; | ||
(b) the Director; | ||
(c) the Revenue Commissioners; | ||
(d) the Workplace Relations Commission; | ||
(e) the Central Bank; | ||
(f) any body responsible for the regulation of the public-interest entity. | ||
(5) A disclosure by the audit committee (or, if there is no audit committee, the directors of the public-interest entity) in accordance with subsection (4) shall not be treated, for any purpose, as a breach of any restriction of disclosure by that committee (or, as appropriate, such directors) imposed by or under any other enactment, rule of law or otherwise. | ||
Auditors’ reporting obligations under Article 12 of Regulation (EU) No 537/2014 | ||
1530. (1) 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 under— | ||
(a) 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 ), | ||
(b) Regulation 52 of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 ), or | ||
(c) Regulation 78 of the European Union (Insurance and Reinsurance) Regulations 2015 ( S.I. No. 485 of 2015 ). | ||
(2) The obligation imposed on a person by subsection (1) to disclose information that he or she has to the Supervisory Authority is in addition to, and not in substitution for, any other obligation that the person has to disclose information to the Supervisory Authority or any other person, but that subsection shall not require the first-mentioned person to disclose that information to the Supervisory Authority more than once. | ||
(3) (a) The Central Bank may, by notice in writing given to a statutory auditor or audit firm, require the auditor or firm to give it, within the period specified in the notice, additional information if such information is necessary for effective financial market supervision as provided for in the law of the State. | ||
(b) The statutory auditor or audit firm the subject of a notice under paragraph (a) shall comply with the notice. | ||
Chapter 13 | ||
Record keeping | ||
Record keeping | ||
1531. (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 shall 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 14 | ||
Objectivity | ||
Future viability | ||
1532. Without prejudice to the reporting requirements referred to in sections 336, 337 and 391 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 undertaking or on the efficiency or effectiveness with which the directors of the undertaking have conducted or will conduct the affairs of the undertaking. | ||
Chapter 15 | ||
Independence | ||
Requirement for independence - general | ||
1533. (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 undertaking. | ||
(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 or her 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) Subsection (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 subsections (1) and (2) shall be required at least during both the period to which the financial statements to be audited relate and the period during which the statutory audit is carried out. | ||
Professional scepticism | ||
1534. (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 undertaking’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 undertaking’s management and of the persons charged with its governance. | ||
(2) For the purposes of this section, ‘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 | ||
1535. (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 or she belongs or any individual in a position to influence the outcome of the statutory audit, and | ||
(b) the audited undertaking, | ||
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 subsection (1), a person shall not act as a statutory auditor of an undertaking if he or she is— | ||
(a) an officer or servant of the undertaking, | ||
(b) a person who has been an officer or servant of the undertaking 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 undertaking, | ||
(c) a parent, spouse, brother, sister or child of an officer of the undertaking, | ||
(d) a person who is a partner of or in the employment of an officer of the undertaking, | ||
(e) a person who is disqualified under this subsection for appointment as auditor of a body corporate that is a subsidiary or holding undertaking of the undertaking or a subsidiary of the undertaking’s holding undertaking, or would be so disqualified if the body corporate were a company, or | ||
(f) a person in whose name a share in the undertaking is registered, whether or not that person is the beneficial owner of the share. | ||
(3) Without prejudice to the generality of subsections (1) and (2), a statutory audit firm, regardless of its legal structure, shall not carry out a statutory audit of an undertaking if— | ||
(a) any principal of the audit firm is an officer or servant of the undertaking, | ||
(b) any principal of the audit firm has been an officer or servant of the undertaking within a period in respect of which accounts would fall to be audited by the firm if the firm was appointed auditor of the undertaking, or | ||
(c) the firm is disqualified under this subsection for appointment as auditor of any other body corporate that is a subsidiary or holding undertaking of the undertaking or a subsidiary of the undertaking’s holding undertaking, or would be so disqualified if the body corporate were a company. | ||
(4) Without prejudice to the generality of subsections (1) to (3), a person shall not carry out a statutory audit of an undertaking on behalf of a statutory audit firm if he or she is— | ||
(a) a person in whose name a share in the undertaking 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 undertaking. | ||
Prohibited relationships - financial or beneficial interest | ||
1536. (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 20049 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 undertaking 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 subsection (1), shall not participate in or otherwise influence the outcome of a statutory audit of any particular audited undertaking if he or she— | ||
(a) owns financial instruments of the audited undertaking, other than interests owned indirectly through diversified collective investment schemes, | ||
(b) owns financial instruments of any undertaking related to the audited undertaking, 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, business or other relationship with the audited undertaking within the period to which the financial statements to be audited relate 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 subsection (1), shall not solicit or accept pecuniary or non-pecuniary gifts or favours from the audited undertaking or any undertaking related to an audited undertaking unless an objective, reasonable and informed third party would consider the value thereof as trivial or inconsequential. | ||
Prohibited relationships - mergers and acquisitions | ||
1537. (1) If, during the period to which the financial statements relate, an audited undertaking is acquired by, merges with, or acquires, another undertaking, 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 undertaking, 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 subsection (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 or her independence and shall, where possible, adopt safeguards to minimise any threat to his or her independence arising from prior and current interests and relationships. | ||
Threats to independence and other information to be recorded | ||
1538. A statutory auditor or audit firm shall document in the audit working papers all significant threats to his or her independence as well as the safeguards applied to mitigate those threats. | ||
Preparation for statutory audit and assessment of threats to independence | ||
1539. 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 or she complies with the requirements set out in sections 1533 and 1535 to 1538; | ||
(b) whether there are threats to his or her independence and the safeguards applied to mitigate those threats; | ||
(c) whether he or she 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. | ||
Non-intervention by certain persons in execution of audit | ||
1540. 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. | ||
Internal organisation of statutory auditors and audit firms | ||
1541. (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 or her employees and any other individuals whose services are placed at his or her disposal or under his or her 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 the undertaking by other persons of important audit functions is not done 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 the relevant provisions; | ||
(ii) the statutory auditor or audit firm shall ensure that any audit functions carried out by such other persons does not affect his or her responsibility towards the audited undertaking; | ||
(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 or her independence as referred to in sections 1533, 1535 to 1539 and 1547; | ||
(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 section 1543; | ||
(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 includes, at least, the policies and procedures referred to in paragraph (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 or her 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 or her 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 undertaking 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 or her systems, internal quality control mechanisms and arrangements established in accordance with the relevant provisions 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 paragraph (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 or her policies and procedures referred to in subsection (1) to the employees of the statutory auditor or audit firm. | ||
(3) A statutory auditor or audit firm shall take into consideration the scale and complexity of his or her activities when complying with the requirements set out in subsection (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 section 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 | ||
1542. (1) An audit firm, when carrying out a statutory audit of an undertaking, 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 undertaking, 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 or her of the relevant provisions. | ||
(5) A statutory auditor or audit firm shall keep records of any consequences of any contravention referred to in subsection (4), including the measures taken to address such contravention and to modify his or her 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 subsection (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 or she asks external experts for advice. | ||
Organisation of work of statutory auditors and audit firms - audit files | ||
1543. (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 name 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 section 1538, 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 the relevant provisions 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 or her. | ||
Restrictions with regard to fees | ||
1544. 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 undertaking, and | ||
(b) are not to be based on any form of contingency. | ||
Restrictions with regard to fees exemption on exceptional basis | ||
1545. (1) A statutory auditor or audit firm may, pursuant to Article 4(2) of Regulation (EU) No 537/2014, request the Supervisory Authority for an exemption from the limits in that Article on total fees for services provided by him or her to a public-interest entity for a period of up to 2 financial years on an exceptional basis. | ||
(2) A request shall be made in such form and manner as the Supervisory Authority specifies. | ||
(3) On receipt of a request in the form specified in subsection (2), the Supervisory Authority shall— | ||
(a) grant the exemption as requested, | ||
(b) grant a shorter exemption than that requested, or | ||
(c) refuse to grant the exemption. | ||
(4) Where the Supervisory Authority, on receipt of a request for an exemption, considers that it requires additional information before making a decision under subsection (3), it may give notice of that to the statutory auditor or audit firm that made the request. | ||
(5) The notice referred to in subsection (4) shall set out the additional information required by the Supervisory Authority. | ||
(6) On receipt of a response to the notice from the statutory auditor or audit firm containing the additional information referred to in subsection (4), the Supervisory Authority shall— | ||
(a) grant the exemption as requested, | ||
(b) grant a shorter exemption than that requested, or | ||
(c) refuse to grant the exemption. | ||
(7) Where the Supervisory Authority grants an exemption under subsection (3) or (4), it shall— | ||
(a) do so on an exceptional and case by case basis only, and | ||
(b) publish its decision on its website. | ||
(8) Where the Supervisory Authority refuses to grant an exemption under subsection (3)(c) or (6)(c), it shall provide reasons for its decision to the statutory auditor or audit firm. | ||
Rotation of key audit partner in cases of public-interest entities | ||
1546. 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 undertakings or public-interest entities | ||
1547. (1) There shall not be taken up by— | ||
(a) a statutory auditor who carries out a statutory audit of an undertaking, or | ||
(b) the key audit partner who carries out, on behalf of an audit firm, a statutory audit of an undertaking, | ||
any of the positions in that undertaking, specified in subsection (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 referred to in subsection (1) are— | ||
(a) a key management position in the audited undertaking, | ||
(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 undertaking, or | ||
(c) a non-executive member position of the audited undertaking or a member’s position of that undertaking. | ||
(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 subsection (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 referred to in subsection (3) 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 employee, partner or other individual is personally approved as a statutory auditor, there shall not be taken up by such employee, partner or other individual any of the positions referred to in subsections (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 undertaking. | ||
Rotation of statutory auditor and audit firms in case of public-interest entities - extension | ||
1548. (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 subsection (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 subsection (4), it shall give notice of that to the public-interest entity that made the request. | ||
(6) The notice referred to in subsection (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 subsection (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 subsection (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 subsection (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 | ||
1549. (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 (including due to firm mergers, acquisitions, or changes in ownership structure), the statutory auditor or audit firm shall immediately report (in accordance with Article 17(8) of Regulation (EU) No 537/2014 and in such form and manner as the Supervisory Authority specifies) such uncertainty to the Supervisory Authority. | ||
(2) On receipt of a report in the form specified in subsection (1), the Supervisory Authority shall— | ||
(a) determine the relevant date for the purposes of that subsection, or | ||
(b) request additional information from the statutory auditor or audit firm before making a decision referred to in paragraph (a). | ||
(3) 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 subsection (2)(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. | ||
(4) 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 subsection (3), the Supervisory Authority shall— | ||
(a) determine the relevant date for the purposes of subsection (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 | ||
1550. (1) Subject to subsection (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 holding undertaking within the European Union or to its controlled undertakings (within the meaning of point (f) of Article 2(1) of the Transparency (Regulated Markets) Directive as defined in section 1379) within the European Union: | ||
(a) tax services relating to— | ||
(i) preparation of tax forms, | ||
(ii) identification of public subsidies and tax incentives where 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 where 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 subsection (1) may only be provided as specified in that subsection 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 this Part are complied with by the statutory auditor or audit firm. | ||
(3) The audit committee or the directors of the public-interest entity, as applicable, shall, at such times as it or they, as the case may be, thinks or think it appropriate to do so, issue guidelines with regard to the non-audit services referred to in subsection (1). | ||
Chapter 16 | ||
Audit committees | ||
Audit committees for public-interest entities | ||
1551. (1) Subject to the other provisions of this section, 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 subsection (3)) so as to be able to contribute effectively to the committee’s functions. | ||
(3) The condition referred to in subsection (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 subsection (2) shall be a person who has competence in accounting or auditing. | ||
(5) For the purposes of subsections (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) (a) Subject to paragraph (b), subsection (1) shall not apply to public-interest entities which meet the criteria set out in points (f) and (t) of Article 2(1) of the 2003 Prospectus Directive provided that the functions assigned to an audit committee are performed by the board of directors as a whole. | ||
(b) The chairman of the board of directors, being an executive member, shall not act as chairman while the board is performing the functions of the audit committee. | ||
(11) Subsection (1) 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 the Accounting Directive if that entity fulfils the requirements set out in subsections (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 a UCITS (within the meaning of the UCITS Regulations as defined in section 1385), or an alternative investment fund (within the meaning of the European Union (Alternative Investment Fund Managers) Regulations 2013 ( S.I. No. 257 of 2013 )), | ||
(c) subject to subsection (12), 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 the Prospectus Regulation (within the meaning of section 1348), or | ||
(d) any credit institution within the meaning of point 1 of Article 3(1) of Directive 2013/36/EU of 26 June 201310 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 whose shares are not admitted to trading on a regulated market of any Member State and which has, in a continuous or repeated manner, issued only debt securities admitted to trading on 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 the 2003 Prospectus Directive. | ||
(12) A public-interest entity that avails itself of the exemption under subsection (11)(c) shall, by means of a statement to that effect included in a published document, such as— | ||
(a) in any annual report published by it, or | ||
(b) in an annual return or other periodic statement delivered by it to the Registrar or Central Bank, | ||
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. | ||
(13) (a) Subject to paragraph (b), subsection (1) shall not apply to a captive insurance undertaking or captive reinsurance undertaking (in each case within the meaning of Regulation 3 of the European Union (Insurance and Reinsurance) Regulations 2015 ( S.I. No. 485 of 2015 )) provided that it has a body or bodies performing equivalent functions to an audit committee, established and functioning in accordance with provisions in place in the State in which the public-interest entity to be audited is registered (in such case the entity shall disclose on its website which body carries out those functions and how that body is composed). | ||
(b) A captive insurance undertaking or captive reinsurance undertaking which falls within paragraph (a) shall satisfy the following conditions: | ||
(i) it shall not be owned by a credit institution; | ||
(ii) it shall not issue transferable securities admitted to trading on a regulated market. | ||
(14) Without prejudice to the responsibility of the directors of the public-interest entity, the responsibilities of the audit committee shall include— | ||
(a) informing directors of the entity of the outcome of the statutory audit and explaining how the statutory audit contributed to the integrity of financial reporting and what the role of the audit committee was in that process, | ||
(b) monitoring the financial reporting process and submitting recommendations or proposals to the directors of the entity to ensure its integrity, | ||
(c) monitoring 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) monitoring the statutory audit of the entity and group 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) reviewing and monitoring the independence of the statutory auditors or the audit firms in accordance with sections 1535 to 1541 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) being responsible for the procedure for the selection of a statutory auditor or audit firm and recommending 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. | ||
(15) Subsection (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. | ||
(16) The other provisions of the relevant provisions with regard to the performance of a function by the audit committee apply with respect to financial statements of the public-interest entity for financial years beginning on or after the establishment of the audit committee in respect of the entity. | ||
(17) A person who, without reasonable excuse, contravenes subsection (12) shall be guilty of a category 3 offence. | ||
(18) Section 167 shall not apply to a public-interest entity which is both a UCITS referred to in subsection (11)(b) and a company. | ||
(19) In this section, ‘2003 Prospectus Directive’ has the meaning assigned to it by section 1348. | ||
Chapter 17 | ||
Cooperation with other Member States | ||
Cooperation with other Member States | ||
1552. (1) 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. | ||
(2) For the purpose of discharging that responsibility, the Supervisory Authority shall put in place appropriate mechanisms, including arrangements with competent authorities in other Member States. | ||
Specific requirements with regard to cooperation | ||
1553. (1) Subject to section 1552, the Supervisory Authority, the recognised accountancy bodies and the Registrar with functions relating to approval, registration, quality assurance, inspection and discipline under the relevant provisions 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 the relevant provisions or, as the case may be, the laws of the other Member State concerned that implement the Audit Directive. | ||
(2) Subject to section 1552, the Supervisory Authority, the recognised accountancy bodies and the Registrar with the foregoing functions under the relevant provisions 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. | ||
(3) In this section, ‘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 with regard to approval, registration, quality assurance, inspection and discipline under the relevant provisions. | ||
Confidentiality of information | ||
1554. (1) A person shall not disclose, except in accordance with law, information that— | ||
(a) is obtained in performing functions under any provision of the relevant provisions, and | ||
(b) has not otherwise come to the notice of members of the public. | ||
(2) A person who contravenes subsection (1) shall be guilty of a category 3 offence. | ||
Supplemental provisions in relation to section 1554 | ||
1555. Without prejudice to section 1554, the persons to whom that section applies shall 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; | ||
(b) an employee or former employee of the Supervisory Authority, the recognised accountancy bodies or the Registrar; | ||
(c) a professional or other advisor to the Supervisory Authority, the recognised accountancy bodies or the Registrar including a former advisor. | ||
Obligation to supply information required for certain purposes and saving concerning confidential information | ||
1556. (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 section 1553. | ||
(2) Section 1554 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 | ||
1557. (1) Where necessary, the Supervisory Authority or a recognised accountancy body, on receiving a request referred to in section 1556(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 subsection (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 section 1554 to certain information | ||
1558. Section 1554 shall apply to information received by the Supervisory Authority, a recognised accountancy body or the Registrar 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 | ||
1559. (1) If— | ||
(a) the Supervisory Authority or a recognised accountancy body of whom a request referred to in section 1556(1) is made does not comply with the request, and | ||
(b) the case is neither— | ||
(i) one of a delay in complying with the request to which section 1557(2) relates, nor | ||
(ii) one of a refusal to comply with the request on any of the grounds referred to in section 1560, | ||
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 subsection (1)(a), it shall also notify the Supervisory Authority of the reasons for the failure referred to in that subsection. | ||
Grounds for refusing request for information | ||
1560. (1) The Supervisory Authority or a recognised accountancy body may refuse to comply with a request referred to in section 1556(1) if— | ||
(a) the ground referred to in point (a) of paragraph 4 of Article 36 of the Audit Directive applies, | ||
(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 subsection (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 subsection (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 subsection (3), shall also notify the Supervisory Authority of the reasons for the refusal referred to in that subsection. | ||
Use to which information may be put | ||
1561. (1) The Supervisory Authority or a recognised accountancy body may use relevant information only for the performance by it of its functions under the relevant provisions and then only in the context of steps it takes in— | ||
(a) investigating and detecting failures to comply with the relevant provisions, and | ||
(b) initiating and employing disciplinary procedures, or maintaining proceedings in any court, in respect of any such failures. | ||
(2) Subject to section 1552, subsection (1) 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 subsection and in the context of administrative or judicial proceedings specifically related to the performance of those functions. | ||
(3) (a) The Supervisory Authority may transmit to the competent 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, information that the Supervisory Authority may need in order to perform its functions under Regulation (EU) No 537/2014. | ||
(4) In this section, ‘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. | ||
Counterpart authority to be notified of non-compliance with Audit Directive and Regulation (EU) No 537/2014 | ||
1562. 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 | ||
1563. (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 the counterpart authority in another Member State to carry out an investigation in the territory of that Member State. | ||
(2) A request under subsection (1) of the 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 subsection (1) and, if such be the case, the making of the further request by it under subsection (2). | ||
Duty of Supervisory Authority or recognised accountancy body to take certain action | ||
1564. (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 the relevant provisions. | ||
(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 subsection (1), and | ||
(b) in addition to so informing, under subsection (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 counterpart authority’s request for investigation | ||
1565. (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 subsection (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 section— | ||
(a) the reference in subsection (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 subsection (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 subsection (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 | ||
1566. (1) The Supervisory Authority or a recognised accountancy body may refuse to accede to a request referred to in section 1565(1) made of it or a further request of the kind referred to in section 1565(3)(a) made of it if— | ||
(a) the ground referred to in point (a) of paragraph 6 of Article 36 of the Audit Directive applies, | ||
(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 subsection (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 subsection (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 subsection (3) shall also notify the Supervisory Authority of the reasons for the refusal referred to in that subsection. | ||
Chapter 18 | ||
Mutual recognition of regulatory arrangements between Member States | ||
Mutual recognition of regulatory arrangements between Member States | ||
1567. To the extent that the preceding provisions of this Part, or, where applicable, Regulation (EU) No 537/2014 do not operate to achieve the following effects in the law of the State, this Part or Regulation (EU) No 537/2014 and those preceding provisions (notwithstanding anything in them to the contrary) shall be read 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 undertaking 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 section 1465 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) an undertaking 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 accounts or consolidated accounts of that undertaking, | ||
and | ||
(c) a statutory auditor or audit firm, approved under section 1464 or Chapter 20, which is registered in any Member State and provides audit reports concerning accounts or consolidated accounts in accordance with section 1573, the systems of oversight, quality assurance, investigation and sanctions of the Member State where registration took place will apply. | ||
Chapter 19 | ||
Transfer of audit working papers, etc., to third-country competent authorities | ||
Transfer of audit documentation to third-country competent authority | ||
1568. (1) Subject to section 1569, 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 an undertaking which— | ||
(i) has issued securities in the third country concerned, or | ||
(ii) forms part of a group that issues 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 the Data Protection Acts 1988 to 2018 and Regulation (EU) 2016/679. | ||
(2) The working arrangements referred to in subsection (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 section 1554 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, and | ||
(ii) the protection of the commercial interests of the audited undertaking, 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 if— | ||
(i) the first ground referred to in point (d) of paragraph 2 of Article 47 of the Audit Directive applies, | ||
(ii) 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 | ||
(iii) a final determination has already been made by the Supervisory Authority in respect of the same actions and 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 subsections (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 subsection (2)(d)), the power 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 or her by the Supervisory Authority. | ||
Derogation from section 1568 in exceptional cases | ||
1569. By way of derogation from section 1568, 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) such 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 section 1568(2)(a) to (d) are satisfied. | ||
Particulars of working arrangements to be notified | ||
1570. (1) Where the Supervisory Authority enters into working arrangements with a third-country competent authority in accordance with section 1568(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. | ||
Joint inspections | ||
1571. The Supervisory Authority may perform the functions (whether in whole or in part) referred to in section 905(2)(n)(iii) in so far as such functions are part of a joint inspection under— | ||
(a) Commission Implementing Decision (EU) 2016/1156 of 14 July 201611 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, or | ||
(b) any other Commission Implementing Decision made pursuant to Article 47(3) of the Audit Directive on the adequacy of competent authorities for the purposes of joint inspections. | ||
Chapter 20 | ||
International aspects | ||
Approval of third-country auditor | ||
1572. (1) Without prejudice to Chapter 3 and subject to subsection (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 sections 1464 and 1472. | ||
(2) A third-country auditor shall not be approved under subsection (1) unless reciprocal arrangements with the third country concerned are in place, that is to say arrangements that enable a statutory auditor to carry out audits in that third country— | ||
(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 section and Chapter 3 for the third-country auditor’s approval under subsection (1). | ||
Chapter 21 | ||
Registration and oversight of third-country auditors and third-country audit entities | ||
Registration of third-country auditors and third-country audit entities | ||
1573. (1)(a) Subject to paragraph (b), subsection (6) and section 1580, the Supervisory Authority shall, in accordance with the relevant provisions of Chapter 5 and Schedule 20, cause to be registered in each year in the public register every third-country auditor and third-country audit entity that indicates, in writing to it, his or her intention to provide an audit report concerning the accounts or consolidated accounts of an undertaking falling within subsection (3). | ||
(b) Paragraph (a) shall not apply to a third-country auditor or third-country audit entity that provides audit reports concerning the annual or group financial statements of undertakings incorporated in third countries in respect of which— | ||
(i) the Commission has not yet made a decision that the public oversight, quality assurance and investigation and penalty systems for third-country auditors and third-country audit entities meet requirements which shall be considered equivalent to those of Articles 29, 30 and 32 of the Audit Directive, or | ||
(ii) such a decision was made but for a specified period of time which has now expired. | ||
(2) Registration in the public register pursuant to subsection (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 subsection (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 in the State. | ||
(4) There shall accompany the indication in writing by a third-country auditor or third-country audit entity referred to in subsection (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 20 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) Subsection (1) shall not apply if the undertaking referred to in that subsection 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, 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, 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) Section 1487 shall apply to third-country auditors and third-country 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. | ||
(8) Section 1488 shall apply, with any necessary modifications, to a notification of information by a third-country auditor or third-country audit entity under— | ||
(a) subsection (4) to the Supervisory Authority, and | ||
(b) section 1487, as applied by subsection (7), to that Authority. | ||
(9) In subsection (3), ‘collective investment undertaking’ does not include such an undertaking of the closed-ended type. | ||
Exemption from quality assurance | ||
1574. (1) The Supervisory Authority may exempt from Chapter 7 a third-country auditor or third-country audit entity registered under Chapter 5 pursuant to section 1573 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 subsection (1) has been carried out as referred to in that subsection, and | ||
(b) the system of quality assurance referred to in that subsection has been assessed as equivalent in accordance with section 1580, | ||
the Supervisory Authority shall grant the exemption and the third-country auditor or third-country audit entity shall be exempted from Chapter 7 accordingly. | ||
Removal of third-country auditor or third-country audit entity registered in accordance with section 1573 from public register | ||
1575. (1) Subject to subsections (2) and (3), the Supervisory Authority may require the Registrar, in the case of a third-country auditor or third-country audit entity registered pursuant to section 1573, to remove the third-country auditor or third-country 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 or her registration or does not pay the appropriate fee under section 1579, or | ||
(b) the outcome of a quality assurance inspection or investigation and disciplinary process requires it. | ||
(2) A third-country auditor or third-country 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 exercise its power under subsection (1) unless it has first given the third-country auditor or third-country audit entity concerned a reasonable opportunity, in the circumstances concerned, of making representations in writing on the grounds (which the Supervisory Authority shall make known to such auditor or entity) that the Supervisory Authority is minded to exercise such power. | ||
(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 subsection (3). | ||
(5) The Supervisory Authority may publish on its website the name of the third-country auditor or third-country audit entity that has been removed from the public register in accordance with this section along with the reasons for such removal. | ||
Audit by non-registered auditor or audit entity - consequence | ||
1576. Without prejudice to section 1580 and unless section 1573(6) applies to it, an audit report provided by a third-country auditor or third-country audit entity concerning the accounts or consolidated accounts of an undertaking falling within section 1573(3) shall have no legal effect in the State if the third-country auditor or third-country audit entity that provides it is not registered under Chapter 5. | ||
Conditions for registration of third-country auditor or third-country audit entity | ||
1577. (1) The Supervisory Authority may cause to be registered a third-country auditor or third-country audit entity pursuant to section 1573 only if— | ||
(a) where the applicant for registration is an audit entity (referred to in this section as the ‘potential registrant’), the applicant satisfies so many of the conditions specified in subsection (2) as are applicable to an entity, and | ||
(b) where the applicant for registration is an auditor (also referred to in this section as the ‘potential registrant’), the applicant satisfies so many of the conditions specified in subsection (2) as are applicable to an individual. | ||
(2) The conditions are as follows: | ||
(a) the majority of the members of the administrative or management body of the potential registrant meet requirements equivalent to those of sections 1464 and 1472; | ||
(b) the third-country auditor carrying out the audit on behalf of the potential registrant meets requirements equivalent to those of sections 1464 and 1472; | ||
(c) the audits of the accounts or consolidated accounts referred to in section 1573(1) are carried out in accordance with international auditing standards as referred to in section 1526, as well as the requirements referred to in section 1491, or with equivalent standards and requirements; | ||
(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 section 1577(2)(c) | ||
1578. (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 section 1577(2)(c), the Supervisory Authority may, for the purposes of that provision, make an assessment of that equivalence. | ||
(2) When assessing the equivalence concerned, 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 section 1573(1) are carried out in accordance with the standards and requirements referred to in section 1577(2)(c). | ||
(3) The general equivalence criteria referred to in subsection (2) shall apply to all third countries. | ||
Certain fees chargeable by Supervisory Authority | ||
1579. (1) (a) For the purposes specified in paragraph (b), the Supervisory Authority may charge and impose annual fees, where necessary on an interim basis, having obtained the Minister’s consent and subject to paragraph (c), on a third-country auditor or third-country audit entity referred to in section 1573(1), in respect of registration, effected or provided in relation to the auditor or audit entity under and in accordance with this Part. | ||
(b) Money received by the Supervisory Authority under this subsection may be used only for the purposes of meeting the Authority’s reasonable administrative expenses in performing its functions and exercising its powers under section 1573 and under any other provision of this Act that contains consequential or incidental provisions on, or in relation to, section 1573. | ||
(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 meet 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 paragraph (b), the Supervisory Authority may charge and impose fees, where necessary on an interim basis, having obtained the Minister’s consent and subject to paragraph (c), on a third-country auditor or third-country audit entity referred to in section 1573(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 the relevant provisions. | ||
(b) Money received by the Supervisory Authority under this subsection may be used only for the purposes of meeting the Authority’s reasonable administrative expenses in performing its functions and exercising its powers under section 930A, Chapter 7 and this Chapter and under any other provision of this Act that contains consequential or incidental provisions on, or in relation to, section 930A, Chapter 7 and this Chapter. | ||
(c) The Supervisory Authority— | ||
(i) shall establish criteria, as set out in subsection (3), for charging and imposing fees on a third-country auditor or third-country audit entity referred to in section 1573(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 meet 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 third-country audit entity referred to in section 1573(1) shall be based on costs incurred to meet the Supervisory Authority’s reasonable administrative expenses in relation to— | ||
(a) location (including any necessary and consequential travel costs), | ||
(b) the testing of the internal quality control system undertaken (including 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 (including the use (if any) of consultants located outside the State to undertake on-site inspections), | ||
(g) the nature and significance of the findings (including the time allocated to inspection, drafting the report and follow-up to the recommendations), | ||
(h) associated miscellaneous costs (including the translation of working papers relevant to the audit), and | ||
(i) legal and other costs. | ||
(4) Notwithstanding that the particular audit of a public-interest entity has been carried out by a statutory auditor, no fee under this section 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 section shall, in those circumstances, be imposed on the statutory audit firm instead. | ||
(5) A fee imposed under subsection (1) or (2) may, in default of payment, be recovered from the third-country auditor or third-country audit entity concerned as a simple contract debt in any court of competent jurisdiction. | ||
Exemptions in case of equivalence | ||
1580. (1) A third-country auditor or third-country audit entity may apply to the Supervisory Authority for an exemption from all or any of the provisions of sections 1573 and 1574 on the basis that the third-country auditor or third-country 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 section 930A, Chapter 7 and this Chapter. | ||
(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 subsection (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 sections 1573 and 1574 partially or entirely and the third-country auditor or third-country 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 subsection (2)(b). | ||
Investigations and sanctions | ||
1581. Sections 934 to 934I shall, with any necessary modifications, apply to third-country auditors and third-country audit entities as those sections apply to statutory auditors and audit firms and audited entities. | ||
Chapter 22 | ||
Savings for disciplinary proceedings in being | ||
Savings for disciplinary proceedings in being - 2010 Audits Regulations | ||
1582. (1) Nothing in the Companies (Statutory Audits) Act 2018 (and, in particular, provisions amending this Act) 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 subsection (1) in relation to a person referred to in that subsection, 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 section 1471 ceases to have effect. | ||
Savings for disciplinary proceedings in being - 2016 Audits Regulations | ||
1583. (1) Nothing in the Companies (Statutory Audits) Act 2018 (and, in particular, provisions amending this Act) affect disciplinary proceedings (not being disciplinary proceedings referred to in section 1582(1)) in being before the date of commencement of section 3 (6) of that Act 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 subsection (1) in relation to a person referred to in that subsection, 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 section 1471 ceases to have effect. | ||
Savings for disciplinary proceedings in being - prescribed accountancy bodies | ||
1584. Nothing in the Companies (Statutory Audits) Act 2018 (and, in particular, provisions amending this Act) affect disciplinary proceedings (not being disciplinary proceedings referred to in section 1582(1) or 1583(1)) in being before the date of commencement of section 3 (6) of that Act by a prescribed 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.”. | ||
5 OJ No. L 157, 9.6.2006, p.87 6 OJ No. L 158, 27.5.2014, p.196 7 OJ No. L 158, 27. 5.2014, p.77 8 OJ No. L 257, 28.8.2014, p.73 9 OJ No. L 162, 30.4.2004, p.70 |