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Part 42E+W+S+N.I.Statutory Auditors

Annotations:

Modifications etc. (not altering text)

C1Pt. 42 applied (with modifications) (4.4.2014 for specified purposes, 16.12.2014 in so far as not already in force) by Local Audit and Accountability Act 2014 (c. 2), s. 49(1), Sch. 5 paras. 1-27 (with Sch. 13 para. 11); S.I. 2014/900, art. 2(j); S.I. 2014/3319, art. 2(e)

C3Pt. 42: functions transferred in part (6.4.2008 in accordance with art. 1 of the amending S.I.) by The Statutory Auditors (Delegation of Functions etc) Order 2008 (S.I. 2008/496), art. 4 (which amending S.I. was revoked (2.7.2012) by S.I. 2012/1741, art. 6)

Chapter 2E+W+S+N.I.Individuals and firms

Professional qualificationsE+W+S+N.I.

1219Appropriate qualificationsE+W+S+N.I.

(1)A person holds an appropriate qualification for the purposes of this Chapter if and only if—

(a)he holds a recognised professional qualification obtained in the United Kingdom,

(b)immediately before the commencement of this Chapter, he—

(i)held an appropriate qualification for the purposes of Part 2 of the Companies Act 1989 (c. 40) (eligibility for appointment as company auditor) by virtue of section 31(1)(a) or (c) of that Act, or

(ii)was treated as holding an appropriate qualification for those purposes by virtue of section 31(2), (3) or (4) of that Act,

(c)immediately before the commencement of this Chapter, he—

(i)held an appropriate qualification for the purposes of Part III of the Companies (Northern Ireland) Order 1990 (S.I. 1990/593 (N.I. 5)) by virtue of Article 34(1)(a) or (c) of that Order, or

(ii)was treated as holding an appropriate qualification for those purposes by virtue of Article 34(2), (3) or (4) of that Order,

(d)he is within subsection (2),[F1 or]

(e)F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f)subject to any direction under section 1221(5), he is regarded for the purposes of this Chapter as holding an approved [F3third country] qualification.

(2)A person is within this subsection if—

(a)before 1st January 1990, he began a course of study or practical training leading to a professional qualification in accountancy offered by a body established in the United Kingdom,

(b)he obtained that qualification on or after 1st January 1990 and before 1st January 1996, and

(c)the Secretary of State [F4approved his qualification before 1st October 2018] as an appropriate qualification for the purposes of this Chapter.

F5(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1220Qualifying bodies and recognised professional qualificationsE+W+S+N.I.

(1)In this Part a “qualifying body” means a body established in the United Kingdom (whether a body corporate or an unincorporated association) which offers a professional qualification in accountancy.

(2)In this Part references to the rules of a qualifying body are to the rules (whether or not laid down by the body itself) which the body has power to enforce and which are relevant for the purposes of this Part.

This includes, so far as so relevant, rules relating to—

(a)admission to or expulsion from a course of study leading to a qualification,

(b)the award or deprivation of a qualification, or

(c)the approval of a person for the purposes of giving practical training or the withdrawal of such approval.

(3)Schedule 11 has effect with respect to the recognition for the purposes of this Part of a professional qualification offered by a qualifying body.

1221Approval of [F6third country] qualificationsE+W+S+N.I.

(1)The Secretary of State may declare that the following are to be regarded for the purposes of this Chapter as holding an approved [F6third country] qualification—

(a)persons who are qualified to audit accounts under the law of a specified [F7third country] , or

(b)persons who hold a specified professional qualification in accountancy obtained in a specified [F7third country] .

[F8(1A)A declaration under subsection (1)(a) or (b) must contain provision to the effect that a person is not to be regarded as holding an approved third country qualification for the purposes of this Chapter unless the person—

(a)already holds a professional qualification which covers all the subjects which are covered by a recognised professional qualification and which are subjects of which knowledge is essential for the pursuit of the profession of statutory auditor, or

(b)holds a professional qualification which does not cover all those subjects and has met whichever of the requirements of subsection (1B) is specified in the declaration.

(1B)The declaration must specify that the condition in subsection (1A)(b) is satisfied in one of the following ways—

(a)only by passing an aptitude test in accordance with subsection (7A),

(b)only by completing an adaptation period in accordance with subsections (7C) and (7D), or

(c)either by passing an aptitude test in accordance with subsection (7A) or by completing an adaptation period in accordance with subsections (7C) and (7D), according to the choice of the person.]

(2)A declaration under subsection (1)(b) may be expressed to be subject to the satisfaction of any specified requirement or requirements.

(3)The Secretary of State may make a declaration under subsection (1) only if he is satisfied that—

(a)in the case of a declaration under subsection (1)(a), the fact that the persons in question are qualified to audit accounts under the law of the specified third country, [F9taken with any requirement or requirements to be specified under subsection (1A),] or

(b)in the case of a declaration under subsection (1)(b), the specified professional qualification taken with any requirement or requirements to be specified under [F10subsections (1A) or (2)] ,

affords an assurance of professional competence equivalent to that afforded by a recognised professional qualification.

(4)The Secretary of State may make a declaration under subsection (1) only if he is satisfied that the treatment that the persons who are the subject of the declaration will receive as a result of it is comparable to the treatment which is, or is likely to be, afforded in the specified [F7third country] or a part of it to—

(a)in the case of a declaration under subsection (1)(a), some or all persons who are eligible to be appointed as a statutory auditor, and

(b)in the case of a declaration under subsection (1)(b), some or all persons who hold a corresponding recognised professional qualification.

(5)The Secretary of State may direct that persons holding an approved [F6third country] qualification are not to be treated as holding an appropriate qualification for the purposes of this Chapter unless they hold such additional educational qualifications as the Secretary of State may specify for the purpose of ensuring that such persons have an adequate knowledge of the law and practice in the United Kingdom relevant to the audit of accounts.

(6)The Secretary of State may give different directions in relation to different approved [F6third country] qualifications.

(7)The Secretary of State may, if he thinks fit, having regard to the considerations mentioned in subsections (3) and (4), withdraw a declaration under subsection (1) in relation to—

(a)persons becoming qualified to audit accounts under the law of the specified [F7third country] after such date as he may specify, or

(b)persons obtaining the specified professional qualification after such date as he may specify.

[F11(7A)An aptitude test required for the purposes of subsection [F12(1B)]

(a)must test the person's knowledge of subjects—

(i)that are covered by a recognised professional qualification,

(ii)that are not covered by the professional qualification already held by the person, and

(iii)the knowledge of which is essential for the pursuit of the profession of statutory auditor;

(b)may test the person's knowledge of rules of professional conduct;

(c)must not test the person's knowledge of any other matters.

F13(7B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

[F14(7C)An adaptation period is a period, not exceeding three years, in which the person (“the applicant”) pursues the profession of statutory auditor under the supervision of another person who holds an appropriate qualification, subject to an assessment (“the ability assessment”) of the applicant’s ability to pursue the profession of statutory auditor in the United Kingdom.

(7D)The adaptation period must be completed, and the ability assessment must be carried out, in accordance with the rules and practices of a recognised supervisory body (see paragraph 7A of Schedule 10).]

(8)The Secretary of State may, if he thinks fit, having regard to the considerations mentioned in subsections (3) and (4), vary or revoke a requirement specified under subsection (2) from such date as he may specify.

(9)F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annotations:

Amendments (Textual)

F7Words in s. 1221(1)(a)(b)(3)(a)(4)(7)(a) substituted (6.4.2008) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 6(3)

F8S. 1221(1A)(1B) substituted for s. 1221(1A) (6.4.2018) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 1 para. 21(a) (with reg. 2(6)(7))

1222Eligibility of individuals retaining only 1967 Act authorisationE+W+S+N.I.

(1)A person whose only appropriate qualification is based on his retention of an authorisation originally granted by the Board of Trade or the Secretary of State under section 13(1) of the Companies Act 1967 (c. 81) is eligible only for appointment as auditor of an unquoted company.

(2)A company is “unquoted” if, at the time of the person's appointment, neither the company, nor any parent undertaking of which it is a subsidiary undertaking, is a quoted company within the meaning of section 385(2).

(3)References to a person eligible for appointment as a statutory auditor by virtue of this Part in enactments relating to eligibility for appointment as auditor of a person other than a company do not include a person to whom this section applies.