Companies (Auditing and Accounting) Act 2003

PART 1 Preliminary Matters

1 Short title, collective citation and construction.

1.—(1) This Act may be cited as the Companies (Auditing and Accounting) Act 2003.

(2) This Act and the Companies Acts 1963 to 2001 may be cited together as the Companies Acts 1963 to 2003 and are to be construed together as one.

2 Commencement.

2.—(1) This Act comes into operation on the day that the Minister may, by order, appoint.

(2) Different days may be appointed under this section, by one or more orders, for different purposes or different provisions of this Act.

3 Interpretation.

3.—(1) In this Act—

“Act of 1963” means the Companies Act 1963;

“Act of 1986” means the Companies (Amendment) Act 1986;

“Act of 1990” means the Companies Act 1990;

“Companies Acts” means the Companies Act 1963 and every enactment, including this Act, that is to be construed as one with that Act.

(2) In this Act—

(a) a reference to a section, Part or Schedule is to a section or Part of, or a Schedule to, this Act, unless it is indicated that a reference to some other enactment is intended,

(b) a reference to a subsection, paragraph or subparagraph is to the subsection, paragraph or subparagraph of the provision in which the reference occurs, unless it is indicated that reference to some other provision is intended, and

(c) a reference to any other enactment is to that enactment as amended by or under any other enactment, including this Act, unless the context otherwise requires.

PART 2 Irish Auditing and Accounting Supervisory Authority

4 Interpretation of this Part.

4.—(1) In this Part, except where the context otherwise requires—

“amount of turnover” and “balance sheet total” have the same meanings as in section 8 of the Act of 1986;

“board” means the board of directors of the Supervisory Authority;

“chief executive officer” means the Chief Executive Officer of the Supervisory Authority;

“designated body” means a body that, under section 6(2), is a designated body at the relevant time;

“disciplinary committee” means any disciplinary committee or tribunal (however called) of a prescribed accountancy body;

“enactment” means a statute or an instrument made under a power conferred by a statute;

“functions” includes duties and responsibilities;

“member”, in relation to a prescribed accountancy body, means—

(a) a person, or

(b) a firm,

that is, or was at the relevant time, subject to the investigation and disciplinary procedures approved under section 9(2)(c) for that body;

“Minister” means the Minister for Enterprise, Trade and Employment;

“parent undertaking” has the same meaning as in the 1992 Regulations;

“prescribed accountancy body” means—

(a) a recognised accountancy body, or

(b) any other body of accountants that is prescribed under section 48(1)(a) for the purposes of this Act;

“recognised accountancy body” means a body of accountants recognised for the purposes of section 187 of the Act of 1990;

“reserve fund” means the fund established under section 15;

“standards”, in relation to a prescribed accountancy body, means the rules, regulations and standards that body applies to its members and to which, by virtue of their membership, they are obliged to adhere;

“subsidiary undertaking” has the same meaning as in the 1992 Regulations;

“superannuation benefits” means pensions, gratuities and other allowances payable on resignation, retirement or death;

“Supervisory Authority” means the company designated by the Minister under section 5(1);

“the 1992 Regulations” means the European Communities (Companies Group Accounts) Regulations 1992 (S.I. No. 201 of 1992);

“the 1993 Regulations” means the European Communities (Accounts) Regulations 1993 (S.I. No. 396 of 1993).

(2) In this Part “material interest” is to be construed in accordance with section 2(3) of the Ethics in Public Office Act 1995.

5 Establishment of Supervisory Authority.

5.—(1) The Minister may designate a public company to perform the functions and exercise the powers of the Supervisory Authority under this Act, if the following requirements are satisfied:

(a) the company is formed and registered under the Companies Acts after the commencement of this section;

(b) the company is a company limited by guarantee;

(c) the name of the company is the Irish Auditing and Accounting Supervisory Authority or in the Irish language Údarás Maoirseachta Iniúchta agus Cuntasaíochta na hÉireann;

(d) the memorandum of association and articles of association of the company are consistent with this Act.

(2) Section 6(1)(b) of the Act of 1963 does not apply to a company where the Minister informs the registrar of companies in writing that the Minister proposes to designate the company under subsection (1).

6 Membership.

6.—(1) The Supervisory Authority is to consist of the following members:

(a) each prescribed accountancy body that is a body corporate;

(b) if a prescribed accountancy body is not a body corporate, an individual or body corporate nominated by that prescribed accountancy body to be a member;

(c) each designated body that is a body corporate;

(d) if a designated body is not a body corporate, an individual or body corporate nominated by that designated body to be a member.

(2) Unless a regulation under section 48(1)(b) provides otherwise, each of the following is a designated body for the purposes of this section and section 11:

(a) the Irish Business and Employers Confederation;

(b) the Irish Congress of Trade Unions;

(c) the Irish Association of Investment Managers;

(d) the Irish Stock Exchange;

(e) the Pensions Board;

(f) the Irish Financial Services Regulatory Authority;

(g) the Revenue Commissioners;

(h) the Director of Corporate Enforcement;

(i) the Law Society of Ireland;

(j) any body prescribed under section 48(1)(b) as a designated body.

7 Alterations in memorandum and articles of association.

7.—Any alteration that is made in the memorandum of association or articles of association of the Supervisory Authority takes effect only if the alteration is made with the Minister's prior approval.

8 Objects.

8.—(1) The principal objects of the Supervisory Authority, which are to be included in its memorandum of association, are—

(a) to supervise how the prescribed accountancy bodies regulate and monitor their members,

(b) to promote adherence to high professional standards in the auditing and accountancy profession,

(c) to monitor whether the accounts of certain classes of companies and other undertakings comply with the Companies Acts, and

(d) to act as a specialist source of advice to the Minister on auditing and accounting matters.

(2) This section does not prevent or restrict the inclusion in the memorandum of association of all objects and powers, consistent with this Act, that are reasonable, necessary or proper for, or incidental or ancillary to, the due attainment of the principal objects of the Supervisory Authority.

9 Functions.

9.—(1) The Supervisory Authority shall do all things necessary and reasonable to further its objects.

(2) Without limiting its responsibilities under subsection (1), the functions of the Supervisory Authority are as follows:

(a) to grant recognition to bodies of accountants for the purposes of section 187 of the Act of 1990;

(b) to attach under section 192 of the Act of 1990 terms and conditions to the recognition of bodies of accountants, including terms and conditions—

(i) requiring changes to and the approval by the Supervisory Authority of their regulatory plans, and

(ii) requiring their annual reports to the Supervisory Authority on their regulatory plans to be prepared in the manner and form directed by the Supervisory Authority;

(c) to require changes to and to approve—

(i) the constitution and bye-laws of each prescribed accountancy body, including its investigation and disciplinary procedures and its standards, and

(ii) any amendments to the approved constitution or bye-laws of each prescribed accountancy body, including amendments to its investigation and disciplinary procedures and to its standards;

(d) to conduct under section 23 enquiries into whether a prescribed accountancy body has complied with the investigation and disciplinary procedures approved for that body under paragraph (c);

(e) to impose under section 23 sanctions on prescribed accountancy bodies;

(f) to undertake under section 24 investigations into possible breaches of the standards of a prescribed accountancy body;

(g) to supervise how each recognised accountancy body monitors its members and to undertake under section 25 reviews of those members;

(h) to co-operate with the recognised accountancy bodies and other interested parties in developing standards relating to the independence of auditors and to monitor the effectiveness of those standards;

(i) to monitor the effectiveness of provisions of the Companies Acts relating to the independence of auditors;

(j) to supervise the investigation and disciplinary procedures of each prescribed accountancy body, including by requiring access to its records and by requiring explanations about the performance of its regulatory and monitoring duties;

(k) to co-operate with the prescribed accountancy bodies and other interested parties in developing auditing and accounting standards and practice notes;

(l) to review under section 26 whether the accounts of companies and undertakings referred to in that section comply with the Companies Acts and to make applications to the High Court to ensure compliance;

(m) to arrange for the regulation and supervision of individually authorised auditors by recognised accountancy bodies;

(n) to perform any other duties or discharge any other responsibilities imposed on it by this Act or the Companies Acts.

10 General powers.

10.—(1) The Supervisory Authority has the power to do anything that appears to it to be requisite, advantageous or incidental to, or to facilitate, the performance of its functions and that is not inconsistent with any enactment.

(2) A power conferred by subsection (1) is not to be considered to be limited merely by implication from another provision, whether of this or any other Act, that confers a power on the Supervisory Authority.

(3) The Supervisory Authority may adopt rules and issue guidelines concerning any matter that relates to its functions or powers.

(4) The Supervisory Authority may apply to the High Court for an order under section 29(7) compelling—

(a) a prescribed accountancy body to comply with a rule adopted or guideline issued under subsection (3) of this section, or

(b) a recognised accountancy body to comply with a term or condition attached under section 192 of the Act of 1990 (before or after the amendment of that Act by section 32 of this Act) to the recognition of that body,

if, in the Authority's opinion, the body concerned may fail or has failed to comply with the rule or guideline or with the term or condition, as the case may be.

11 Board of directors.

11.—(1) Subject to a regulation under section 48(1)(d), the board of directors of the Supervisory Authority is to consist of—

(a) not more than 14 directors (including the chairperson and the deputy chairperson) appointed by the Minister under subsection (2), and

(b) the person holding the office of chief executive officer who, by virtue of that office, is a director.

(2) Subject to a regulation under section 48(1)(d), the directors appointed by the Minister shall include—

(a) 3 persons nominated jointly by agreement among the prescribed accountancy bodies,

(b) 2 persons nominated by the Minister, one of whom—

(i) is neither an officer or employee of the Minister nor a member, officer or employee of a prescribed accountancy body, and

(ii) is appointed as chairperson by the Minister,

and

(c) for each designated body, one person nominated by that body.

(3) Subject to a regulation under section 48(1)(d), the board shall not include at any one time more than 4 directors appointed under subsection (2) who are members of prescribed accountancy bodies, and of those 4 directors—

(a) 3 may be nominees of the prescribed accountancy bodies, and

(b) one may be a nominee of a designated body.

(4) If, at any time, more than one designated body proposes to nominate a member of a prescribed accountancy body for appointment to the board, the designated bodies proposing to do so shall decide among themselves which one of them is to nominate such a member.

(5) The directors may select the deputy chairperson from among those directors who are not members of a prescribed accountancy body.

(6) The term of office of a director appointed under subsection (2) shall be specified by the Minister when appointing the director and, subject to subsection (12), may not be less than 3 or more than 5 years.

(7) The members of the Supervisory Authority may not instruct the directors, at any meeting of those members or by any other means, regarding the carrying out of their duties as directors of the Supervisory Authority.

(8) Section 182 of the Act of 1963 does not apply to the Supervisory Authority.

(9) A director may resign by letter addressed to the Minister and copied to the Supervisory Authority, and the resignation takes effect on the date the Minister receives the letter.

(10) At any time, the Minister may remove for stated reasons any director appointed under subsection (2), including a director nominated under subsection (2)(b).

(11) The Minister shall fill any vacancy that arises on the board as a consequence of the resignation or removal of a director by appointing a replacement nominated in the same manner as the replaced director.

(12) A director appointed under subsection (11) to replace another holds office for the remainder of the replaced director's term of office, and the same terms and conditions apply to the new appointee.

(13) The directors may act despite one or more vacancies in their numbers.

12 Chief executive officer.

12.—(1) The directors appointed under section 11(2) shall appoint a chief executive officer to—

(a) carry on, manage and control generally the administration and business of the Supervisory Authority, and

(b) perform any other functions that may be determined by the board.

(2) The chief executive officer holds office on and subject to the terms and conditions (including terms and conditions relating to remuneration and allowances) that the directors appointed under section 11(2) may, with the approval of the Minister given with the consent of the Minister for Finance, determine.

(3) The directors appointed under section 11(2) may remove the chief executive officer from office at any time.

13 Work programme.

13.—(1) The Supervisory Authority shall prepare and submit to the Minister a work programme for—

(a) in the case of the initial work programme, the period specified by the Minister, and

(b) in the case of each subsequent work programme, the period of 3 years beginning on the day after the last day of the period covered by the preceding work programme.

(2) In preparing the work programme, the Supervisory Authority shall have regard to the need to ensure the most beneficial, effective and efficient use of its resources and shall include the following information:

(a) the key strategies and activities the Supervisory Authority will pursue to further its objects and perform its functions;

(b) the outputs the Supervisory Authority aims to achieve and against which its performance will be assessed;

(c) the staff, resources and expenditures (including an annual programme of expenditure) necessary to pursue the strategies and activities mentioned in paragraph (a).

(3) In addition to capital and other expenditures, the annual programme of expenditure must include the amount of revenue to be received under section 14(1) and (2) that is to be paid into the reserve fund.

(4) With the consent of the Minister for Finance and after considering the views of the prescribed accountancy bodies, the Minister may approve, with or without amendment, the annual programme of expenditure.

(5) If the annual programme of expenditure is amended under subsection (4), the Supervisory Authority—

(a) may revise any other part of the work programme, and

(b) if it does so, shall submit to the Minister the revised work programme, including the annual programme of expenditure as amended under subsection (4).

(6) The Supervisory Authority may—

(a) if it considers it necessary to do so, undertake an interim review of a work programme, and

(b) submit to the Minister, within the period covered by that programme, an amended or supplementary work programme, including an amended or supplementary annual programme of expenditure.

(7) Subsections (4) and (5) apply with any necessary changes if an amended or a supplementary annual programme of expenditure is submitted to the Minister.

(8) Subject to subsection (9), the Minister shall ensure that a copy of each work programme (including each revised, amended or supplementary work programme) is laid before each House of the Oireachtas not later than 60 days after the date on which it was submitted to the Minister.

(9) If a revised work programme (including a revised amended or supplementary work programme) is submitted to the Minister before the unrevised work programme is laid before the Houses of the Oireachtas as required by subsection (8), only the revised work programme need be laid before the Houses.

(10) The Minister may not give directions to the Supervisory Authority concerning the discharge of a work programme, including an amended or a supplementary work programme.

14 Funding.