EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations amend the Statutory Auditors and Third Country Auditors Regulations 2007 (“SATCAR”) to give effect to Commission Decision 2008/627/EC of 29 July 2008 concerning a transitional period for audit activities of certain third country auditors and audit entities (O.J. L202,31.7.2008, p.70). That Decision is made under article 46(2) of Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts (O.J. L157, 9.6.2006, p.87).
They make provision in respect of “exempt third country auditors”: auditors from a list of third countries set out in the definition of “specified third country” in regulation 2(2). If the Professional Oversight Board (“POB”) has directed that other provisions of SATCAR are not to apply to such auditors, the provisions in these amending Regulations apply to them.
Regulation 2(3) sets out information which exempt third country auditors must provide to POB in order to be registered.
Regulation 2(4) requires exempt third country auditors to inform POB of any change to information which they have provided falling within subparagraphs (a) to (d) and the first sentence of subparagraph (e) of Article 1.1 of the Commission Decision, which read—
(a)‘the name and address of the auditor or audit entity concerned and information about its legal structure;
(b)where the auditor or the audit entity belongs to a network, a description of the network;
(c)the auditing standards and independence requirements which have been applied to the audit concerned;
(d)a description of the internal quality control system of the audit entity;
(e)an indication of whether and when the last quality assurance review of the auditor or audit entity was carried out and necessary information about the outcome of the review’.
Regulation 2(5)(b) (regulation 2(5)(a) is purely consequential) provides that POB may remove an exempt third country auditor from the register if—
the auditor has failed to inform POB of changes to the information which the auditor has provided, or
the auditor has failed to apply the auditing standards and independence requirements which the auditor has told POB have been applied, or
POB considers that the auditor is not fit and proper to conduct audits, or
the competent authority in the exempt third country auditor’s own country considers that the auditor is not fit and proper or eligible to conduct audits.
Regulation 3 provides that exempt third country auditors who applied for registration before the Regulations come into force may then be registered as if they had applied in accordance with the Regulations.
A transposition note has been prepared which sets out how Directive 2006/43 is transposed into UK law, updated to reflect the implementation of Commission Decision 2008/627/EC. An Impact Assessment of the effect of the implementation of Directive 2006/43 on the costs of business, charities or voluntary bodies was also prepared. Both are available from the Department for Business, Enterprise and Regulatory Reform, Corporate Law and Governance Directorate, 1 Victoria Street, London, SW1H 0ET. They are also available electronically at www.berr.gov.uk. Copies have also been placed in the libraries of both Houses of Parliament. Otherwise, an Impact Assessment has not been produced for these Regulations as they have only a negligible impact on the costs of business, charities or voluntary bodies.