The maximum engagement period38A

Section 494ZA applies to LLPs, modified so that it reads as follows—

494ZA

1

Where a person is auditor of an LLP for consecutive financial years, the maximum engagement period of the person as auditor of the LLP—

a

begins with the first of those years (see the appropriate entry in the first column of the following Table), and

b

ends with the financial year specified in the corresponding entry in the second column of the Table:

First financial year of the maximum engagement period	Last financial year of the maximum engagement period
A financial year of the LLP beginning before 17 June 1994.	The last financial year of the LLP to begin before 17 June 2020.
A financial year of the LLP beginning— (a) on or after 17 June 1994, and (b) before 17 June 2003.	The last financial year of the LLP to begin before 17 June 2023.
A financial year of the LLP beginning— (a) on or after 17 June 2003, and (b) before 17 June 2016.	No qualifying selection procedure Where neither the first financial year of the maximum engagement period nor any subsequent financial year is one for which the auditor has been appointed following the carrying out of a qualifying selection procedure, the later of— (a) the last financial year of the LLP to begin before 17 June 2016, and (b) the last financial year of the LLP to begin within the period of 10 years beginning with the first day of the first financial year of the maximum engagement period. No qualifying selection procedure within 10 years Where the last day of the last financial year of the LLP to begin within the period of 10 years beginning with the first day of the last financial year of the LLP for which the auditor was appointed following a qualifying selection procedure is before 17 June 2016— (a) the last financial year of the LLP to begin before 17 June 2016, unless (b) the auditor is appointed following a qualifying selection procedure for the first financial year of the LLP to begin on or after 17 June 2016, in which case it is the last financial year of the LLP to begin within the period of 20 years beginning with the first day of the first financial year of the maximum engagement period. Qualifying selection procedure within 10 years In any other case, the earlier of— (a) the last financial year of the LLP to begin within the period of 10 years beginning with the first day of the last financial year of the LLP for which the auditor was appointed following a qualifying selection procedure, and (b) the last financial year of the LLP to begin within the period of 20 years beginning with the first day of the first financial year of the maximum engagement period.
A financial year of the LLP beginning on or after 17 June 2016.	The earlier of— (a) the last financial year of the LLP to begin within the period of 10 years beginning with the first day of the last financial year of the LLP for which the auditor was appointed following a qualifying selection procedure, and (b) the last financial year of the LLP to begin within the period of 20 years beginning with the first day of the first financial year of the maximum engagement period.

2

Where the first financial year of the maximum engagement period begins on or after 17 June 2003, the maximum engagement period may be extended by a period of no more than 2 years with the approval of the competent authority.

3

Such approval may be given by the competent authority only if it is satisfied that exceptional circumstances exist.

4

Where the competent authority gives its approval as mentioned in subsection (2)—

a

the second column of the Table in subsection (1) has effect with the necessary modifications, and

b

the first appointment to be made after the end of the period as so extended must be made following a qualifying selection procedure.

5

In this section “qualifying selection procedure” means—

a

in the case of an appointment for a financial year beginning on or after 17 June 2016 made after the Statutory Auditors and Third Country Auditors Regulations 2017 come into force—

i

if the LLP has an audit committee, a selection procedure that complies with the requirements of section 485A(4) and (5)(a) and (b), and

ii

if the LLP does not have an audit committee, a selection procedure that complies with the requirements of Article 16(3) and (4) of the Audit Regulation;

b

in any other case, a selection procedure that substantially meets the requirements of Article 16(2) to (5) of the Audit Regulation, having regard to the circumstances at the time (including whether the LLP had an audit committee).

Interpretation38B

Section 494A applies to LLPs, modified so that it reads as follows—

494AInterpretation

In this Chapter—

• “audit committee” means a body which performs the functions referred to in Article 39(6) of the Audit Directive or equivalent functions;

• “Audit Directive” means Directive 2006/43/EC of the European Parliament and of the Council 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/EEC74;

• “Auditor General” means—

  1. a

     the Comptroller and Auditor General,

  2. b

     the Auditor General for Scotland,

  3. c

     the Auditor General for Wales, or

  4. d

     the Comptroller and Auditor General for Northern Ireland;

• “issuer” has the same meaning as in Part 6 of the Financial Services and Markets Act 2000 (see section 102A(6)75);

• “network” means an association of persons other than a firm co-operating in audit work by way of—

  1. a

     profit-sharing;

  2. b

     cost sharing;

  3. c

     common ownership, control or management;

  4. d

     common quality control policies and procedures;

  5. e

     common business strategy; or

  6. f

     use of a common name;

• “public interest entity” means—

  1. a

     an issuer whose transferable securities are admitted to trading on a regulated market;

  2. b

     a credit institution within the meaning given by Article 4(1)(1) of Regulation (EU) No. 575/2013 of the European Parliament and of the Council76, other than one listed in Article 2 of Directive 2013/36/EU of the European Parliament and of the Council on access to the activity of credit institutions and investment firms77;

• “regulated market” has the same meaning as in Part 6 of the Financial Services and Markets Act 2000 (see section 103(1)78);

• “transferable securities” means anything which is a transferable security for the purposes of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments79.