S.I. No. 220/2010 - European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010

PART 1 Preliminary and General

1.

2.

3.

PART 2 Miscellaneous Amendments — Amendments of Preliminary and General Nature, Amendments Adapting Certain Provisions of Companies Acts in Consequence of Directive, Etc.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

PART 3 Designation of competent authorities

16.

17.

18.

PART 4 Approval of Statutory Auditors and Audit Firms, Prohibition on Unapproved Persons Acting as Auditor, etc.

Chapter 1 Approval of Statutory Auditors and Audit Firms

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

Chapter 2 Aptitude Test

30.

31.

32.

Chapter 3 Withdrawal of approval

33.

34.

35.

36.

37.

38.

PART 5 Standards and provisions applicable to statutory auditors and audit firms

Chapter 1 Standards for statutory auditors and audit firms

39.

40.

41.

42.

43.

Chapter 2 Confidentiality and Professional Secrecy

44.

45.

46.

47.

48.

49.

50.

51.

52.

53.

Chapter 3 Auditing Standards and Audit Reporting

54.

55.

56.

57.

Chapter 4 Transparency report

58.

59.

60.

61.

Chapter 5 Duties to notify competent authority with supervisory and other functions in event of cessation of office by statutory auditor or audit firm and restrictions on their removal

62.

PART 6 Public Register

63.

64.

65.

66.

67.

68.

69.

PART 7 Independence

70.

71.

72.

73.

74.

75.

76.

77.

78.

PART 8 Public Oversight and Quality Assurance of Statutory Auditors and Audit Firms

Chapter 1 Public Oversight

79.

80.

81.

Chapter 2 Quality Assurance

82.

83.

84.

85.

86.

Chapter 3 Systems of investigations and penalties

87.

88.

89.

90.

PART 9 Audit Committees

91.

PART 10 Regulatory arrangements between Member States

Chapter 1 Cooperation with other Member States

92.

93.

94.

95.

96.

97.

98.

99.

100.

101.

102.

103.

104.

105.

106.

107.

Chapter 2 Mutual recognition of regulatory arrangements between Member States

108.

Chapter 3 Transfer of working papers to third-country competent authorities

109.

110.

111.

PART 11 Third-Country Auditors

Chapter 1 International Aspects

112.

Chapter 2 Registration and oversight of third-country auditors and audit entities

113.

114.

115.

116.

117.

118.

119.

PART 12 Miscellaneous

120.

121.

SCHEDULE 1 Information required, by Part 6, to be supplied and entered in Public Register

SCHEDULE 2 Standards relating to training and qualifications for approval of natural person as statutory auditor

S.I. No. 220 of 2010

EUROPEAN COMMUNITIES (STATUTORY AUDITS) (DIRECTIVE 2006/43/EC) REGULATIONS 2010

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 25th May, 2010.

I, BATT O’KEEFFE, Minister for Enterprise, Trade and Innovation, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving effect to Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006, hereby make the following regulations:

PART 1 Preliminary and General

Citation and construction

• (2) These Regulations shall be read as one with the Companies Acts.

Application

• (a) in so far as they relate to the conduct of statutory audits and the duties and powers of statutory auditors and audit firms in relation thereto — to the conduct of statutory audits for financial years commencing on or after the date of the making of these Regulations; and

• (b) as regards each other matter provision for which is made by these Regulations — on and from the date of the making of these Regulations.

Interpretation

“Act of 1990” means the Companies Act 1990 (No. 33 of 1990);

“Act of 2003” means the Companies (Auditing and Accounting) Act 2003 (No. 44 of 2003);

“affiliate”, in relation to a statutory audit firm, means any undertaking, regardless of legal form, which is connected to the statutory audit firm by means of common ownership, control or management;

“approved”, in relation to a statutory auditor or audit firm, means approved under these Regulations;

“audit report” means the report issued by the statutory auditor or audit firm to the members of a company in accordance with section 193 of the Act of 1990;

“audit working papers”, in relation to a statutory auditor or audit firm, means material (whether in the form of data stored on paper, film, electronic media or other media or otherwise) prepared by or for, or obtained by the statutory auditor or audit firm in connection with the performance of the audit concerned, and includes—

• (a) the record of audit procedures performed,

• (b) relevant audit evidence obtained, and

• (c) conclusions reached,

and a reference to audit working papers in relation to—

• (i) a Member State auditor or audit firm, or

• (ii) a third-country auditor or audit entity,

shall be read accordingly;

“Commission” means Commission of the European Communities;

“competent authorities under these Regulations” has the meaning assigned to it by Regulation 16(3);

“competent authority”, where used without qualification, has the meaning assigned to it by Regulation 16(2);

“competent authority with registration functions” has the meaning assigned to it by Regulation 16(2);

“competent authority with supervisory and other functions” has the meaning assigned to it by Regulation 16(2);

“Directive” means Directive No. 2006/43/EC of the European Parliament and of the Council of 17 May 2006 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/EEC;

“EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

“EEA State” means a state that is a contracting party to the EEA Agreement;

“enactment” includes an instrument made under an enactment;

“financial year”, in relation to a statutory auditor or audit firm, means—

• (a) subject to paragraph (b), any period in respect of which a profit and loss account or income statement is prepared by the auditor or audit firm for income tax or other business purposes, or

• (b) in the case of a statutory audit firm that is a company, any period in respect of which accounts under the Companies Acts are prepared by the firm,

whether that period is of a year’s duration or not;

“firm” includes a body corporate;

“group auditor” means the statutory auditor or audit firm carrying out the statutory audit of the group accounts in question;

“key audit partner” or “key audit partners” means:

• (a) the one or more statutory auditors designated by a statutory audit firm for a particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm, or

• (b) in the case of a group audit, at least the one or more statutory auditors designated by a statutory audit firm as being primarily responsible for carrying out the statutory audit at the level of the group and the one or more statutory auditors designated as being primarily responsible at the level of material subsidiaries, or

• (c) the one or more statutory auditors who sign the audit report;

“Member State” means a Member State of the European Union or an EEA State;

“Member State audit firm” means an audit entity approved in accordance with the Directive by a competent authority of another Member State to carry out audits of annual or group accounts as required by Community law;

“Member State auditor” means an auditor approved in accordance with the Directive by a competent authority of another Member State to carry out audits of annual or group accounts as required by Community law;

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

“network”, in relation to a statutory auditor or audit firm, means the larger structure:

• (a) which is aimed at cooperation and to which the statutory auditor or audit firm belongs, and

• (b) either—

• (i) the clear objective of which is profit or cost-sharing, or

• (ii) which shares—

• (I) common ownership, control or management,

• (II) common quality control policies and procedures,

• (III) a common business strategy, or

• (IV) the use of a common brand-name or a significant part of professional resources;

“Principal Act” means the Companies Act 1963 (No. 33 of 1963);

“public-interest entities” means—

• (a) companies or other bodies corporate governed by the law of a Member State whose transferable securities are admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC,

• (b) credit institutions as defined in point 1 of Article 1 of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions, and

• (c) insurance undertakings within the meaning of Article 2(1) of Directive 91/674/EEC;

“recognised accountancy body” means a body of accountants—

• (a) recognised, or

• (b) deemed, by virtue of section 191(3) or (4) of the Act of 1990, to be recognised,

by the competent authority with supervisory and other functions for the purposes of—

• (i) section 187 of the Act of 1990, or

• (ii) these Regulations;

“standards” means those standards of a recognised accountancy body as defined in section 4 of the Act of 2003;

“statutory audit” means an audit of individual accounts or group accounts in so far as required by Community law;

“statutory audit firm” means an audit firm which is approved in accordance with these Regulations to carry out statutory audits;

“statutory auditor” means a natural person who is approved in accordance with these Regulations to carry out statutory audits;

“third country” means a country or territory that is not a Member State or part of a Member State;

“third-country audit entity” means an entity that is entitled, under or by virtue of the laws, regulations or administrative provisions of a third country, to carry out audits of the annual or group accounts of a company incorporated in that third country;

“third-country auditor” means a natural person who is entitled, under or by virtue of the laws, regulations or administrative provisions of a third country, to carry out audits of the annual or group accounts of a company incorporated in that third country;

“third-country competent authority” means an authority in a third country with responsibilities, as respects auditors and audit entities in that country, equivalent to those of a competent authority or the competent authority with supervisory and other functions;

“transparency report” shall be read in accordance with Regulation 58.

• (2) A reference in these Regulations to a registered third-country auditor or audit entity is a reference to a third-country auditor or entity registered under Chapter 2 of Part 11.

• (3) A word or expression that is used in these Regulations and is also used in the Directive shall have in these Regulations the same meaning as it has in the Directive.

PART 2 Miscellaneous Amendments — Amendments of Preliminary and General Nature, Amendments Adapting Certain Provisions of Companies Acts in Consequence of Directive, Etc.

Amendment of Principal Act

• (a) by inserting the following definition after the definition of “articles”:

“ ‘auditor’ means a statutory auditor or statutory audit firm within the meaning of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010;”, and

• (b) by inserting the following definition after the definition of “subsidiary”:

“ ‘Supervisory Authority’ means the Irish Auditing and Accounting Supervisory Authority;”.

• (2) Section 149A(1)(b)(xi) of the Principal Act is amended by deleting “paragraph 39(5) of the Schedule to the Act of 1986 and”.

• (3) Section 150B(2)(k) of the Principal Act is amended by deleting “paragraph 39(5) of the Schedule to the Act of 1986 and”.

• (4) Section 160 of the Principal Act is amended, in subsection (9), by inserting “(not being a body corporate)” after “firm” where it firstly occurs.

• (5) The amendments effected by paragraphs (2) and (3) apply to accounts for financial years ending on or after the date falling 3 months after the date of the making of these Regulations.

Amendment of Companies (Amendment) Act 1986

• (2) The amendment effected by this Regulation applies to accounts for financial years ending on or after the date falling 3 months after the date of the making of these Regulations.

Amendment of section 187 of Act of 1990

• (a) in subsection (1), by deleting “either as auditor of a company or”;

• (b) by deleting subsection (2);

• (c) in subsection (3), by substituting the following paragraph for paragraph (f):

• “(f) a person who is disqualified under Regulation 71 of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 for appointment as auditor of a company that is a subsidiary or holding company of the society,”;

• (d) in subsection (6), by deleting “as auditor of a company or”;

• (e) in subsection (7), by deleting “auditor of a company or”; and

• (f) in subsection (12), by deleting “as an auditor of a company or”.

Amendment of section 188 of Act of 1990

Amendment of section 189 of Act of 1990

• (a) in subsection (1), by deleting “auditor of a company or”; and

• (b) in subsection (2)(a) and (c), by deleting “auditor of a company or”.

Amendment of section 190 of Act of 1990

“Consultation by Supervisory Authority regarding standards and qualifications.

1. (1) Before granting, renewing, withdrawing, revoking, suspending or refusing a recognition of a body of accountants under or for the purposes of—

2. (a) the Companies Acts; or

3. (b) the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 (the ‘Regulations of 2010’),

the Supervisory Authority may consult with any body of persons or other person as to the conditions or standards required by the body of accountants concerned in connection with membership of that body or, as the case may be, the awarding to persons of practising certificates or the approval of persons as auditors.

• (2) Without prejudice to any obligations in that behalf in connection with the performance of the foregoing functions as they relate to the Regulations of 2010, the Supervisory Authority may also consult with any body of persons or other person before forming any opinion or making any declaration in relation to the qualifications held by any person or class of persons as respects qualification for appointment as a public auditor.”.

Amendment of section 191 of Act of 1990

“Recognition of body of accountants.

1. (1) The Supervisory Authority may grant recognition to a body of accountants under or for the purposes of section 187 or the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 but may only grant such recognition if satisfied—

2. (a) in the case of a grant of recognition—

   • (i) to a body of accountants under or for the purposes of section 187, that the standards relating to training, qualifications and repute required by that body for the awarding of a practising certificate to a person are not less than those that were specified in Articles 3 to 6, 8 and 19 of the Council Directive before the repeal thereof by Directive No. 2006/43/EC of the European Parliament and of the Council of 17 May 2006; and

   • (ii) to a body of accountants under or for the purposes of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010, that the standards relating to training, qualifications and repute required by that body for the approval of a person as an auditor are not less than those specified in Articles 4, 6 to 8 and 10 of Directive No. 2006/43/EC of the European Parliament and of the Council of 17 May 2006;

   and

3. (b) in either of those 2 cases, as to the standards that body applies to its members in the area of ethics, codes of conduct and practice, independence, professional integrity, auditing and accounting standards and investigation and disciplinary procedures.

4. (2) In subsection (3) ‘relevant amendment’ means the amendment of this section by Regulation 10 of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010.

5. (3) Each of the following—

   • (a) the Association of Chartered Certified Accountants;

   • (b) the Institute of Chartered Accountants in Ireland;

   • (c) the Institute of Chartered Accountants in England and Wales;

   • (d) the Institute of Chartered Accountants of Scotland;

   • (e) the Institute of Certified Public Accountants in Ireland;

   • (f) the Institute of Incorporated Public Accountants,

   being a body of accountants that stood recognised under or for the purposes of section 187 immediately before the relevant amendment, continues to stand recognised under or for the purposes of section 187 (and such recognition shall be deemed to have been granted by the Supervisory Authority).

6. (4) Each of the bodies of accountants referred to in subsection (3) shall be deemed to have been granted recognition by the Supervisory Authority under or for the purposes of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010.”.

Amendment of section 192 of Act of 1990

• (a) in subsections (1) to (3), by inserting “or the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010” after “under or for the purposes of section 187”;

• (b) in subsection (4)(a), by inserting “or the Regulations referred to in the preceding subsections” after “the said section 187”; and

• (c) in subsection (6), by inserting “or the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010” after “for the purposes of section 187”.

Amendment of section 198 of Act of 1990

• (a) in subsection (1)—

• (i) by inserting “(‘the register of public auditors’)” after “a register”; and

• (ii) by deleting “as auditor of a company or”;

• (b) in subsection (2)—

• (i) by deleting “as an auditor of a company or” in paragraphs (a) and (b);

• (ii) by deleting “an auditor of a company or” in paragraph (c);

and

• (iii) by substituting “register of public auditors” for “register of auditors” in paragraph (c)(i);

and

• (c) in subsection (3)—

• (i) by substituting “register of public auditors” for “register of auditors” where it firstly occurs;

• (ii) by substituting “a public auditor” for “an auditor” in paragraph (a); and

• (iii) by substituting “register of public auditors” for “register of auditors” in paragraph (b).

Amendment of sections 199 and 200 of Act of 1990

• (a) in subsection (1), by deleting “auditor of a company or”;

• (b) in subsection (2), by adding “as public auditors” after “in the State”; and

• (c) in subsection (3), by deleting “as auditor of a company or”.

• (2) Section 200 of the Act of 1990 is amended—

• (a) in subsection (1), by deleting “as auditor of a company or”;

• (b) in subsection (2), by adding “as public auditors” after “in the State”; and

• (c) in subsection (3), by deleting “as auditor of a company or”.

Amendments of Act of 2003

• (a) in section 4(1), by substituting the following definition for the definition of “recognised accountancy body”:

“ ‘recognised accountancy body’ means a body of accountants—

• (a) recognised, or

• (b) deemed, by virtue of section 191(3) or (4) of the Act of 1990, to be recognised,

by the Supervisory Authority for the purposes of—

- (i) section 187 of the Act of 1990, or

- (ii) the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010;”; and

• (b) in section 9(2), by inserting the following paragraph after paragraph (ma) (inserted by the Investment Funds, Companies and Miscellaneous Provisions Act 2006 (No. 41 of 2006)):

• “(mb) to perform the functions (and in particular the functions of public oversight) conferred on it by the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010;”.

Revocation of certain secondary legislation

• (2) Regulations 5 to 7 of the Companies Act 1990 (Auditors) Regulations 1992 ( S.I. No. 259 of 1992 ) are revoked.

• (3) Part I of the Schedule to the European Communities (Credit Institutions: Accounts) Regulations 1992 ( S.I. No. 294 of 1992 ) is amending by revoking subparagraph (3) of paragraph 74.

• (4) Part III of the Schedule to the European Communities (Insurance Undertakings: Accounts) Regulations 1996 ( S.I. No. 23 of 1996 ) is amended by revoking subparagraph (d) of paragraph 21.

• (5) The amendments effected by paragraphs (3) and (4) apply to accounts for financial years ending on or after the date falling 3 months after the date of the making of these Regulations.

PART 3 Designation of competent authorities

Designation of competent authorities and meaning of “competent authority” and related expressions

• (a) designates, for the purposes of the tasks provided for in the Directive, various bodies or other persons as competent authorities in the State; and

• (b) assigns a meaning to each of the following expressions used in these Regulations and which are connected with the foregoing designation, namely:

• (i) “competent authority” — where that expression is used without qualification;

• (ii) “competent authorities under these Regulations”;

• (iii) “competent authority with registration functions”; and

• (iv) “competent authority with supervisory and other functions”.

• (2) In these Regulations, other than this paragraph—

“competent authority”, where used without qualification, means a recognised accountancy body;

“competent authority with registration functions” means the Registrar of Companies;

“competent authority with supervisory and other functions” means the Irish Auditing and Accounting Supervisory Authority,

and, accordingly, each recognised accountancy body, the Registrar of Companies and the Irish Auditing and Accounting Supervisory Authority is designated as a competent authority in the State for the purposes of such of the tasks provided for in the Directive as correspond to the particular functions conferred on it or him or her by the provision concerned of these Regulations.

• (3) In these Regulations “competent authorities under these Regulations” means—

• (a) each of the recognised accountancy bodies;

• (b) the Registrar of Companies; and

• (c) the Irish Auditing and Accounting Supervisory Authority,

save that in Regulations 96 to 98, 101 and 103 to 107 the expression does not include the Registrar of Companies.

• (4) Regulation 17 supplements paragraph (2) with regard to the operation of a provision of these Regulations that refers to a competent authority without qualification.

Operation of provisions with regard to particular recognised accountancy bodies

• (2) A provision of these Regulations that confers a function on a competent authority in relation to a statutory auditor or audit firm shall be read as conferring that function—

• (a) in the case of a statutory auditor who is not a member of a statutory audit firm — on the recognised accountancy body of which the statutory auditor is a member;

• (b) in the case of a statutory auditor who is a member of a statutory audit firm — on the recognised accountancy body of which the statutory audit firm is a member;

• (c) in the case of a statutory audit firm — on the recognised accountancy body of which the statutory audit firm is a member.

• (3) With regard to the function conferred by Regulation 19 on a competent authority in relation to a natural person or firm, paragraph (2) applies as if, for each reference in that paragraph to a statutory auditor or statutory audit firm (as the case may be), there were substituted a reference to the natural person or firm, as appropriate.

• (4) A provision of these Regulations requiring that an act is to be done, or enabling an act to be done, by a person (other than a person referred to in paragraph (5)(b)) in relation to a competent authority shall be read as requiring or enabling it to be done by the person in relation to—

• (a) if the person is not a member of a statutory audit firm — the recognised accountancy body of which the person is a member;

• (b) if the person is a member of a statutory audit firm — the recognised accountancy body of which the statutory audit firm is a member; and

• (c) if the person is a statutory audit firm — the recognised accountancy body of which the statutory audit firm is a member.

• (5) In the case—

• (a) of a provision of the kind referred to in paragraph (2), (3) or (4);

• (b) where the provision falls to be applied to a Member State auditor, a Member State audit firm, a third-country auditor or any other person who or which is not a member of a recognised accountancy body (or, as the case may be, the firm of which the person is a member is not a member of a recognised accountancy body),

the recognised accountancy body that shall perform the function concerned or, as the case may be, in relation to which the act concerned is required or enabled to be done shall be determined—

• (i) by reference to arrangements, in writing, entered into by the recognised accountancy bodies amongst themselves for the purpose (which arrangements those bodies are empowered by this paragraph to enter into); or

• (ii) in default of—

• (I) such arrangements being entered into; or

• (II) the provisions of such arrangements dealing with the particular case falling to be determined,

by the competent authority with supervisory and other functions.

• (6) On a determination being made by the competent authority with supervisory and other functions for the purposes of paragraph (5)(ii), a direction in writing, reflecting the terms of the determination, shall be given by it (which direction that authority is empowered by this paragraph to give).

• (7) Arrangements shall not be entered into under paragraph (5)(i) by the recognised accountancy bodies save after consultation by them with the competent authority with supervisory and other functions.

• (8) If in consequence of the operation of this Regulation, the function of withdrawal of a particular approval under this Regulation falls to be discharged by a recognised accountancy body that is different from the recognised accountancy body that granted the approval:

• (a) the first-mentioned accountancy body shall notify in writing the second-mentioned accountancy body of the proposal by it to withdraw the approval; and

• (b) the second-mentioned accountancy body shall provide such assistance, by way of provision of information or clarification of any matter, to the first-mentioned accountancy body as the latter considers it may require so as to inform itself better on any issue bearing on the performance of the function of withdrawal,

and the procedures adopted for those purposes by the foregoing accountancy bodies shall be such as will—

• (i) avoid any unnecessary delay in the performance of the function of withdrawal; and

• (ii) respect the requirements of procedural fairness as concerns the auditor or audit firm in question being able to answer any part of the case made against him, her or it that is informed by those procedures being employed.

• (9) In a case falling within paragraph (8), if the approval concerned is withdrawn, the first-mentioned body in that paragraph, in addition to making the notifications required by Regulation 37 and (where it applies) Regulation 38, shall notify the second-mentioned body in that paragraph of the withdrawal of approval.

Conflicts of interest to be avoided

PART 4 Approval of Statutory Auditors and Audit Firms, Prohibition on Unapproved Persons Acting as Auditor, etc.

Chapter 1 Approval of Statutory Auditors and Audit Firms

Applications for approval, general principle as to good repute, etc.

• (2) A competent authority may, on foot of an application under paragraph (1), grant approval under these Regulations only to—

• (a) natural persons; or

• (b) firms,

who or which are of good repute.

• (3) A competent authority may, on application to it by a third-country auditor and in accordance with Regulation 112, approve, under these Regulations, the applicant as a statutory auditor.

• (4) For the purposes of this Regulation, in the case of an application under paragraph (1)—

• (a) by a firm that is a Member State audit firm; or

• (b) by a Member State auditor,

the fact that the applicant is a Member State audit firm or a Member State auditor, as the case may be, shall constitute conclusive evidence that the applicant is of good repute unless, arising out of the cooperation referred to in paragraph (5), a counterpart authority in the Member State where the applicant is approved as a statutory audit firm or auditor has notified the competent authority (or the competent authority with supervisory and other functions) that the counterpart authority has reasonable grounds for believing that the good repute of the audit firm or auditor has been seriously compromised.

• (5) The cooperation referred to in paragraph (4) is the cooperation that the State is required to engage in by virtue of Chapter VIII (which relates to, inter alia, regulatory arrangements between Member States) of the Directive.

• (6) On approving a person as a statutory auditor or audit firm, the competent authority shall assign an individual identification number to the person and a written record shall be maintained by the competent authority of all such numbers assigned by it under this paragraph.

• (7) A competent authority shall, in performing its functions under this Regulation, be subject to the supervision of the competent authority with supervisory and other functions.

• (8) In paragraph (4) the reference to counterpart authority shall be construed in accordance with Regulation 93.

Restriction as to the persons who may carry out statutory audits

Restriction on acting as statutory auditor

• (a) act as a statutory auditor;

• (b) describe himself or herself as a statutory auditor; or

• (c) so hold himself or herself out as to indicate, or be reasonably understood to indicate, that he or she is a statutory auditor,

unless he or she has been approved in accordance with the provisions of these Regulations.

Restriction on acting as statutory audit firm

• (a) act as a statutory audit firm;

• (b) describe itself as a statutory audit firm; or

• (c) so hold itself out as to indicate, or be reasonably understood to indicate, that it is a statutory audit firm,

unless it has been approved in accordance with the provisions of these Regulations.

Offence for contravening Regulation 20, 21 or 22

• (a) on summary conviction, to a fine not exceeding €5,000; or

• (b) on conviction on indictment, to a fine not exceeding €50,000 or imprisonment for a term not exceeding 12 months or both.

• (2) If the contravention in respect of which a person is convicted of an offence under paragraph (1) is continued after the conviction, the person is guilty of a further offence for each day that the contravention continues and for each such offence the person is liable—

• (a) on summary conviction, to a fine not exceeding €1,000, or

• (b) on conviction on indictment, to a fine not exceeding €10,000.

Conditions for approval as statutory auditor

• (a) a member of a recognised accountancy body and holds an appropriate qualification as referred to in Regulation 26; or

• (b) a Member State auditor and complies with Regulation 30; or

• (c) a third-country auditor and complies with Regulations 30 and 112.

Transitional provision — deemed approval of persons qualified for appointment pursuant to Part X of Act of 1990

• (2) The following paragraph has effect in the case of a person to whom paragraph (1) applies, being a person who is qualified for appointment as auditor of a company pursuant to Part X of the Act of 1990 by virtue of having been authorised by the Minister to be so appointed before 3 February 1983.

• (3) The deemed approval, by virtue of paragraph (1), of a person referred to in paragraph (2) shall cease to have effect unless, as soon as may be after the commencement of this Regulation, the person becomes either—

• (a) a member of; or

• (b) subject to the regulation of,

a competent authority.

• (4) In relation to a person to whom paragraph (1) applies, Regulation 33 shall have effect as if—

• (a) in paragraph (3) of that Regulation, the following subparagraph were substituted for subparagraph (b):

• “(b) either—

  • (i) any of the conditions specified in Regulation 24(a) are not being complied with in respect of the auditor; or

  • (ii) in the case of a person referred to in Regulation 25(2) who has complied with the condition specified in Regulation 25(3)(a) or (b), that condition ceases to be complied with by him or her,”;

and

• (b) there were substituted, in paragraph (5), for all the words beginning with “Where, having” and ending immediately before subparagraph (ii) of that paragraph, the following:

“Where, having—

• (a) complied with the requirements of procedural fairness in that regard; and

• (b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,

the competent authority is satisfied that circumstances referred to in paragraph (3)(a) have arisen or that a statutory auditor has failed to comply with any of the conditions specified in Regulation 24(a) or, in the case of a person referred to in Regulation 25(2) who has complied with the condition specified in Regulation 25(3)(a) or (b), that that condition has ceased to be complied with by him or her, it shall, subject to paragraph (6), serve a notice in writing on the auditor stating that—

- (i) it is satisfied that, as appropriate—

    - (I) those circumstances have arisen;

    - (II) such a failure has occurred; or

    - (III) that condition has ceased to be complied with,

      in relation to the auditor;”.

Appropriate qualification for purpose of Regulation 24(a)

• (2) In paragraph (1) “qualification” means a qualification to undertake an audit of individual accounts and group accounts in so far as required by Community law.

Conditions for approval as statutory audit firm and transitional provision

• (2) A firm shall not be eligible for approval as a statutory audit firm unless:

• (a) the natural persons who carry out statutory audits in the State on behalf of the firm are approved as statutory auditors in accordance with these Regulations;

• (b) the majority of the voting rights in the firm are held by—

• (i) natural persons who are eligible for approval in the State or in any other Member State as statutory auditors; or

• (ii) audit firms approved as statutory audit firms in the State or in any other Member State;

and

• (c) the majority of the members of the administrative or management body of the firm are—

• (i) natural persons who are eligible for approval in the State or in any other Member State as statutory auditors; or

• (ii) audit firms approved as statutory audit firms in the State or in any other Member State,

and, for the avoidance of doubt, a majority, for the purposes of subparagraph (b) or (c), may be constituted by a combination of natural persons so eligible and audit firms so approved.

• (3) Where the administrative or management body of the firm has no more than 2 members, then, for the purposes of subparagraph (c) of paragraph (2), one of those members shall satisfy at least the conditions in that subparagraph.

• (4) Subject to Regulation 121, a firm that, immediately before the commencement of these Regulations, is qualified for appointment as auditor of a company pursuant to Part X of the Act of 1990 shall be deemed to have been approved as a statutory audit firm in accordance with these Regulations.

• (5) In relation to a firm referred to in paragraph (4), Regulation 34 shall have effect as if—

• (a) in paragraph (3) of that Regulation, the following subparagraph were substituted for subparagraph (b):

• “(b) the condition specified in Regulation 27(2)(a) is not being complied with in respect of the firm,”; and

• (b) there were substituted, in paragraph (5), for all the words beginning with “Where, having” and ending immediately before subparagraph (ii) of that paragraph, the following:

“Where, having—

• (a) complied with the requirements of procedural fairness in that regard; and

• (b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,

the competent authority is satisfied that circumstances referred to in paragraph (3)(a) have arisen or that a statutory audit firm has failed to comply with the condition specified in Regulation 27(2)(a), it shall, subject to paragraph (6), serve a notice in writing on the audit firm stating—

- (i) it is satisfied that—

    - (I) those circumstances have arisen; or

    - (II) such a failure has occurred,

      in relation to the firm;”.

Powers of Director of Corporate Enforcement

• (a) acting as a statutory auditor or audit firm of a company; or

• (b) purporting to have obtained approval under these Regulations to so act,

the production of evidence of the person’s approval under these Regulations in respect of any period during which the person so acted or purported to have obtained such approval.

• (2) If the person concerned refuses or fails to produce the evidence referred to in paragraph (1) within 30 days after the date of the demand referred to in that paragraph, or such longer period as the Director may allow, the person is guilty of an offence.

• (3) A person who is guilty of an offence under this Regulation is liable—

• (a) on summary conviction, to a fine not exceeding €5,000; or

• (b) on conviction on indictment, to a fine not exceeding €12,500.

• (4) In a prosecution for an offence under this Regulation, it shall be presumed, until the contrary is shown, that the defendant did not, within 30 days, or any longer period allowed, after the day on which the production was demanded, produce evidence in accordance with paragraph (1).

Evidence in prosecutions under Regulation 23

• (2) Paragraph (1) does not apply unless a copy of the certificate concerned is served by the prosecution on the defendant, by registered post, not later than 28 days before the day the certificate is produced in court in the proceedings concerned.

• (3) If the defendant in those proceedings intends to contest the statement contained in such a certificate, he or she shall give written notice of that intention to the prosecution within 21 days, or such longer period as the court may allow, after the date of receipt by him or her of a copy of the certificate from the prosecution.

Chapter 2 Aptitude Test

Aptitude test to be passed

• (2) Paragraph (1) shall not apply to a Member State auditor or a third-country auditor if the competent authority is satisfied that he or she has otherwise demonstrated sufficient knowledge of the enactments and practice referred to in that paragraph.

• (3) The competent authority with supervisory and other functions shall issue guidance to each competent authority as to the specific matters that a competent authority should have regard to in reaching a decision that it is satisfied that a person has demonstrated, in accordance with paragraph (2), the knowledge referred to in this Regulation.

• (4) That guidance shall be issued by the competent authority with supervisory and other functions as soon as may be after the date of the making of these Regulations but, in any event, not later than 6 months thereafter.

• (5) A competent authority may charge and impose a fee (of an amount specified from time to time by the Minister sufficient to cover the authority’s administrative expenses in respect of the following) on a Member State auditor or third-country auditor in respect of the administration of an aptitude test under this Regulation in relation to him or her.

• (6) A fee imposed under paragraph (5) may, in default of payment, be recovered from the Member State auditor or third-country auditor concerned as a simple contract debt in any court of competent jurisdiction.

Scope of aptitude test

• (a) be conducted in an official language of the State; and

• (b) cover only the applicant’s adequate knowledge of the enactments and practice that are relevant to statutory audits in the State.

• (2) Any decision by a competent authority—

• (a) as to the various matters that shall constitute the contents of the aptitude test; or

• (b) that those contents shall stand altered in any manner (which decision the competent authority is empowered, by this paragraph, to make from time to time),

shall require the prior approval of the competent authority with supervisory and other functions.

Adequate standards to be applied in administration of aptitude test

• (2) No standards shall be used by a competent authority for that purpose unless those standards have (with respect to that use) first been approved by the competent authority with supervisory and other functions.

Chapter 3 Withdrawal of approval

Grounds for mandatory withdrawal in case of statutory auditor

• (2) For the purposes of this Regulation—

• (a) the cases that can constitute circumstances of an auditor’s good repute being seriously compromised include cases of professional misconduct or want of professional skill on the part of the auditor; and

• (b) “disciplinary committee” has the same meaning as it has in the Act of 2003.

• (3) Without prejudice to Regulation 89, a competent authority shall withdraw an approval of an auditor under these Regulations if, but only if—

• (a) circumstances arise (involving acts or omissions on the part of the auditor) from which the competent authority can reasonably conclude that the auditor’s good repute is seriously compromised; or

• (b) any of the conditions specified in Regulation 24 are no longer being complied with in respect of the auditor,

but this paragraph is subject to paragraph (5).

• (4) Unless there do not exist internal appeal procedures of the competent authority as referred to in paragraph (7)(a), references in paragraphs (5) and (6) to a competent authority shall be read as references to a competent authority acting through the disciplinary committee that deals with matters at first instance.

• (5) Where, having—

• (a) complied with the requirements of procedural fairness in that regard; and

• (b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,

the competent authority is satisfied that circumstances referred to in paragraph (3)(a) have arisen or that non-compliance, as referred to in paragraph (3)(b), with a condition has occurred, it shall, subject to paragraph (6), serve a notice in writing on the auditor stating that—

• (i) it is satisfied that—

• (I) those circumstances have arisen in relation to; or

• (II) such non-compliance has occurred on the part of,

the auditor;

• (ii) as the case may be, the auditor must take specified steps to restore his or her repute to good standing, or comply with the condition concerned, within a specified period (which shall not be less than a month); and

• (iii) if those steps are not taken or the condition concerned is not complied with within that specified period, it shall withdraw the approval of the auditor,

and, if but only if, as the case may be—

• (I) those steps are not taken; or

• (II) the condition concerned is not complied with,

within that specified period by the auditor, the competent authority shall withdraw the approval of the auditor under these Regulations.

• (6) The procedure specified in paragraph (5) as concerns the service of a notice with respect to the matters specified in subparagraphs (i) to (iii) of it need not be employed if the acts or omissions concerned referred to in paragraph (3)(a) are such as, in the opinion of the competent authority, constitute professional misconduct or want of professional skill on the part of the auditor of a degree that employing that procedure would not be in the public interest but nothing in this paragraph affects the application of the requirements of procedural fairness to the withdrawal of approval.

• (7) If—

• (a) there exist applicable internal appeal procedures of the competent authority; and

• (b) the investigation and disciplinary procedures of the competent authority provide that a decision of its disciplinary committee referred to in paragraph (4), being a decision of a nature to which this Regulation applies, shall stand suspended or shall not take effect until, as the case may be—

• (i) the period for making an appeal under those procedures has expired without such an appeal having been made;

• (ii) such an appeal has been made and the decision to withdraw the approval confirmed; or

• (iii) such an appeal that has been made is withdrawn,

then, notwithstanding anything in the preceding provisions of this Regulation, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the happening of an event specified in clause (i), (ii) or (iii).

• (8) If—

• (a) there exist applicable internal appeal procedures of the competent authority; and

• (b) the investigation and disciplinary procedures of the competent authority do not provide, as mentioned in paragraph (7)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect,

then, notwithstanding anything in those procedures, the auditor to whom that decision relates may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the relevant appellate committee of an appeal that he or she is making under those internal appeal procedures and, where such an application is made, paragraphs (11) to (14) apply to that application with—

• (i) the substitution of references to an appeal under those internal appeal procedures for references to an appeal under Regulation 35; and

• (ii) any other necessary modifications.

• (9) If the relevant appellate committee referred to in paragraph (8) is of opinion, having regard to the particular issues that have arisen on that appeal, that, in the interests of justice, the disposal by it of an appeal referred to in that paragraph ought to include its proceeding in the manner specified in the provisions of paragraph (5) that follow subparagraphs (a) and (b) of paragraph (5), then, in disposing of that appeal, it shall proceed in the manner so specified.

• (10) The competent authority shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in paragraph (8) is prosecuted promptly and it shall be the duty of that appellate committee to ensure that any such appeal to it is disposed of as expeditiously as may be and, for that purpose, to take all such steps as are open to it to ensure that, in so far as is practicable, there are no avoidable delays at any stage in the determination of such an appeal.

• (11) Where a competent authority has made a decision to withdraw the approval of an auditor under this Regulation (that is to say a final decision of the competent authority on the matter after the internal appeal procedures (if any) of it have been employed and exhausted), the auditor may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the High Court of an appeal under Regulation 35 that he or she is making against the withdrawal.

• (12) On the hearing of an application under paragraph (11), the High Court may, subject to paragraph (14), as it considers appropriate and having heard the competent authority concerned and, if it wishes to be so heard, the competent authority with supervisory and other functions (which shall have standing to appear and be heard on the application)—

• (a) grant an order suspending the operation of the withdrawal; or

• (b) refuse to grant such an order,

and an order under subparagraph (a) may provide that the order shall not have effect unless one or more conditions specified in the order are complied with (and such conditions may include conditions requiring the auditor not to carry out statutory audits save under the supervision of another statutory auditor or not to carry out such audits save in specified circumstances).

• (13) The High Court may, on application to it by the auditor or competent authority concerned, vary or discharge an order under paragraph (12)(a) if it considers it just to do so.

• (14) In considering an application under paragraph (11) or (13), the High Court shall have regard to—

• (a) whether, as regards the appeal the applicant is making under Regulation 35 to the High Court, the applicant has a strong case that is likely to succeed before that Court (and, for that purpose, the High Court shall require the applicant to give an indication of the facts that will be relied upon, or of the evidence that will be adduced in the case of facts that are in controversy, by him or her on the hearing of that appeal); and

• (b) the public interest and, in particular, the public interest in ensuring that there is the minimum of disruption, consistent with law, to the discharge by the competent authority concerned, as a body designated in the State for the purposes of the Directive, of the function of granting and withdrawing approval.

Grounds for mandatory withdrawal in case of statutory audit firm

• (2) For the purposes of this Regulation—

• (a) the cases that can constitute circumstances of an audit firm’s good repute being seriously compromised include cases of professional misconduct or want of professional skill on the part of the audit firm or any of the one or more auditors through whom it acts; and

• (b) “disciplinary committee” has the same meaning as it has in the Act of 2003.

• (3) Without prejudice to Regulation 89, a competent authority shall withdraw an approval of an audit firm under these Regulations if, but only if—

• (a) circumstances arise (involving acts or omissions on the part of the audit firm or auditor or auditors through whom it acts) from which the competent authority can reasonably conclude that the firm’s good repute is seriously compromised; or

• (b) any of the conditions specified in Regulation 27(2) are no longer being complied with in respect of the firm,

but this paragraph is subject to paragraph (5).

• (4) Unless there do not exist internal appeal procedures of the competent authority as referred to in paragraph (7)(a), references in paragraphs (5) and (6) to a competent authority shall be read as references to a competent authority acting through the disciplinary committee that deals with matters at first instance.

• (5) Where, having—

• (a) complied with the requirements of procedural fairness in that regard; and

• (b) served any notices required for that purpose or as required by its investigation and disciplinary procedures,

the competent authority is satisfied that circumstances referred to in paragraph (3)(a) have arisen or that non-compliance, as referred to in paragraph (3)(b), with a condition has occurred, it shall, subject to paragraph (6), serve a notice in writing on the audit firm stating that—

• (i) it is satisfied that—

• (I) those circumstances have arisen in relation to; or

• (II) such non-compliance has occurred on the part of, the firm;

• (ii) as the case may be, the firm must take specified steps to restore its repute to good standing, or comply with the condition concerned, within a specified period (which shall not be less than a month); and

• (iii) if those steps are not taken or the condition concerned is not complied with within that specified period, it shall withdraw the approval of the firm,

and, if but only if, as the case may be—

• (I) those steps are not taken; or

• (II) the condition concerned is not complied with,

within that specified period by the audit firm, the competent authority shall withdraw the approval of the audit firm under these Regulations.

• (6) The procedure specified in paragraph (5) as concerns the service of a notice with respect to the matters specified in subparagraphs (i) to (iii) of it need not be employed if the acts or omissions concerned referred to in paragraph (3)(a) are such as, in the opinion of the competent authority, constitute professional misconduct or want of professional skill on the part of the audit firm (or the auditor or auditors through whom it acts) of a degree that employing that procedure would not be in the public interest but nothing in this paragraph affects the application of the requirements of procedural fairness to the withdrawal of approval.

• (7) If—

• (a) there exist applicable internal appeal procedures of the competent authority; and

• (b) the investigation and disciplinary procedures of the competent authority provide that a decision of its disciplinary committee referred to in paragraph (4), being a decision of a nature to which this Regulation applies, shall stand suspended or shall not take effect until, as the case may be—

• (i) the period for making an appeal under those procedures has expired without such an appeal having been made;

• (ii) such an appeal has been made and the decision to withdraw the approval confirmed; or

• (iii) such an appeal that has been made is withdrawn,

then, notwithstanding anything in the preceding provisions of this Regulation, the operation of the withdrawal of approval by that disciplinary committee shall stand suspended until the happening of an event specified in clause (i), (ii) or (iii).

• (8) If—

• (a) there exist applicable internal appeal procedures of the competent authority; and

• (b) the investigation and disciplinary procedures of the competent authority do not provide, as mentioned in paragraph (7)(b), for the decision of the disciplinary committee referred to in that provision to stand suspended or not to take effect,

then, notwithstanding anything in those procedures, the audit firm to which that decision relates may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the relevant appellate committee of an appeal that it is making under those internal appeal procedures and, where such an application is made, paragraphs (10) to (14) apply to that application with—

• (i) the substitution of references to an appeal under those internal appeal procedures for references to an appeal under Regulation 35; and

• (ii) any other necessary modifications.

• (9) If the relevant appellate committee referred to in paragraph (8) is of opinion, having regard to the particular issues that have arisen on that appeal, that, in the interests of justice, the disposal by it of an appeal referred to in that paragraph ought to include its proceeding in the manner specified in the provisions of paragraph (5) that follow subparagraphs (a) and (b) of paragraph (5), then, in disposing of that appeal, it shall proceed in the manner so specified.

• (10) The competent authority shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in paragraph (8) is prosecuted promptly and it shall be the duty of that appellate committee to ensure that any such appeal to it is disposed of as expeditiously as may be and, for that purpose, to take all such steps as are open to it to ensure that, in so far as is practicable, there are no avoidable delays at any stage in the determination of such an appeal.

• (11) Where a competent authority has made a decision to withdraw the approval of an audit firm under this Regulation (that is to say a final decision of the competent authority on the matter after the internal appeal procedures (if any) of it have been employed and exhausted), the audit firm may apply to the High Court for an order suspending the operation of the withdrawal pending the determination by the High Court of an appeal under Regulation 35 that it is making against the withdrawal.

• (12) On the hearing of an application under paragraph (11), the High Court may, subject to paragraph (14), as it considers appropriate and having heard the competent authority concerned and, if it wishes to be so heard, the competent authority with supervisory and other functions (which shall have standing to appear and be heard on the application)—

• (a) grant an order suspending the operation of the withdrawal; or

• (b) refuse to grant such an order,

and an order under subparagraph (a) may provide that the order shall not have effect unless one or more conditions specified in the order are complied with (and such conditions may include conditions requiring the audit firm not to carry out statutory audits save under the supervision of one or more statutory auditors or one or more other statutory audit firms or not to carry out such audits save in specified circumstances).

• (13) The High Court may, on application to it by the audit firm or competent authority concerned, vary or discharge an order under paragraph (12)(a) if it considers it just to do so.

• (14) In considering an application under paragraph (11) or (13), the High Court shall have regard to—