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Part 42U.K.Statutory Auditors

Modifications etc. (not altering text)

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S.I.) by The Statutory Auditors (Delegation of Functions etc) Order 2008 (S.I. 2008/496), art. 4 (which amending S.I. was revoked (2.7.2012) by S.I. 2012/1741, art. 6)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 6U.K.Supplementary and general

[F1Transfer of papers to third countriesU.K.

Textual Amendments

F1Ss. 1253D-1253F and cross-heading inserted (6.4.2008) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 15(1) (with reg. 15(2) (as amended by S.I. 2008/499), reg. 2(4)))

[F21253DRestriction on transfer of audit working papers to third countriesU.K.

(1)[F3Audit working papers and investigation reports] must not be transferred to a third country competent authority [F4unless the third country competent authority is an approved third country competent authority and the transfers are made] in accordance with—

(a)section 1253DA (transfer by Secretary of State),

(b)section 1253DB (transfer by statutory auditor with approval of Secretary of State), or

(c)section 1253DC (transfer by statutory auditor for purposes of investigation of auditor).

F5(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Nothing in the sections referred to in subsection (1) authorises the making of a disclosure in contravention of [F6the data protection legislation].]

Textual Amendments

F6Words in s. 1253D(3) substituted (25.5.2018) by Data Protection Act 2018 (c. 12), s. 212(1), Sch. 19 para. 126 (with ss. 117, 209, 210); S.I. 2018/625, reg. 2(1)(g)

[F71253DATransfer by Secretary of StateU.K.

(1)The Secretary of State may transfer [F8audit working papers and investigation reports] to an approved third country competent authority if the following conditions are met (but see also section 1253DD).

(2)The first condition is that the authority has made a request to the Secretary of State for the transfer of the [F8audit working papers and investigation reports].

(3)The second condition is that the [F8audit working papers and investigation reports] relate to audits of companies that—

(a)have issued securities in the third country in which the authority is established, or

(b)form part of a group issuing statutory consolidated accounts in that third country.

(4)The third condition is that the authority has entered into arrangements with the Secretary of State in accordance with section 1253E.

Textual Amendments

1253DBTransfer by statutory auditor with approval of Secretary of StateU.K.

(1)A statutory auditor may transfer [F9audit working papers and investigation reports] to an approved third country competent authority if the transfer is made—

(a)with the prior approval of the Secretary of State, and

(b)in accordance with rules of a recognised supervisory body meeting the requirements of paragraph 16AA of Schedule 10.

(2)The Secretary of State must not approve a transfer of [F9audit working papers and investigation reports] to an approved third country competent authority for the purposes of this section unless the following conditions are met (see also section 1253DD).

(3)The first condition is that the authority has made a request to the Secretary of State for the transfer of the [F9audit working papers and investigation reports].

(4)The second condition is that the [F9audit working papers and investigation reports] relate to audits of companies that—

(a)have issued securities in the third country in which the authority is established, or

(b)form part of a group issuing statutory consolidated accounts in that third country.

(5)The third condition is that the authority has entered into arrangements with the Secretary of State in accordance with section 1253E.

Textual Amendments

1253DCTransfer by statutory auditor for purposes of investigation of auditorU.K.

A statutory auditor may transfer [F10audit working papers and investigation reports] to a third country competent authority if the transfer is made—

(a)for the purposes of an investigation of an auditor or audit firm, and

(b)in accordance with rules of a recognised supervisory body meeting the requirements of paragraph 16AB of Schedule 10.

Textual Amendments

1253DD Agreement of [F11third country competent authority] U.K.

(1)This section applies where—

(a)an approved third country competent authority makes a request to the Secretary of State for the transfer of [F12audit working papers and investigation reports] which relate to the audit of the consolidated accounts of a group, and

(b)the [F12audit working papers and investigation reports] that are the subject of the request—

(i) have been created by the auditor of a subsidiary that is located in [F13an equivalent third country or transitional third country] in relation to the audit of that subsidiary, and

(ii)are in the possession of a statutory auditor.

(2) In the case of a transfer by the Secretary of State under section 1253DA, the transfer must not take place unless the [F14third country competent authority] responsible for the auditor of the subsidiary has given its express agreement to the transfer.

(3) In the case of a transfer by a statutory auditor under section 1253DB, the Secretary of State must not approve the transfer unless the [F15third country competent authority] responsible for the auditor of the subsidiary has given its express agreement to the transfer.

Textual Amendments

1253DETransfer by means of inspectionU.K.

(1)This section applies in the case of a transfer of [F16audit working papers and investigation reports] if—

(a)it is a transfer to an approved third country competent authority F17...,

(b)it is a transfer under section 1253DA or 1253DB, and

(c)it is to take place by means of an inspection in the United Kingdom by the authority.

(2)The Secretary of State must participate in the inspection.

(3)The inspection must be under the leadership of the Secretary of State unless the Secretary of State otherwise permits.]

Textual Amendments

[F181253EWorking arrangements for transfer of papersU.K.

(1)The Secretary of State may enter into arrangements with a third country competent authority relating to the transfer of [F19audit working papers and investigation reports]—

(a)from the third country competent authority or a third country auditor regulated by that authority to the Secretary of State, and

(b)from the Secretary of State or a statutory auditor to the third country competent authority.

(2)The arrangements must provide that a request by the Secretary of State or the third country competent authority for a transfer mentioned in subsection (1) must be accompanied by a statement explaining the reasons for the request.

(3)The arrangements must—

(a)provide that the Secretary of State may not use [F19audit working papers and investigation reports] obtained from the third country competent authority or a third country auditor regulated by that authority except in connection with one or more of the functions mentioned in subsection (4), and

(b)include comparable provision in relation to [F19audit working papers and investigation reports] obtained by the third country competent authority from the Secretary of State or a statutory auditor.

(4)Those functions are—

(a)quality assurance functions which meet requirements equivalent to those of [F20regulation 9 of the Statutory Auditors and Third Country Auditors Regulations 2016];

(b)investigation or disciplinary functions which meet requirements equivalent to those of [F21regulations 5 to 8 and 10 of the Statutory Auditors and Third Country Auditors Regulations 2016];

(c)public oversight functions which meet requirements equivalent to those of [F22regulation 3 of the Statutory Auditors and Third Country Auditors Regulations 2016].

(5)The arrangements must—

(a)provide that the Secretary of State, a person exercising the functions of the Secretary of State and persons employed or formerly employed in discharging those functions must be subject to obligations of confidentiality as to personal data, professional secrets and sensitive commercial information contained in [F19audit working papers and investigation reports] transferred to the Secretary of State, F23...

(b)provide that the third country competent authority and persons involved in exercising its functions are subject to comparable obligations in relation to [F19audit working papers and investigation reports] transferred to the authority [F24and

(c)ensure that the protection of the commercial interests of any audited person, including its industrial and intellectual property, is not undermined.]

(6)The arrangements must—

(a)provide that the Secretary of State may refuse, or direct a statutory auditor to refuse, a request from the third country competent authority for a transfer of [F19audit working papers and investigation reports] in a case mentioned in subsection (7)(a) or (b), and

(b)provide that the third country competent authority has comparable rights in relation to a request from the Secretary of State.

(7) Those cases are—

(a)where the transfer of the papers would adversely affect the sovereignty, security or public order F25...of the United Kingdom;

(b)where legal proceedings have been brought in the United Kingdom (whether continuing or not) in relation to the persons and matters to which the request relates.

[F26(7A)The arrangements must—

(a)provide that the Secretary of State may only disclose confidential information received from the third country competent authority—

(i)with the agreement of that authority or for purposes for which that authority has given its agreement,

(ii)where disclosure is required by law, or

(iii)where disclosure is necessary in connection with legal proceedings, and

(b)provide that the third country competent authority may only disclose confidential information received from the Secretary of State—

(i)with the Secretary of State’s agreement or for purposes for which the Secretary of State has given agreement,

(ii)where disclosure is required by law, or

(iii)where disclosure is necessary in connection with legal proceedings.]

F27(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F27(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

1253FPublication of working arrangementsU.K.

If the Secretary of State enters into working arrangements in accordance with section 1253E, he must publish on a website without undue delay—

(a)the name of the third country competent authority with which he has entered into such arrangements, and

(b)the country or territory in which it is established.]