The Statutory Auditors and Third Country Auditors Regulations 2016

Performance, monitoring and enforcement of third country audit functions U.K.

11.—(1) Regulations 4 to 9 and Schedule 2 apply in relation to—

(a) the performance of third country audit functions by persons who are eligible for appointment as statutory auditors,

(b) the monitoring by the competent authority of the performance of third country audit functions by persons who are eligible for appointment as statutory auditors, and

(c) the imposition of sanctions by the competent authority in relation to the performance of third country audit functions by persons who are eligible for appointment as statutory auditors,

as they apply to the conduct of statutory audit work, the monitoring of that work and the imposition of sanctions in relation to that work, subject to the modifications set out in paragraphs (3) to (6).

(2) Paragraph (1) does not apply in respect of monitoring of the performance of third country audit functions—

[F1 (a) for an audited entity which—

(i) is incorporated in an equivalent third country, or

(ii) is incorporated in a transitional third country; or]

(b) by a statutory auditor—

(i) who is also [F2 eligible for appointment as an auditor of bodies corporate incorporated or formed under the law of an equivalent third country or a transitional third country], and

(ii) whose performance of third country audit functions is subject to the systems of public oversight, quality assurance and investigations and sanctions of the [F3 third country competent authority in that equivalent third country or transitional third country].

(3) Regulations 4 to 9 and Schedule 2 apply but as if—

(a) for any cross-references to provisions within those regulations, there were substituted references to those provisions as they apply by virtue of this regulation; and

(b) for references to—

(i) “conduct of statutory audit work” or “conduct of a statutory audit” there were substituted references to “performance of third country audit functions”, except in regulation 5(1)(c),

(ii) “statutory auditors”, except in regulation 5(1)(e), or “persons appointed to conduct a statutory audit” there were substituted references to “a person who is eligible for appointment as a statutory auditor and who is appointed to perform third country audit functions”,

and related expressions are to be construed accordingly.

(4) Regulation 4 applies but as if for paragraphs to (2) to (4) there were substituted—

“(2) The relevant standards are—

(a) the international auditing standards adopted by the European Commission in accordance with Article 26(3) of the Audit Directive [F4 before IP completion day], or standards which are equivalent,

[F5 (aa) the UK-adopted international standards adopted by the competent authority in accordance with regulation 4(3)(za), or standards which are equivalent,]

(b) any auditing standards, procedures or requirements imposed by the competent authority in relation to the conduct of statutory audit which do not cover the same subject-matter as the standards referred to in [F6 paragraphs (a) or (aa),] or standards, procedures or requirements which are equivalent, and

[F7 (c) any auditing standards, procedures or requirements imposed by the competent authority in accordance with the requirements set out in paragraphs 1 to 6 and 8 of Schedule 1, or with any other equivalent standards, procedures or requirements.]

(3) The person who is eligible for appointment as a statutory auditor who is appointed to perform third country audit functions must, if not already required to do so by reason of carrying out statutory audits of public interest entities, publish on a website an annual transparency report equivalent to that required for auditors of public interest entities by Article 13 of the Audit Regulation (transparency report).”.

(5) Regulation 5 applies but as if—

(a) paragraph (9) were omitted;

(b) for the definition of a “relevant requirement” in paragraph (11) were substituted—

“a “relevant requirement” means a requirement with which A must comply under—

(a)

these Regulations (including the requirement under regulation 4(1)), or

(b)

the Audit Regulation;”; and

(c) the definition of “subordinate legislation” in paragraph (11) were omitted.

(6) Regulation 9 applies but as if—

(a) for paragraph (1) were substituted—

“(1) The competent authority must monitor the performance of third country audit functions by persons eligible for appointment as statutory auditors, and may do so by means of a system of inspections.”;

(b) in paragraph (2)—

(i) the words “which does not relate to public interest entities” were omitted, and

(ii) for “(4) to (12)” were substituted “ (4) to (11) ”;

(c) paragraph (3) were omitted;

(d) in paragraph (6), sub-paragraph (b) were omitted;

(e) in paragraph (10)—

(i) after “statutory auditor” were inserted “ in respect of their performance of third country audit functions ”; and

(ii) sub-paragraph (b) were omitted;

(f) paragraph (12) were omitted.

(7) Schedule 2 applies but as if—

(a) in paragraph 1, sub-paragraphs (3) and (4) were omitted; and

(b) paragraph 4 were omitted.

(8) In this regulation, “third country audit function” means any function related to the audit of a [F8 UK-traded third country company] or of [F9 a body corporate] whose transferable securities are admitted to trading on a regulated market situated or operating in [F10 an equivalent third country or a transitional third country].

Textual Amendments

F1 Reg. 11(2)(a) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 71(a); 2020 c. 1, Sch. 5 para. 1(1)

F2 Words in reg. 11(2)(b)(i) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 71(b); 2020 c. 1, Sch. 5 para. 1(1)

F3 Words in reg. 11(2)(b)(ii) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 71(c); 2020 c. 1, Sch. 5 para. 1(1)

F4 Words in reg. 11(4) inserted (31.12.2020) by S.I. 2019/177, reg. 71(d)(i) (as amended by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 15(f)

F5 Words in reg. 11(4) inserted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 71(d)(ii); 2020 c. 1, Sch. 5 para. 1(1)

F6 Words in reg. 11(4) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 71(d)(iii); 2020 c. 1, Sch. 5 para. 1(1)

F7 Words in reg. 11(4) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 71(d)(iv); 2020 c. 1, Sch. 5 para. 1(1)

F8 Words in reg. 11(8) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 71(e)(i); 2020 c. 1, Sch. 5 para. 1(1)

F9 Words in reg. 11(8) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 71(e)(ii); 2020 c. 1, Sch. 5 para. 1(1)

F10 Words in reg. 11(8) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 71(e)(iii); 2020 c. 1, Sch. 5 para. 1(1)