Audit Regulations. (This includes all amendments to the 2008 printed version of the Regulations as previously notified to firms in Audit News 53)

Transcription

1 Audit Regultions Institute of Chrtered Aountnts in Englnd nd Wles Institute of Chrtered Aountnts of Sotlnd Chrtered Aountnts Irelnd 2013 (This inludes ll mendments to the 2008 printed version of the Regultions s previously notified to firms in Audit News 53) Copyright 2008 Institute of Chrtered Aountnts in Englnd nd Wles Institute of Chrtered Aountnts of Sotlnd Chrtered Aountnts Irelnd ISBN

2 Arevitions The following revitions re used in this ooklet: ICAEW ICAI ICAS APB ACCA CPD ISA ISQC1 PII RSB The Institute of Chrtered Aountnts in Englnd nd Wles The Institute of Chrtered Aountnts in Irelnd operting s Chrtered Aountnts Irelnd. The Institute of Chrtered Aountnts of Sotlnd Auditing Prties Bord Assoition of Chrtered Certified Aountnts Continuing professionl development Interntionl Stndrds on Auditing (UK nd Irelnd) Interntionl Stndrd on Qulity Control (UK nd Irelnd) 1 Professionl indemnity insurne Reognised Supervisory Body 2

3 Contents Pge Introdution 5 Prt 1 Audit Regultions Chpter 1 Generl Sope nd sttus 7 Definitions nd interprettion 7 Trnsitionl rrngements 7 Notifitions 7 Shedule 1 Definition nd interprettion Definitions 9 Interprettion 14 Chpter 2 Eligiility, pplition for registrtion, ontinuing oligtions nd esstion of registrtion. Eligiility 16 Applition for registrtion 17 Continuing oligtions 18 Chnges in irumstnes 18 Fees 20 Dispenstion 20 Cesstion of registrtion 20 Chpter 3 Condut of udit work Independene nd integrity 22 Tehnil stndrds 22 Audit report 24 Mintining ompetene 25 Monitoring 25 Chpter 4 Approprite qulifitions nd responsile individuls Responsile individul 26 Cesstion of responsile individul sttus 27 Chpter 5 Audit ffilites Generl 28 Grnting of udit ffilite sttus 28 Withdrwl of udit ffilite sttus 28 Cesstion of udit ffilite sttus 29 Chnges in irumstnes 29 Review of regultory deisions 29 Implementtion of deisions 30 Fees 30 Disiplinry rrngements 30 Chpter 6 The ommittees Registrtion Committee 31 Notifition to ommittees 33 Review Committee nd Pnel 33 Appel Committee 34 3

4 Proedures of the ommittees 34 Chpter 7 Regultory tion Setion 7A Firms registered y the Institute of Chrtered Aountnts in Englnd nd Wles, the Institute of Chrtered Aountnts of Sotlnd nd the Institute of Chrtered Aountnts in Irelnd Restritions nd onditions 35 Withdrwl of registrtion 35 Suspension 36 Urgent orders 37 Implementtion of ommittee deisions nd orders 37 Setion 7B Firms registered y the Institute of Chrtered Aountnts of Sotlnd nd the Institute of Chrtered Aountnts in Irelnd Regultory penlties 38 Chpter 8 Representtion efore ommittees, review nd ppel Setion 8A Firms registered y the Institute of Chrtered Aountnts in Englnd nd Wles nd the Institute of Chrtered Aountnts in Irelnd Representtion efore ommittees 39 Review of regultory deisions 39 Appel 40 Setion 8B Firms registered y the Institute of Chrtered Aountnts of Sotlnd Proedures 42 Appel 43 Chpter 9 Disiplinry rrngements Setion 9A Firms registered y the Institute of Chrtered Aountnts in Englnd nd Wles, the Institute of Chrtered Aountnts of Sotlnd nd the Institute of Chrtered Aountnts in Irelnd Applition of disiplinry rrngements 44 Setion 9B Firms registered y the Institute of Chrtered Aountnts in Englnd nd Wles Regultory penlties 44 4

5 Introdution 1. The Institutes re ll Reognised Supervisory Bodies in the UK nd Reognised Aountny Bodies in Irelnd for the purposes of regulting uditors. The Institute of Chrtered Aountnts in Irelnd, pursunt to Bye-Lw 41 of its Bye-Lws, hs estlished the Chrtered Aountnts Regultory Bord whih rries out the funtions of the ICAI s registering Institute. The Institutes must hve rules setting out how uditors re regulted nd they hve provided guidne on how they should e followed. 2. The Institutes re lso Reognised Qulifying Bodies in the UK. This mens tht memership of n Institute, provided it is ompnied y prtil udit experiene, would qulify memer s the holder of n pproprite qulifition (see hpter 4). This in turn llows memer to pply to eome registered uditor. There re other routes to otining the pproprite qulifition nd these re set out in hpter The ojetives of the Institutes in issuing these udit regultions re to mke sure tht: registered uditors mintin high stndrds of udit work; the reputtion of registered uditors with the puli is mintined; the pplition of the regultions is fir ut firm; the regultions re ler; nd the regultions pply to ll sizes of firm. 4. Registered uditors must omply with the regultions, whih require them to: rry out udit work with integrity; e nd e seen to e independent; omply with uditing stndrds; mke sure tht ll prinipls nd employees re fit nd proper persons; nd mke sure tht ll prinipls nd employees re ompetent nd ontinue to e ompetent to rry out udit work. 5. Guidne is given to help firms pply the regultions. This is printed in light type nd the regultions re in old type. There is dditionl guidne in prt 2 of the ooklet. 6. As eh firm is different, no guidne n e suffiiently omprehensive to over ll firms. Firms my develop other proedures to omply with these regultions ut it is ompline with the regultions tht is importnt. 7. The regultions should e red in onjuntion with: the Institutes Code of Ethis (inluding the fundmentl priniples); pulitions issued y the Auditing Prties Bord: Interntionl Stndrds on Auditing (UK nd Irelnd); Interntionl Stndrds on Qulity Control (UK nd Irelnd); Ethil Stndrds; relevnt finnil reporting stndrds: issued y the Aounting Stndrds Bord: IFRS s endorsed/dopted y the EU; relevnt prts of ompny legisltion in the United Kingdom nd Irelnd; nd the Professionl Indemnity Insurne Regultions. 8. Eh Institute issues mgzine whih often hs new mteril on udit relted mtters. The ICAEW pulishes eonomi, ICAS, The CA mgzine nd ICAI Aountny Irelnd. One of these should lso e red. In ddition, Audit News is issued y ICAEW nd ICAS nd ontins informtion for registered uditors, inluding hnges to the regultions. ICAI memers should red the CARB Regultory Bulletin. 5

6 9. Shedule 1 to hpter 1 ontins definitions nd interprettion of these regultions whih pply oth to the regultions nd the relted guidne. A word or phrse whih is defined in shedule 1 is printed in itlis when used in the regultions. 6

7 Audit Regultions Chpter 1 Generl Sope nd sttus 1.01 These regultions pply to firms seeking registrtion nd to firms registered y the Institute s eligile for ppointment s registered uditor under the At. The regultions lso pply to prinipls nd responsile individuls of the firm. In ertin instnes the regultions ontinue to pply notwithstnding tht registrtion hs esed These regultions re issued y uthority of Counil. Definitions nd interprettion 1.03 The definitions of terms used in the regultions nd the rules of interprettion re in shedule 1 to this hpter. Setion hedings re not prt of the regultions nd re for guidne only. Trnsitionl rrngements 1.04 In respet of the udits of UK entities these regultions ome into fore on 6 April 2008 sujet to regultion From this dte the Audit Regultions (Deemer 1995 edition, s mended) re no longer in fore, sujet to regultions 1.05 nd A In respet of the udit of Irish entities these regultions ome into fore on 1 June 2012 sujet to regultion From this dte the Audit Regultions (Deemer 1995 edition, s mended) re no longer in fore, sujet to regultions 1.05 nd Regultions 3.09, 3.13, 3.14 nd 3.16 ome into effet s speified in those regultions The liility of prinipl, udit ffilite or registered uditor to regultory or disiplinry tion is to e determined in ordne with the regultions in fore t the time tht the mtter now the sujet of regultory or disiplinry tion ourred, ut the regultory or disiplinry proeedings shll e onduted in ordne with these regultions (inluding ny susequent mendments). Notifitions 1.07 Any notie or doument my e served on the relevnt registering Institute y sending it to the pproprite ddress s follows: The Institute of Chrtered Aountnts in Englnd nd Wles: Professionl Condut Deprtment, Metropolitn House, 321 Aveury Boulevrd, Milton Keynes, MK9 2FZ. The Institute of Chrtered Aountnts of Sotlnd: CA House, 21 Hymrket Yrds, Edinurgh, EH12 5BH. The Institute of Chrtered Aountnts in Irelnd: 7

8 Chrtered Aountnts Regultory Bord, The Linenhll, Linenhll Street, Belfst, BT1 8BG. Or s otherwise notified to firms Any notie, deision, order or other doument whih needs to e served on firm or other person under these regultions will e delivered y hnd, or sent y fx or post: d if it is delivered y hnd to the ddressee servie will tke effet immeditely; if sent y fx, it will e sent to the ltest fx numer given y the ddressee nd servie will tke effet immeditely; if sent y post, it will e sent to the ltest ddress given y the ddressee nd servie will tke effet two usiness dys fter posting; or if sent y emil it must e sent to the ltest emil ddress notified y the ddressee nd servie will tke effet immeditely. 8

9 Shedule 1 Definitions nd interprettion Definitions If term hs more thn one mening defined, the one to use will depend on the ountry of the registering Institute, or the ountry of the lient eing udited s pproprite. In the regultions the following words hve the following menings. The At The 2006 At The 1990 At Appel Committee pproprite qulifition The Compnies At 2006 of the United Kingdom or the Compnies Ats 1963 to 2009 of Irelnd nd every other entment whih is mde under, or is to e red together with or s one with, ny of those Ats. The Compnies At 2006 of the UK. The Compnies At 1990 of Irelnd. The ommittee of the registering Institute ppointed under the Institute s Bye-lws, regultions or Rules with responsiility for hering ppels ginst deision of the Review Committee under these regultions. When ommittee dishrges these funtions its memers re to e treted s offiers of the Institute for the purpose of regultion 2.04e. ) In reltion to the udit of UK entities, person holds n pproprite qulifition if it is: qulifition wrded y reognised qulifying ody under setion 1219 of the 2006 At; n EEA qulifition nd n ptitude test if required under prgrph 6 of shedule 10 of the 2006 At; n pproved non-eea qulifition nd n ptitude test, if required under setions 1219 nd 1221 of the 2006 At. ) In reltion to the udit of Irish entities, person holds n pproprite qulifition if it is: qulifition wrded y reognised ountny ody under regultion 26 of S.I. No.220 of 2010; n EEA qulifition nd if required, the person hs pssed n ptitude test under regultion 30 of S.I. No.220 of 2010; n pproved non-eea qulifition nd if required, the person hs pssed n ptitude test under regultions 30 of S.I. No. 220 of 2010 nd omplies with regultion 112 of S.I. No. 220 of 2010 Note. The Institutes nd the ACCA re reognised qulifying odies for the purposes of UK legisltion nd reognised ountny odies for the purposes of Irish legisltion. So the pproprite qulifition they wrd is reognised in oth jurisditions. For EEA qulifitions the ptitude test is different in the UK nd Irelnd, so pssing the ptitude test in one ountry does not give udit rights in the other. For overses qulifitions, the pprovl proess is different in eh ountry, so qulifition pproved in one ountry my not e pproved in the other. Even if pproved in oth ountries, the ptitude test will e different so udit rights will only e otined in the ountry of the ptitude test. Holding qulifition under ) ove will meet the qulifition requirement under S187 of the 1990 At for puli uditor 9

10 ssoite Assoited undertking Audit In reltion to n entity, nother entity in whih it holds n interest on long-term sis for the purpose of seuring ontriution to its own tivities y the exerise of ontrol or influene rising from or relted to tht interest, or whih holds suh n interest in it. A holding of 20% or more is presumed to rete n ssoite reltionship. In reltion to ody orporte: prent undertking or susidiry undertking of the ody orporte referred to; or susidiry undertking of prent undertking of the ody orporte. ) (i) ny funtion in respet of ompny inorported in the United Kingdom or Irelnd whih is required to e performed y Registered Auditor s uditor of tht ompny; (ii) ny funtion in respet of ny of the following entities onstituted in the United Kingdom or Irelnd whih is required to e performed y Registered Auditor s uditor of tht entity: uilding soiety; redit union; hrity; n industril nd provident soiety; friendly soiety; pension sheme; limited liility prtnership; prtnership; n open ended investment ompny; unit trust; Lloyds syndite; mutul life offie; nd person uthorised under legisltion relting to the ondut of investment, insurne or mortgge usiness; where suh funtion is expressly required to e dishrged either y or under United Kingdom or Irelnd legisltion. (iii) ny funtion in respet of United Kingdom trded non-eea ompny whih is required to e performed y n uditor nd whih is performed y Registered Auditor s uditor of tht ompny. ) ny funtion in respet of ompny inorported in the United Kingdom or Irelnd whih is inluded on the offiil list whih is performed y Registered Auditor following ppointment s uditor of tht ompny in reltion to its finnil sttements or extrts of finnil sttements s required y listing uthority or reognised ompny stok exhnge in either of those jurisditions. Audit ffilite ) person grnted ffilite sttus y the ICAEW under luse 12A of the Supplementl Royl Chrter of 21 Deemer 1948 for the purposes of these regultions; 10

11 ) person grnted sttus s n ffilite y the ICAI under Bye-lw 41 for the purposes of these regultions; or ) n individul grnted Affilite sttus y ICAS under Rule or Firm under Rule of the ICAS Rules for the purposes of these regultions. Audit lient Audit ompline prinipl Audit report Auditing stndrds Audit work Audit working ppers Any person whose ounts re eing udited under these regultions y Registered Auditor. A responsile individul who is either prinipl of the Registered Auditor (or sole prtitioner where the Registered Auditor is sole prtie) or memer of its mngement ord who is responsile for monitoring tht the Registered Auditor hs omplied, nd is likely to ontinue to omply, with these regultions, nd whose identity is notified in writing to the registering Institute nd who is the first point of ontt with the registering Institute in onnetion with these regultions. A report y Registered Auditor whih reltes to n udit. The si priniples nd essentil proedures (shown in old type) in the Interntionl Stndrds on Auditing (UK nd Irelnd) whih re to e onstrued nd pplied hving regrd to the explntory text nd other mteril in those stndrds; issued y the Auditing Prties Bord. Any work done y or on ehlf of the Registered Auditor in respet of n udit. Mteril (whether in the form of dt stored on pper, film, eletroni medi or other medi or otherwise) prepred y or for, or otined y the Registered Auditor in onnetion with the performne of the udit onerned nd inludes () the reord of udit proedures performed; () relevnt udit evidene otined; nd () onlusions rehed. uditor sntions proedure ody orporte usiness dy Bye-lws Chrter Amendment Ats of 1966 Controller The rules nd prties of the Finnil Reporting Counil (the Auditors Regultory Sntions Proedure) whih provide for sntion determined y it rising from independent monitoring of Mjor Audits under UK lw to e treted s if it were sntion whih the Institute, ting s Reognised Supervisory Body, hd itself determined. An entity tht hs legl personlity (inluding limited liility prtnership) nd similr ody onstituted under the lws of ountry or territory outside the United Kingdom or Irelnd. A dy exluding weekends nd puli holidys. The ye-lws of the ICAEW or the ICAI or the regultions of ICAS.. The Institute of Chrtered Aountnts in Irelnd (Chrter Amendment) At 1966 nd The Institute of Chrtered Aountnts in Irelnd (Chrter Amendment) At (Northern Irelnd) A person who, lone or with ny ssoite or ssoites, is entitled to exerise or ontrol 15% or more of the rights to vote on ll or sustntilly ll mtters t generl meetings of ody orporte, or of nother ody orporte of whih it is susidiry undertking. 11

12 orporte prtie Counil diretor Disiplinry Committee Disiplinry Sheme employee ethil stndrds EEA uditor EEA udit firm EEA memer stte A ody orporte, exluding limited liility prtnership. ) the Counil of the ICAEW under Cluse 2 of the Supplementl Royl Chrter of 21 Deemer 1948; ) the Counil of the ICAS under Rule 45; or ) the Counil of the ICAI under setion 3 of the Chrter Amendment Ats of Any person oupying the position of diretor (lled y whtever nme) in orporte prtie. Also ny person under whose diretions or instrutions the diretors of the orporte prtie re used to ting. The ommittee of the registering Institute ppointed under the Institute s Bye-lws, regultions or Rules with responsiility for disiplining memers, firms nd others in ordne with the Bye-lws, regultions or Rules. When ommittee dishrges these funtions its memers re to e treted s offiers of the Institute for the purpose of regultion 2.04e. Any investigtion nd disipline sheme in whih the registering Institute prtiiptes for the purposes of the independent investigtion of mtters onerning memers nd firms. Anyone who rries out udit work for Registered Auditor, inluding su-ontrtor or onsultnt. The si priniples nd essentil proedures (shown in old type) in the Ethil Stndrds issued y the Auditing Prties Bord whih re to e onstrued nd pplied hving regrd to the explntory text nd other mteril in those stndrds. An individul who holds qulifition to udit ounts under the lw of n EEA memer stte other thn the UK nd Irelnd. A firm eligile for ppointment s n uditor under the lw of n EEA memer stte. Any ountry tht is signtory to the Europen Union nd Europen Community Treties (ie EU memer sttes) nd Ielnd, Liehtenstein, Norwy. Girltr is lso treted s n EEA memer stte y the 2006 At. Finnil Reporting Counil (FRC) The Finnil Reporting Counil Limited, ompny limited y gurntee inorported in Englnd nd Wles, numer nd ny other ody whih tkes over its funtions under the uditor sntions proedure. firm ) n individul who engges in the profession of ountny s sole prtitioner; ) prtnership whih engges in the profession of ountny; ) limited liility prtnership whih engges in the profession of ountny; or d) orporte prtie whih engges in the profession of ountny. Group A orporte prtie, ny prent or susidiry undertkings nd ny prent or susidiry undertkings of ny of them. Institute ) the Institute of Chrtered Aountnts in Englnd nd Wles (ICAEW); ) the Institute of Chrtered Aountnts of Sotlnd (ICAS); or 12

13 ) the Institute of Chrtered Aountnts in Irelnd (ICAI) operting s Chrtered Aountnts Irelnd. Investigtion Committee Mjor Audit The ommittee of the registering Institute ppointed under the Institute s Bye-lws, regultions or Rules with responsiility for onsidering omplints ginst memers, firms nd others s speified in the Byelws, regultions or Rules. When ommittee dishrges these funtions its memers re to e treted s offiers of the Institute for the purpose of regultion 2.04 e. An udit onduted under UK lw in respet of; puli interest entity ny other person in whose finnil ondition there is mjor puli interest mngement ord monitoring unit oversight ody Pnel PII regultions prtising ertifite prtie notes prinipl qulity ontrol stndrds Reognised Supervisory Body Any ommittee, ord or other mngement ody tht is responsile for setting nd direting the implementtion of the firm s poliies. The registering Institute or ny ody undertking monitoring in ordne with prgrph 12 or prgrph 23 of shedule 10 of the 2006 At or regultion 83 of S.I. No. 220 of A ody whih pursunt to the At is responsile for the regultion nd/or supervision of Reognised Supervisory Bodies. A su-ommittee of the Registrtion Committee of the ICAS. ) the Professionl Indemnity Insurne Regultions of the ICAEW; ) the Professionl Indemnity Insurne Regultions of the ICAI; or ) the Professionl Indemnity Insurne Bye-lws of the ICAS. A ertifite issued to memer y n Institute uthorising the memer to engge in puli prtie. Prtie notes nd ulletins issued y, or with the uthority of, the Auditing Prties Bord. An individul in sole prtie, (where the firm is sole prtie), person who is prtner (inluding oth slried nd equity prtners) (where the firm is prtnership), memer of limited liility prtnership (where the firm is limited liility prtnership) diretor (where the firm is ompny) or ny individul who is held out s eing ompny diretor, prtner or memer. The si priniples nd essentil proedures (shown in old type) in the Interntionl Stndrds on Qulity Control (UK nd Irelnd) whih re to e onstrued nd pplied hving regrd to the explntory text nd other mteril in those stndrds, s issued y the Auditing Prties Bord. A ody reognised under the 2006 At, or the 1990 At or the Compnies (Audit nd Aounting) At 2003 for the purposes of the registrtion nd supervision of Registered Auditors. Register Registered The register of uditors ompiled under setion 1239 of the 2006 At or regultion 63 of S.I. No. 220 of 2010 or setion 198 of the 1990 At. A firm entered on the register s eligile for ppointment s sttutory 13

14 Auditor uditor under setion 1239 of the 2006 At or under regultion 63 of S.I. No. 220 of 2010 or setion 198 of the 1990 At. The register mintined under S198 is the Register of Puli Auditors. registering Institute Registrtion Committee regultions regultory penlty responsile individul Review Committee Rules Sntion S.I. No. 220 of 2010 voting rights The Institute to whih the firm is pplying for or from whih it hs otined registrtion. In the se of ICAI these funtions re rried out y the Chrtered Aountnts Regultory Bord (CARB) estlished in ordne with the provisions of Bye-Lw 41. The ommittee of the registering Institute ppointed under the Institute s Bye-lws, regultions or Rules with responsiility for dishrging the funtions set out in Chpter 6 or ny su-ommittee of tht ommittee. When ommittee dishrges these funtions its memers re to e treted s offiers of the Institute for the purpose of regultion 2.04e. These regultions s modified or mended. An mount imposed with the onsent of Registered Auditor s penlty for rehes of these regultions whih the Registered Auditor grees hve een ommitted. A prinipl or employee responsile for udit work nd designted s suh under regultion Any ommittee ppointed under registering Institute s Bye-lws, regultions or Rules with responsiility for reviewing deisions mde y the Registrtion Committee s speified in these regultions. When ommittee dishrges these funtions its memers re to e treted s offiers of the Institute for the purpose of regultion 2.04e. The rules of the ICAS. Any regultory tion inluding the imposition of onditions or restritions, suspension or withdrwl of registrtion, nd imposition of regultory penlty Europen Communities (Sttutory Audits) (Diretive 2006/43/EC) Regultions 2010 of Irelnd. The rights to vote on ll or sustntilly ll mtters t meetings of prinipls or shreholders of the ody in question. In deiding wht voting rights re to e tken into ount, prgrphs 5 to 11 of shedule 7 to the 2006 At pply to orporte prties nd limited liility prtnerships, nd prgrphs 5 to 7 nd 11 of tht shedule pply to prtnerships. Interprettion Words nd expressions hve the menings given y the At nd the Interprettion At 1978 unless defined in these regultions. The definitions in these regultions tke preedene. In these regultions words importing the singulr numer inlude the plurl numer nd vie vers. Words importing the msuline gender inlude the feminine. Hedings do not ffet the interprettion of these regultions. These regultions will e governed y, nd interpreted ording to, the lw of the ountry of the registering Institute. Any referenes to legisltion, regultions, ye-lws, rules, stndrds or other douments, will pply to ny re-entment, re-issue or mendment. 14

15 Chpter 2 Eligiility, pplition for registrtion, ontinuing oligtions nd esstion of registrtion 2.01 No Institute memer or firm my ept n udit ppointment unless registered y Reognised Supervisory Body. Eligiility 2.02 The Registrtion Committee my register firm only if the ommittee is stisfied tht: d e f the firm is fit nd proper to e ppointed s Registered Auditor; the firm hs professionl indemnity insurne or other pproprite rrngements s required either y the PII regultions, or in the se of firm whih is n employee of n Auditor Generl under the At, hs the enefit of sttutory indemnity; the firm hs ppointed n udit ompline prinipl whose nme hs een given to the registering Institute; eh responsile individul hs een designted in ordne with regultion 4.01; if the firm is sole prtie, the sole prtitioner is responsile individul nd the udit ompline prinipl (nd if not memer of n Institute or memer of the Assoition of Chrtered Certified Aountnts is n udit ffilite of the registering Institute); nd if the firm is not sole prtie, the firm meets the dditionl requirements of regultion The dditionl requirements for firm whih is not sole prtie re: eh prinipl is either: 1) memer of n Institute; 2) memer of the Assoition of Chrtered Certified Aountnts; 3) n udit ffilite of the registering Institute; 4) Registered Auditor; 5) n EEA uditor who is lso n udit ffilite of the registering Institute; or 6) n EEA udit firm whih is lso n udit ffilite of the registering Institute; individuls who hve n pproprite qulifition, Registered Auditors, EEA uditors, EEA udit firms or omintion of these hold t lest mjority of the voting rights or hold suh rights under the firm s onstitution s enle them to diret its overll poliy or lter its onstitution; individuls who hve n pproprite qulifition, Registered Auditors, EEA uditors, EEA udit firms or omintion of these hold t lest mjority of the voting rights in the mngement ord or hold suh rights under the 15

16 firm s onstitution s enle them to diret its overll poliy or lter its onstitution; nd d where the firm is orporte prtie the Artiles of Assoition: 1) require its shreholders to notify it of ny hnges in the numer of shres held in the orporte prtie, whether the shres re held diretly or indiretly; 2) enle the ord of diretors to require shreholders to supply informtion out their shreholdings in the orporte prtie over the previous three yers; 3) enle the ord of diretors to require ny non-shreholder whom the diretors know or hve resonle use to elieve hs or hd n interest in the shres of the orporte prtie to supply informtion out their interests in the previous three yers; 4) enle the ord of diretors to deprive ny shreholder of the right to vote if the informtion sked for in regultion 2.03d.2 or 2.03d.3 is not given in the time speified in the request; 5) enle the ord of diretors to deprive ny shreholder of the right to vote if the orporte prtie's pplition for registrtion is rejeted under regultion 2.05, or registrtion hs een withdrwn under regultion 7.03, nd the orporte prtie hs een told tht the refusl or withdrwl reltes to the ownership of ny shreholding; nd 6) require the ord of diretors to pprove ny trnsfer of shres whih would result in shreholder hving n interest representing more thn 3% of the ggregte nominl vlue of the issued shre pitl. Note: For the purposes of this regultion, in Irelnd, in the se of the udits of redit unions, industril nd provident soieties or friendly soieties, the lw still does not llow the udit to e rried out y ody orporte. In other ses in Irelnd where Registered Auditor sttus is required, the prtiulr lw my still not permit the uditor to e ody orporte. Firms re dvised to hek the sttus required for udits other thn those listed ove. Note: The Institutes nd the ACCA re reognised qulifying odies for the purposes of UK legisltion nd reognised ountny odies for the purposes of Irish legisltion. So the pproprite qulifition they wrd is reognised in oth jurisditions nd n e used to ount towrds the ontrol perentge of the firm for udit purposes, s n n EEA qulifition (regrdless of whether the holder hs tken n ptitude test). However for non-eea qulifitions, the pprovl proess is different in eh ountry, so qulifition pproved in one ountry my not e pproved in the other. So if you hold n pproprite qulifition otined y this ltter route, you n only ount towrds the ontrol perentge for udit registrtion purposes in the jurisdition tht the ptitude test reltes to. You re dvised to onsult the registering Institute if lrifition is required. Applition for registrtion 2.04 A firm tht wishes to register must pply in the mnner tht the Registrtion Committee deides. The pplition must inlude the following: ny informtion tht the Registrtion Committee my require to ssess the ility of the firm to rry out udit work; delrtion mde with the uthority of the firm tht it grees to e ound y these regultions nd will mke sure tht it omplies with these regultions t ll times; 16

17 d e delrtion mde with the uthority of the firm tht it will del with the registering Institute in n open nd oopertive mnner nd inform the registering Institute promptly out nything onerning the firm tht these regultions require; the nme nd ddress of the udit ompline prinipl; nd n knowledgement y the firm tht none of the registering Institute, its offiers or stff, memers of its Counil or monitoring unit or the Committees or stff of the Disiplinry Sheme, n e held lile in dmges for nything done or not done in deling with ny of the funtions onneted with registrtion under the At or under these regultions or enforing the terms of either or the monitoring of ompline with these regultions in ny respet, unless the t or omission is shown to hve een in d fith The Registrtion Committee my: d grnt the pplition; rejet the pplition; grnt the pplition sujet to restritions or onditions; or postpone onsidertion of the pplition. Continuing oligtions 2.06 A Registered Auditor must ontinue to meet the requirements of these regultions Sujet to regultions 2.17 to 2.20, Registered Auditor must not ontinue s n uditor if it eses to meet one or more of the eligiility requirements of regultion 2.02 or A Registered Auditor must ooperte with the registering Institute, its stff, Committees, monitoring unit or disiplinry sheme A Registered Auditor or former Registered Auditor on whom the registering Institute serves notie requesting informtion or notie of visit under regultion 2.23 or 6.02k (or upon whom notie is served requesting informtion under the At) must omply with suh notie within suh period s the registering Institute my llow (or in the se of notie served under the At, s the notie provides) Where Registered Auditor or n EEA udit firm is prinipl or shreholder in nother Registered Auditor, then its interests t meetings of prinipls, the mngement ord or shreholders must e represented y n individul who is either the holder of n pproprite qulifition or is n EEA uditor A A registered Auditor must provide suh returns, sttements or other informtion s onsidered neessry nd in form deided y the Registrtion Committee. Chnges in irumstnes 2.11 A Registered Auditor must inform the registering Institute in writing s soon s prtile, ut not lter thn ten usiness dys fter the event: 17

18 d e f g h i of ny mtter, whether relting to the firm or to ny of its prinipls or employees, whih ould men tht the firm is no longer fit nd proper to e ppointed s Registered Auditor; if the firm is no longer omplying with the PII regultions; of ny other hnges whih might ffet firm's eligiility to e registered or its ility to ondut udit work; of ny hnge in: 1) the nme or trding nmes of the firm; 2) the ddresses of the firm's offies; 3) the nmes or prinipl usiness ddress of ny of the firm's prinipls or responsile individuls inluding new prinipls or responsile individuls; 4) the detils of ny other udit registrtion tht ny responsile individul hs in nother ountry, the nme of the registering ody nd ny registrtion numer; or 5) the nme or ddress of the udit ompline prinipl; if responsile individul leves the firm or eses to e responsile individul; in the se of orporte prtie, of ny hnge in: 1) the nme or ddress of shreholder or nyone with ny interest in the shres; nd 2) ny hnge in the numer of shres held y shreholder or in the numer of shres in whih nyone hs n interest; of ny hnge in the wesite ddress of the firm; of ny hnge in the nme or usiness ddress of ny memer of the mngement ord; or of ny hnge in detils of ny other udit registrtion tht the Registered Auditor hs in nother ountry, the nme of the registering ody nd ny registrtion numer A Registered Auditor whih is memer of network must: d mintin list of the nmes nd ddresses of ll: 1) other firms in the network nd their ffilites; nd 2) its own ffilites; mke tht list ville to memers of the puli; updte the list with ny hnges no lter thn ten usiness dys fter the hnge; nd inform the registering Institute of the lotion of the list nd of ny hnge to the lotion no lter thn ten usiness dys fter the hnge. Note: For the purposes of this regultion network is lrger struture imed t oopertion whih registered uditor elongs to nd whih is ontrolled y the registered uditor; lerly imed t profit or ost shring; under ommon ownership, ontrol or mngement; or 18

19 ffilited or ssoited with the registered uditor through ommon qulity ontrol poliies nd proedures, ommon usiness strtegy, the use of ommon rnd-nme or through the shring of signifint ommon resoures. For the purposes of this regultion n ffilite mens ny entity, regrdless of legl form, whih is onneted to firm y mens of ommon ownership, ontrol or mngement. Fees 2.13 A Registered Auditor must py suh registrtion fees (to inlude ny osts tht the registering Institute is required or hs greed to py to ny other person or ody exerising regultory or supervisory role in reltion to it) s the registering Institute determines, t the times nd t the rtes set y it The first registrtion fee is due when firm pplies for registrtion. An pplition fee is lso pyle with this first fee The registering Institute my hrge Registered Auditor to whih its representtives hve mde seond or susequent visit s result of n erlier visit. The Registrtion Committee will deide how muh the fee will e If Registered Auditor hs not pid ny fees under regultion 2.13 or regultion 2.15, within 60 dys of the invoie dte, the registering Institute my withdrw its registrtion. Dispenstion 2.17 If Registered Auditor eses to meet one or more of the eligiility requirements of regultion 2.02 or 2.03 (where pproprite), or if it onsiders tht it is impossile or imprtil to omply with ny other regultion, it must notify the Registrtion Committee in writing. The notifition must e within ten usiness dys of the sitution rising nd must sy wht hs hppened nd the tion whih the Registered Auditor proposes to tke The Registrtion Committee will review the informtion provided under regultion If the ommittee onsiders tht the Registered Auditor is tking ll prtil steps nd tht these will remedy the position, it my grnt the Registered Auditor dispenstion from the requirement to omply with ny regultion In the se of mtter relting to the dditionl eligiility requirements for Registered Auditor (set out in regultion 2.03) the dispenstion will not lst for more thn 90 dys, strting from the dte tht the sitution first rose. In ny other se the period will e set y the Registrtion Committee The Registrtion Committee will not grnt dispenstion under regultion 2.18 unless the Registered Auditor n stisfy the ommittee tht its ontinued registrtion during the dispenstion period would not dversely ffet n udit lient or ny other person. Cesstion of registrtion 2.21 A firm will ese to e Registered Auditor if: the Registrtion Committee epts n pplition from the firm to nel its registrtion; the firm eses to exist; or 19

20 the Registrtion Committee withdrws registrtion under regultion The Registrtion Committee my require firm whih hs esed to e registered to provide evidene tht it hs resigned from ll udit ppointments nd provide detils of ny udit registrtions it hs in ny other EEA memer stte If firm is no longer Registered Auditor: it must still respond to enquiries (mde in writing or y visiting firm's offie or offies) from the Registrtion Committee in onnetion with ny irumstne tht reltes to these regultions during the time the firm ws registered; it must still respond to enquiries mde y nother Registered Auditor in ordne with regultion 3.09; disiplinry tion (inluding the imposition of regultory penlty) my still e tken for: 1) ny filure to omply with these regultions during the time it ws registered; 2) ny filure to omply with ny regultion ontinuing to hve effet notwithstnding tht registrtion hs esed; 3) ny filure to keep onfidentil ny informtion reeived in the ourse of udit work The registering Institute's right to reover ny unpid fees or other mounts due from firm under these regultions does not end when firm is no longer registered. 20

21 Chpter 3 Condut of udit work Independene nd Integrity 3.01 A Registered Auditor must not ept n ppointment or ontinue s n uditor if the firm hs ny interest likely to onflit with the proper ondut of the udit A Registered Auditor must t in ordne with the fundmentl priniples set out in the Code of Ethis issued y Counil nd the ethil stndrds A Registered Auditor must onsider its independene nd ility to perform the udit properly nd reord this efore it epts ppointment or reppointment s uditor A Registered Auditor must not ept or ontinue n udit ppointment of n entity where: d e f g h there exists etween the Registered Auditor nd the entity reltionship where the lw prohiits the Registered Auditor uditing tht entity; the entity is shreholder in the Registered Auditor; the entity n e influened y shreholder in the Registered Auditor; the entity is prinipl in the Registered Auditor; the entity, eing neither shreholder or prinipl in the Registered Auditor hs the ility to influene the ffirs of the Registered Auditor; the Registered Auditor is shreholder in the entity; the Registered Auditor is prinipl in the entity; or the Registered Auditor is in position to exerise influene over the entity A Registered Auditor must lwys ondut udit work properly nd with integrity A Registered Auditor must mke rrngements so tht eh prinipl nd nyone the firm employs to do udit work or permits to e involved in its udit work is, nd ontinues to e, fit nd proper person A Registered Auditor must mke rrngements to prevent nyone who is not responsile individul in the firm from hving ny influene whih would e likely to ffet the independene or integrity of the udit. Tehnil stndrds 3.08 A Registered Auditor must omply with the requirements of the 2006 At, the 1990 At nd other relevnt legisltion When Registered Auditor (the predeessor ) eses to hold n udit ppointment nd nother Registered Auditor (the suessor ) is ppointed the predeessor must, if requested in writing y the suessor, llow the suessor ess to ll relevnt informtion held y the predeessor in respet of its udit 21

22 work. If relevnt informtion is to e sought y the suessor, it should e sought nd provided in ordne with the guidne for this regultion. Any informtion otined y the suessor is for the purposes of its udit nd must not e dislosed to third prty unless the suessor is required to do so y legl or professionl oligtion. Note: This regultion only pplies in respet of ppointments for the udit of UK entities. In Irelnd, this regultion is set out in ompny lw, under regultion 47 of S.I.No.220 of 2010, nd is not replited in these regultions A Registered Auditor must omply with the uditing stndrds nd the qulity ontrol stndrds A Registered Auditor must keep ll udit working ppers whih uditing stndrds require for n udit for period of t lest six yers. The period strts with the end of the ounting period to whih the ppers relte A Registered Auditor must mke rrngements so tht if ny of its udit work is rried out y nother firm, then: ll the udit working ppers reted y tht firm re returned to the Registered Auditor; or the other firm grees to keep those ppers s required y regultion 3.11 nd llows the Registered Auditor unrestrited ess to the ppers for whtever reson In the se of group udit where prt of the group is udited y firm from non- EEA memer stte, Registered Auditor must mke rrngements so tht, if requested y monitoring unit or n oversight ody, it n otin from tht firm ll the udit working ppers neessry for review of tht firm s udit work. Note: This regultion pplies in respet of udits of: UK entities with finnil yers strting on or fter 6 April 2008; nd Irish entities with finnil yers strting on or fter 20 My If requested y ompetent uthority of ountry tht is not n EEA memer stte, Registered Auditor my trnsfer to tht ody its udit working ppers provided:. the ppers relte to the udit of ody tht either: 1) hs listed seurities in the ountry of the ompetent uthority; or 2) forms prt of group issuing sttutory onsolidted ounts in the ountry of the ompetent uthority;. the ompetent uthority hs requested the trnsfer of the udit working ppers for the purposes of: 1) rrying out its funtions in respet of qulity ssurne or puli oversight; or 2) n investigtion initited y itself or nother ompetent uthority estlished in the sme ountry;. the ompetent uthority hs given the oversight ody notie of its request; d. there is n greement etween tht ompetent uthority nd the oversight ody; nd 22

23 e. the oversight ody hs onfirmed in writing tht where the request is for the purposes of: 1) prgrph (1) ove, tht it pproves the trnsfer; 2) prgrph (2) ove, tht it is not prohiiting the trnsfer on the grounds set out in setion 1253E(7) of the 2006 At. Note: This regultion only pplies in respet of ppointments for the udit of UK entities nd only for requests reeived fter 15 th Novemer In Irelnd, this requirement is set out in ompny lw, under regultion 109 of S.I.No.220 of 2010, nd is not replited in these regultions. For the purposes of this regultion ompetent uthority is ody tht is designted in the lw of the relevnt ountry s hving responsiility for the regultion or oversight of uditors; in most ses the ody would e the equivlent of n RSB or n oversight ody. For the purposes of this regultion trnsfer mens the physil or eletroni trnsfer of udit working ppers (or opy) or llowing ess to suh ppers If Registered Auditor is ppointed to mjor udit lient (or Registered Auditor eomes wre tht n existing udit lient is now mjor udit lient) it must inform the Registrtion Committee in writing s soon s prtile, ut not lter thn 21 usiness dys fter the event, of the nme of the udit lient, unless the Registrtion Committee hs given the Registered Auditor wiver from ompline with this regultion. Note: This regultion only pplies in respet of the udit of UK entities. Audit Report 3.16 An udit report in respet of the udit of UK entities must: stte the nme of the firm s it ppers in the Register; inlude the words Sttutory Auditor or Sttutory Auditors fter the nme of the firm; nd if required y lw, stte the nme of the responsile individul who ws in hrge of the udit, e signed y this person in his own nme nd inlude the words Senior Sttutory Auditor fter the nme of the responsile individul. Note: The requirements of this regultion pply to udit reports for finnil yers eginning on or fter 6 April For entities listed in Setion 1210 of the 2006 At the requirement pplies s follows: ompnies, nks, insurers, ertin prtnerships (see definition of n udit) udit reports for finnil yers eginning on or fter 6 April uilding soieties udit reports for finnil yers eginning on or fter 29 June 2008 friendly nd industril nd provident soieties tht re insurers udit reports for finnil yers eginning on or fter 29 June Limited liility prtnerships udit reports for finnil yers eginning on or fter 1 Otoer Lloyd s syndites udit reports for finnil yers eginning on or fter 1 Jnury A An udit report in respet of the udit of Irish entities must: 23

24 stte the nme of the firm s it ppers in the Register; if required y lw, stte the nme of the responsile individul who ws in hrge of the udit, e signed y this person in his own nme nd inlude the words for nd on ehlf of efore the nme of the udit firm. Note: The requirements of this regultion pply to udit reports for finnil yers eginning on or fter 20 My Mintining ompetene 3.17 A Registered Auditor must mke rrngements so tht ll prinipls nd employees doing udit work re, nd ontinue to e, ompetent to rry out the udits for whih they re responsile or employed A Registered Auditor must mintin n pproprite level of ompetene in the ondut of udits A Registered Auditor must mke sure ll prinipls nd employees involved in udit work re wre of nd omply with these regultions, the At, ny relevnt rules nd regultions issued under the At nd ny proedures estlished y the firm. Monitoring 3.20 A Registered Auditor must monitor, t lest one yer, how effetively it is omplying with these regultions nd tke tion to del with ny issues found nd ommunite ny hnges in proedures to prinipls nd employees on prompt sis Eh Registered Auditor (other thn sole prtie) must ppoint n udit ompline prinipl. A sole prtitioner will e the udit ompline prinipl. 24

25 Responsile individul Chpter 4 Approprite qulifitions nd responsile individuls 4.01 Sujet to regultion 4.02 nd regultion 4.05 the udit ompline prinipl my designte s responsile individul ny of the Registered Auditor s prinipls or employees who: hs n pproprite qulifition ; is ompetent to ondut udit work; nd is llowed to sign udit reports in their nme on ehlf of the firm. Note: The Institutes nd the ACCA re reognised qulifying odies for the purposes of UK legisltion nd reognised ountny odies for the purposes of Irish legisltion. So the pproprite qulifition they wrd is reognised in oth jurisditions nd the holder of these qulifitions n e ppointed s responsile individul for the UK nd Irelnd. For EEA qulifitions nd those holding udit qulifitions from outside the EEA the position is different. The UK nd Irelnd hve pproved different overses qulifitions nd the ptitude tests for EEA nd non EEA qulifitions re different for UK nd Irelnd. So responsile individul sttus n only e grnted in the ountry tht the ptitude test reltes to. You re dvised to onsult the registering Institute if lrifition is required Before prinipl or employee n e designted s responsile individul, the individul must e: memer of n Institute nd hold prtising ertifite; memer of the Assoition of Chrtered Certified Aountnts nd hold its equivlent of prtising ertifite; or stisfy the Registrtion Committee of similr experiene of udit work s would e required of memer of the registering Institute nd hve een grnted udit ffilite sttus under hpter 5 of these regultions Consultnts nd su-ontrtors nnot e designted s responsile individuls Only responsile individuls n e responsile for n udit nd sign n udit report Any designtion in ordne with regultion 4.01 shll not e effetive until pplition hs een mde to the Registrtion Committee in form speified y it nd the pplition hs een pproved nd the Registrtion Committee my pprove the pplition with onditions or restritions A responsile individul my not ept ppointment in key mngement position in puli interest entity if, t ny time during the two yers preeding the dte of the proposed ppointment, the responsile individul ted in the pity of responsile individul for tht puli interest entity, or for mteril susidiry if the puli interest entity is group. Note: For the purposes of this regultion key mngement position is diretor (inluding shdow diretor) or other offier. 25

26 4.07 The disiplinry rrngements of the registering Institute will pply to rehes of these regultions y responsile individul in the sme wy s they pply to rehes y memer. Cesstion of responsile individul sttus 4.08 Responsile individul sttus will ese if: d e the firm in whih the individul is responsile individul eses to e Registered Auditor; the individul eses to e prinipl or employee in the Registered Auditor to whih the grnt of responsile individul sttus relted; n event ours whih under the Royl Chrters, the Rules, Bye-lws or other regultions of the pproprite Institute the individul would ese to e memer or n udit ffilite; the udit ompline prinipl notifies the registering Institute tht the individul is no longer responsile individul; or the Registrtion Committee withdrws responsile individul sttus If n individul is no longer responsile individul disiplinry tion (inluding the imposition of regultory penlty) my still e tken for ny filure to keep onfidentil ny informtion reeived in the ourse of udit work nd for ny filure to omply with regultion

27 Chpter 5 Audit ffilites Generl 5.01 An udit ffilite n only e responsile for n udit nd sign n udit report if designted s responsile individul under regultion Grnting of udit ffilite sttus 5.02 Audit ffilite sttus does not give the udit ffilite ny rights other thn those ontined in these regultions. An udit ffilite must not mke ny puli sttement tht they hve ny suh rights Persons pplying for udit ffilite sttus must do so in the mnner tht the Registrtion Committee deides The Registrtion Committee my grnt udit ffilite sttus if the ommittee is stisfied tht the pplint: d is fit nd proper person to e grnted udit ffilite sttus; hs greed to omply with these regultions; hs greed to oserve nd uphold the Code of Ethis of the Institute; nd hs greed to provide the registering Institute with ll the informtion it requires The Registrtion Committee my: d grnt the pplition; rejet the pplition; grnt the pplition sujet to restritions or onditions; or postpone onsidertion of the pplition. Withdrwl of udit ffilite sttus 5.06 The Registrtion Committee my withdrw person's udit ffilite sttus if, in the opinion of the ommittee, the udit ffilite: d e is no longer fit nd proper person; hs filed to py on time ny fines or osts ordered y the Registrtion Committee, Review Committee, Disiplinry Committee, Appel Committee or y ny ommittee ppointed under the Disiplinry Sheme; eomes sujet to deision y the Disiplinry Committee tht they should no longer e n udit ffilite; fils to py the nnul fee within 30 dys of the dte of notie to renew udit ffilite sttus; or fils or eses to omply with ny of these regultions nd, in the irumstnes, withdrwl is justified. 27