The Statutory Auditors and Third Country Auditors Regulations 2016

The competent authority U.K.

3.—(1) The competent authority is responsible for—

(a) the public oversight of statutory auditors under these Regulations;

(b) carrying out the tasks provided for in the Audit Regulation and for ensuring that the provisions of that Regulation are applied;

(c) the determination of technical standards (which must meet the requirements of Schedule 1) and of other standards (which must meet the requirements of [F1 regulation 4(3) and] that Schedule) on professional ethics and internal quality control of statutory auditors and statutory audit work;

(d) the determination of the manner in which the standards determined under sub-paragraph (c) are to be applied in practice;

(e) the [F2 imposition] of the standards determined under sub-paragraph (c) (including provision for securing compliance with those standards);

(f) the determination of criteria for the purpose of determining whether persons are eligible for appointment as statutory auditors;

(g) the application of the criteria determined under sub-paragraph (f) to determine whether persons are eligible for appointment as statutory auditors;

(h) registration of persons approved as eligible for appointment as statutory auditors under sub-paragraph (g);

(i) keeping the register and making it available for inspection;

(j) ensuring persons eligible for appointment as statutory auditors take part in appropriate programmes of continuing education in order to maintain their theoretical knowledge, professional skills and values at a sufficiently high level;

(k) monitoring (by means of inspections) of statutory auditors and audit work;

(l) investigations of statutory auditors and audit work; and

(m) imposing and enforcing sanctions.

(2) The competent authority—

(a) must consider whether and how tasks arising from its responsibility for the matters listed in sub-paragraphs (e) to (m) of paragraph (1) may be delegated to any recognised supervisory body; and

(b) subject to [F3 paragraphs (5), (5A) and (5B)], may delegate such tasks to any recognised supervisory body.

(3) In exercising its duty under paragraph (2)(a), the competent authority—

(a) must consult the recognised supervisory bodies, and

(b) may consider the requirements of Schedule 10 to the Act (including the way in which recognised supervisory bodies discharge those requirements).

(4) The competent authority may delegate tasks to any recognised supervisory body in accordance with paragraphs (6) and (7).

(5) The competent authority may not delegate tasks related to any of the matters listed in Article 24(1)(a) to (c) of the Audit Regulation.

[F4 (5A) Any delegation under paragraph (2) of the competent authority’s responsibilities under sub-paragraphs (k), (l) or (m) of paragraph (1) must not prejudice the competent authority’s ability to initiate and conduct an inspection or investigation of audit work by a statutory auditor itself, where necessary, and to take appropriate action.

(5B) In determining the delegation of tasks, the competent authority must ensure that conflicts of interest are avoided.]

(6) The competent authority must specify the tasks delegated (and may specify those tasks by reference to particular descriptions of activity for which the competent authority is responsible, particular descriptions of statutory auditor or particular descriptions of audited person) and any conditions under which those tasks are to be carried out (and may vary those conditions).

(7) The competent authority may specify (including by reference to particular descriptions of activity for which the competent authority is responsible, particular descriptions of statutory auditor or particular descriptions of audited person) exceptions to any delegation.

(8) The competent authority may reclaim tasks it has delegated, including those which relate to a particular description of activity for which the competent authority is responsible, particular description of statutory auditor or particular description of audited person.

(9) When the competent authority has reclaimed a task from a recognised supervisory body (‘A’) and delegated that task to another recognised supervisory body (‘B’), section 1224ZA of the Act (as inserted by paragraph 33 of Schedule 3 to these Regulations) has effect so that the competent authority's power to call for information from A applies so that the competent authority may require A to provide such information as the competent authority considers that B reasonably requires for the performance of the task.

(10) The competent authority must make such arrangements as it considers necessary in relation to any of the matters for which it is responsible under this regulation, including arrangements for the performance by the competent authority of any task arising from its responsibility for those matters in the following circumstances—

(a) where the competent authority does not delegate a task to a recognised supervisory body;

(b) where the competent authority reclaims a task from a recognised supervisory body;

(c) where the recognition order in relation to a recognised supervisory body is revoked under paragraph 3 of Schedule 10 to the Act.

(11) An obligation which a statutory auditor has by virtue of any rules which a recognised supervisory body is required to have under Part 2 of Schedule 10 to the Act is an obligation which the statutory auditor owes to the competent authority including—

(a) where the competent authority reclaims a task from that recognised supervisory body, to the extent that the obligation arises from the competent authority having delegated that task to the body; or

(b) where the recognition order in relation to that recognised supervisory body is revoked under paragraph 3 of Schedule 10 to the Act, to any extent.

(12) The Secretary of State may give directions to the competent authority in connection with the delegation of tasks to the recognised supervisory bodies.

(13) Schedule 1 (which prescribes requirements for the standards the competent authority must determine in relation to the obligations of statutory auditors in relation to professional ethics, independence, objectivity and confidentiality) has effect.

[F5 (14) The members of the management body of the competent authority must be individuals who—

(a) are knowledgeable in the areas relevant to statutory audit;

(b) are selected in accordance with an independent and transparent nomination procedure;

(c) during their period in office are non-practitioners, and in the three years preceding their appointment were non-practitioners.

(15) In paragraph (14), a “non-practitioner” is a person who is not—

(a) carrying out statutory audit work;

(b) a member of the ownership or management body of a firm that is eligible for appointment as a statutory auditor;

(c) employed by or otherwise associated with a firm that is eligible for appointment as a statutory auditor.]

Textual Amendments

F1 Words in reg. 3(1)(c) inserted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 67(a); 2020 c. 1, Sch. 5 para. 1(1)

F2 Word in reg. 3(1)(e) substituted (31.12.2020) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 67(b); 2020 c. 1, Sch. 5 para. 1(1)

F3 Words in reg. 3(2)(b) substituted (22.2.2019) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 106(a)

F4 Reg. 3(5A)(5B) inserted (22.2.2019) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 106(b)

F5 Reg. 3(14)(15) inserted (22.2.2019) by The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 106(c)