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

• (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 it 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.

Appeals against withdrawal of approval

• (2) An appeal shall not lie under paragraph (1) unless and until any applicable internal appeal procedures of the competent authority have been employed and exhausted by the first-mentioned person in that paragraph.

• (3) An appeal under paragraph (1) shall be made within one month—

• (a) unless subparagraph (b) applies, after the date of the withdrawal of approval; or

• (b) after the confirmation of that withdrawal on foot of the internal appeal procedures of the competent authority having been employed.

• (4) On the hearing of such an appeal, the High Court—

• (a) if it is satisfied that the appellant has established that there was not a reasonable basis for the decision of the competent authority concerned to withdraw the approval, shall cancel the withdrawal of the approval; or

• (b) if it is not so satisfied, shall confirm the withdrawal of the approval.

• (5) For the purposes of paragraph (4), there is a reasonable basis for the decision of the competent authority if, taking into account the expertise and specialist knowledge possessed by the competent authority, the decision (and the process that led to its making) was not vitiated by—

• (a) any serious and significant error or a series of such errors;

• (b) a mistake of law; or

• (c) the evidence, taken as a whole, not supporting the decision.

• (6) The High Court may, on the hearing of an appeal under paragraph (1), consider evidence not adduced or hear an argument not made to the competent authority concerned if the Court is satisfied that—

• (a) there are cogent circumstances justifying the failure to adduce the evidence or make the argument to the competent authority; and

• (b) it is just and equitable for the Court to consider the evidence or hear the argument, as the case may be.

• (7) A notification of the outcome of an appeal under this Regulation (or of any appeal from a decision of the High Court thereunder to the Supreme Court) shall be made by the competent authority concerned to the same persons to whom a notification of a withdrawal of approval must be made by Regulation 37 and (where it applies) Regulation 38.

Amendment of section 24 of Act of 2003 to clarify relationship between powers thereunder and powers under these Regulations

• “(11A) For the avoidance of doubt, the following matters may, without prejudice to the generality of the preceding provisions, be the subject of an investigation by the Supervisory Authority under this section, namely matters—

  • (a) in relation to which a competent authority (within the meaning of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010) has decided not to withdraw a person’s approval under those Regulations as a statutory auditor or audit firm; or

  • (b) which either—

    • (i) have not been considered by such a competent authority as grounds for the withdrawal of a person’s approval under those Regulations as a statutory auditor or audit firm; or

    • (ii) having been considered by it as such grounds, are not considered by it to disclose a prima facie case for proceeding further.

• (11B) Where—

  • (a) those matters are the subject of such an investigation by the Supervisory Authority; and

  • (b) a breach of standards is found by the Supervisory Authority,

  subsection (7)(a) shall be read as requiring or enabling (depending on whether the breach of standards found falls within Part 4 or Chapter 3 of Part 8 of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010) the Supervisory Authority to withdraw the approval under those Regulations of the person concerned as a statutory auditor or audit firm; where such an approval is withdrawn by it, the following provisions of those Regulations shall, with any necessary modifications, apply (and not subsections (8) and (9) of this section) to that withdrawal, namely Regulation 33(11) to (14) (or, as the case may be, Regulation 34(11) to (14)) and Regulation 35.

• (11C) Subsection (11B) does not prejudice the imposition, in the circumstances concerned, by the Supervisory Authority of another sanction referred to in subsection (7)(a) in addition to a withdrawal of approval (where withdrawal of the approval is mandatory under the foregoing Regulations) or in lieu of a withdrawal of approval (where such withdrawal is not so mandatory).”.

Certain persons to be notified of withdrawal

• (a) the competent authority with supervisory and other functions; and

• (b) the competent authority with registration functions,

as soon as possible, but not later than one month after the date of withdrawal of approval.

Other persons to be notified of withdrawal

• (a) the approval under these Regulations of a statutory auditor or audit firm is withdrawn for any reason by a competent authority, and

• (b) the statutory auditor or audit firm is also approved in another Member State,

the competent authority shall, in addition to making the communication specified in Regulation 37, notify the relevant competent authorities of Member States where the statutory auditor or audit firm is also approved and entered in the relevant register of the fact of the withdrawal and the reasons for it.

• (2) The notification under this Regulation shall be made as soon as possible, but not later than one month after the date of withdrawal of approval.

• (3) If the approval under these Regulations of a statutory auditor or audit firm is withdrawn by the competent authority with supervisory and other functions under section 24 (as amended by these Regulations) of the Act of 2003, this Regulation and Regulation 37 (other than paragraph (a) of it) shall apply in relation to the withdrawal as if the references in them to the competent authority were references to the competent authority with supervisory and other functions and with any other necessary modifications.

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

Chapter 1 Standards for statutory auditors and audit firms

Continuing education

• (2) That condition is one requiring the person to take part in appropriate programmes of continuing education in order to maintain his or her theoretical knowledge, professional skills and values at a sufficiently high level.

• (3) In the case of a statutory auditor who is a person in relation to whom a competent authority may, by virtue of Regulation 17, perform functions under these Regulations but either—

• (a) the approval of whom as a statutory auditor has not been granted by that competent authority; or

• (b) the person is a person referred to in Regulation 25(1),

a like obligation to that mentioned in paragraph (2) as regards taking part in appropriate programmes of continuing education is, by virtue of this paragraph, imposed on him or her.

Professional ethics

Independence and objectivity

Standards for purposes of Regulations 39 to 41

• (a) have adequate standards requiring those auditors and audit firms to comply with the obligations specified in Regulations 39 to 41, and

• (b) institute adequate arrangements for the effective monitoring and enforcement of compliance with such standards.

• (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, in accordance with section 9(2)(c) of the Act of 2003, by the competent authority with supervisory and other functions.

Arrangements for enforcement of standards

• (a) sanctions which include—

• (i) at the discretion of the competent authority, in accordance with the third-mentioned Regulation, the withdrawal of approval under these Regulations as a statutory auditor or audit firm;

• (ii) appropriate penalties;

• (iii) appropriate disciplinary measures;

• (iv) appropriate regulatory sanctions,

and

• (b) making available to the public information relating to the measures taken and the penalties imposed in respect of statutory auditors and audit firms.

Chapter 2 Confidentiality and Professional Secrecy

Rules of confidentiality to apply

• (2) The statutory auditor or audit firm, as the case may be, shall comply with those rules of confidentiality and secrecy.

• (3) Where the statutory auditor or audit firm is not a member of a recognised accountancy body, then the preceding provisions of this Regulation shall apply as if the references to the rules of confidentiality and secrecy were references to the rules of confidentiality and secrecy of the competent authority that, by virtue of Regulation 17, may perform functions in relation to him, her or it.

Supplemental provisions in relation to Regulation 44

• (a) that the statutory auditor or audit firm referred to in that Regulation has ceased to be engaged in that audit assignment; or

• (b) that the auditor or audit firm referred to in that Regulation ceases to be—

• (i) a statutory auditor or audit firm; or

• (ii) an auditor or audit firm.

• (2) Accordingly, in such a case—

• (a) the statutory auditor or, as the case may be, audit firm, or

• (b) the former such auditor or, as the case may be, audit firm,

shall continue to comply with the rules of confidentiality and secrecy concerned.

Saving

Incoming statutory auditor or audit firm to be afforded access to information

• (2) This Regulation applies to a replacement of a statutory auditor or audit firm that occurs on or after the date falling 3 months after the date of the making of these Regulations.

Access by competent authority to audit documents

• (a) furnish to it specified documents; or

• (b) permit it to have access, under specified circumstances, to all relevant documents in the possession or control of the auditor or audit firm,

within a specified period.

• (2) Without prejudice to the generality of paragraph (1), the powers under that paragraph are exercisable in relation to a statutory auditor or audit firm where a complaint is made to the competent authority that the statutory auditor or audit firm has failed to comply with any requirement of these Regulations.

• (3) Where the powers under paragraph (1) are exercisable, the following additional power may be exercised by the competent authority if it considers that the exercise of it is reasonably necessary to enable it to clarify any matter arising from its inspection of the documents concerned, namely a power to require the statutory auditor or a member of the statutory audit firm to—

• (a) attend before it; and

• (b) explain any entry in the documents concerned and otherwise give assistance to it in clarifying the matter concerned.

• (4) In this Regulation “specified” means specified in the notice concerned.

• (5) Without prejudice to paragraph (6), a person who fails, without reasonable excuse, to comply with a requirement under paragraph (1) or (3) is guilty of an offence and 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.

• (6) Where a person fails to comply with a requirement under paragraph (1) or (3), the competent authority concerned may apply to the High Court for an order compelling compliance by the person with the requirement, and, on the hearing of such application, the High Court may make such an order or such other order as it thinks just.

• (7) Nothing in this Regulation derogates from—

• (a) the powers exercisable by a disciplinary committee in the circumstances, and under the conditions, specified in section 192A of the Act of 1990; or

• (b) the bye-laws of a competent authority.

Access by competent authority with supervisory and other functions to documents in possession of competent authority

• (a) furnish to it specified documents; or

• (b) permit it to have access, under specified circumstances, to all relevant documents in the possession or control of the authority,

within a specified period.

• (2) Without prejudice to the generality of paragraph (1), the powers under that paragraph are exercisable in relation to a competent authority where a complaint is made to the competent authority with supervisory and other functions that the first-mentioned competent authority has failed to comply with any requirement of these Regulations.

• (3) Where the powers under paragraph (1) are exercisable, the following additional power may be exercised by the competent authority with supervisory and other functions if it considers that the exercise of it is reasonably necessary to enable it to clarify any matter arising from its inspection of the documents concerned, namely a power to require an officer of the competent authority to—

• (a) attend before it; and

• (b) explain any entry in the documents concerned and otherwise give assistance to it in clarifying the matter concerned.

• (4) In this Regulation “specified” means specified in the notice concerned.

• (5) A person who fails, without reasonable excuse, to comply with a requirement under paragraph (1) or (3) is guilty of an offence and 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.

• (6) Nothing in this Regulation derogates from the powers exercisable by the competent authority with supervisory and other functions in the circumstances, and under the conditions, specified in section 23 or 24 of the Act of 2003.

Professional privilege

No liability for acts done in compliance with Regulations

• (2) No liability to the company audited or being audited, its shareholders, creditors, or other interested parties shall attach to the statutory auditor or audit firm by reason of such compliance.

• (3) For the avoidance of doubt, nothing in this Regulation affects the liability of a statutory auditor or audit firm for negligence or breach of duty in the conduct of a statutory audit by him, her or it.

Restriction of section 31 of Act of 2003

Further amendment of section 31 of Act of 2003

• (a) in paragraph (a), by substituting “section 23, 24 or 26,” for “section 23, 24 or 26, or”;

• (b) in paragraph (b)(xv), by substituting “the purposes of this section, or” for “the purposes of this section.”; and

• (c) by inserting the following paragraph after paragraph (b):

• “(c) if the information disclosed is to an individual or entity performing functions in another state which are similar to the functions the Authority has by virtue of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 (including functions under this Act which the Authority has by virtue of those Regulations), provided that restrictions equivalent to those provided by this section apply in that state in relation to that individual or entity with respect to disclosure of information so given.”.

Chapter 3 Auditing Standards and Audit Reporting

International auditing standards to be applied

• (2) The reference in paragraph (1) to the adoption of international auditing standards is a reference to the adoption by the Commission, in accordance with the procedure referred to in Article 48(2) of the Directive, of international auditing standards.

Audit of group accounts — responsibility of group auditor

• (a) the group auditor shall bear the full responsibility for the audit report in relation to the group accounts;

• (b) the group auditor shall carry out a review, and maintain documentation of such review, of the work of whoever of the following performed audit work for the purposes of the group audit, namely one or more:

• (i) third-country auditors;

• (ii) statutory auditors;

• (iii) third-country audit entities;

• (iv) statutory audit firms;

• (v) Member State auditors;

• (vi) Member State audit firms.

• (2) The documentation referred to in paragraph (1)(b) to be retained by the group auditor shall be such as enables the competent authority to review the work of the group auditor properly.

Further responsibility of group auditor

• (a) a statutory audit of the group accounts of a group of undertakings is carried out, and

• (b) a component of the group of undertakings is audited by one or more third-country auditors or audit entities that have no working arrangement as referred to in Regulation 109(1)(c) or 110(c),

the group auditor is responsible for ensuring proper delivery, when requested, to the competent authority with supervisory and other functions of the documentation of the audit work performed by those auditors or audit entities, including the working papers relevant to the group audit.

• (2) To ensure such delivery, the group auditor shall retain a copy of such audit documentation, or alternatively—

• (a) agree with the one or more third-country auditors or audit entities concerned arrangements for the group auditor’s proper and unrestricted access, upon request, to the documentation, or

• (b) take any other appropriate action.

• (3) Where legal or other impediments prevent audit working papers from being passed from a third country to the group auditor, the documentation retained by the group auditor shall include—

• (a) evidence that he or she has undertaken the appropriate procedures in order to gain access to the audit documentation, and

• (b) in the case of an impediment other than a legal one arising from legislation of the third country or countries concerned, evidence supporting such an impediment.

Amendment of section 193 of Act of 1990

• (a) in subsection (4D), by deleting paragraph (a); and

• (b) by inserting the following subsection after subsection (4F):

• “(4G)

  • (a) The auditors’ report shall state the name of the auditor and be signed, as provided for in paragraph (b), and dated.

  • (b) Where the auditor is—

    • (i) a statutory auditor (within the meaning of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010, the report shall be signed by that person, or

    • (ii) a statutory audit firm (within the meaning of the foregoing Regulations), the report shall be signed by—

      • (I) the statutory auditor (or, where more than one, each statutory auditor) designated by the statutory audit firm for the particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm, or

      • (II) in the case of a group audit, at least the statutory auditor (or, where more than one, each statutory auditor) designated by the statutory audit firm as being primarily responsible for carrying out the statutory audit at the level of the group,

      in his or her own name, for and on behalf of, the audit firm.”.

Chapter 4 Transparency report

Transparency report

• (a) the financial year of the statutory auditor or audit firm referred to in paragraph (2); and

• (b) each subsequent financial year of the statutory auditor or audit firm,

a report in relation to that financial year (in these Regulations referred to as a “transparency report”).

• (2) The financial year referred to in paragraph (1)(a) is one ending on or after the date falling 3 months after the date of the making of these Regulations.

Contents of transparency report — general

• (a) approved by the statutory auditor or audit firm; and

• (b) signed—

• (i) in the case of a report prepared by a statutory auditor — by him or her; or

• (ii) in the case of a report prepared by a statutory audit firm — by a partner or other member of the firm who has senior executive responsibility in relation to the affairs of the firm.

Publication of transparency report

• (a) is made available on a website, being a website maintained by or on behalf of the statutory auditor or audit firm, not later than 3 months after the end of the financial year of the statutory auditor or audit firm to which it relates, and

• (b) remains available for a period of 3 years reckoned from the end of the period of 3 months referred to in paragraph (a).

Specific requirements in relation to contents of transparency report

• (a) where the subject of the report is a statutory audit firm (referred to in this Regulation as the “subject”), contain at least the information specified hereafter in this Regulation, and

• (b) where the subject of the report is a statutory auditor (also referred to in this Regulation as the “subject”), contain at least so much of the information specified hereafter in this Regulation as is applicable in the case of an individual,

namely—

• (i) a description of the legal structure and ownership of the subject;

• (ii) where the subject belongs to a network, a description of the network and the legal and structural arrangements of the network;

• (iii) a description of the governance structure of the subject;

• (iv) a description of the internal quality control system of the subject and a statement by the administrative or managerial body on the effectiveness of its functioning;

• (v) an indication of when the last quality assurance review referred to in Chapter 2 of Part 8 took place;

• (vi) a list of public-interest entities for which the subject has carried out statutory audits during the preceding financial year;

• (vii) a statement concerning the subject’s independence practices which also confirms that an internal review of independence compliance has been conducted;

• (viii) a statement on the policy followed by the subject concerning the continuing education of statutory auditors referred to in Regulation 39;

• (ix) financial information showing the significance, from the perspective of the market, of the subject, such as the total turnover divided into fees from the statutory audit of annual and group accounts, and fees charged for other assurance services, tax advisory services and other non-audit services;

• (x) information concerning the basis for the remuneration of the principals or partners.

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

Amendment of Principal Act with regard to removal of auditors

• (a) in section 160, by inserting, in subsection (5), “and subject to section 161C” after “in relation to his removal under this subsection”; and

• (b) by inserting the following sections after section 161:

“Duty of auditor to notify Supervisory Authority regarding cessation of office.

161A. (1) Where, for any reason, during the period between the conclusion of the last annual general meeting and the conclusion of the next annual general meeting of a company, an auditor ceases to hold office either by virtue of section 160, or section 185 of the Act of 1990, the auditor shall—

• (a) in such form and manner as the Supervisory Authority specifies, and

• (b) within 1 month after the date of that cessation,

notify the Supervisory Authority that the auditor has ceased to hold office.

• (2) That notification shall be accompanied by:

  • (a) in the case of resignation of the auditor, the notice served under section 185(1) of the Act of 1990, or

  • (b) in the case of removal of the auditor at a general meeting pursuant to section 160(5), a copy of any representations in writing made to the company, pursuant to section 161(3), in relation to the intended resolution except where such representations were not sent out to the members of the company in consequence of an application to the court under section 161(4).

• (3) Where, in the case of resignation, the notice served under section 185(1) of the Act of 1990 is to the effect that there are no circumstances connected with the resignation to which it relates that the auditor concerned considers should be brought to the notice of members or creditors of the company, the notification under subsection (1) shall also be accompanied by a statement of the reasons for the auditor’s resignation.

• (4) In this section—

  • (a) ‘resignation’ includes an indication of unwillingness to bere-appointed at an annual general meeting; and

  • (b) a reference to a notice served under section 185(1) of the Act of 1990 includes a reference to a notice given by the auditor under section 160(2)(c).

  Duty of company to notify Supervisory Authority of auditor’s cessation of office.

  161B. (1) Where, for any reason, during the period between the conclusion of the last annual general meeting and the conclusion of the next annual general meeting, an auditor ceases to hold office either by virtue of section 160, or section 185 of the Act of 1990, the company shall—

  • (a) in such form and manner as the Supervisory Authority specifies, and

  • (b) within 1 month after the date of that cessation,

  notify the Supervisory Authority that the auditor has ceased to hold office.

• (2) That notification shall be accompanied by:

  • (a) in the case of resignation of the auditor, the notice served by the auditor under section 185(1) of the Act of 1990, or

  • (b) in the case of removal of the auditor at a general meeting pursuant to section 160(5)—

    • (i) a copy of the resolution removing the auditor, and

    • (ii) a copy of any representations in writing made to the company, pursuant to section 161(3), by the outgoing auditor in relation to the intended resolution except where such representations were not sent out to the members of the company in consequence of an application to the court under section 161(4).

• (3) In this section—

  • (a) ‘resignation’ includes an indication of unwillingness to be re-appointed at an annual general meeting; and

  • (b) a reference to a notice served under section 185(1) of the Act of 1990 includes a reference to a notice given by the auditor under section 160(2)(c).

  Restrictions on removal of auditor.

  161C. (1) The passing of a resolution to which this section applies shall not be effective with respect to the matter it provides for unless—

  • (a) in case the resolution provides for the auditor’s removal from office, there are good and substantial grounds for the removal related to the conduct of the auditor with regard to the performance of his duties as auditor of the company or otherwise; or

  • (b) in the case of any other resolution to which this section applies, the passing of the resolution is, in the company’s opinion, in the best interests of the company,

  but—

  - (i) for the foregoing purposes, diverging opinions on accounting treatments or audit procedures cannot constitute the basis for the passing of any such resolution, and
  
  - (ii) in paragraph (*b*) ‘best interests of the company’ does not include any illegal or improper motive with regard to avoiding disclosures or detection of any failure by the company to comply with the Companies Acts.
  

• (2) This section applies to—

  • (a) a resolution removing an auditor from office,

  • (b) a resolution at an annual general meeting appointing somebody other than the retiring auditor as auditor,

  • (c) a resolution providing expressly that the retiring auditor shall not be re-appointed.”.

PART 6 Public Register

Public register

• (a) statutory auditors and audit firms; and

• (b) third-country auditors and audit entities.

• (2) The date referred to in paragraph (1) is the date falling 3 months after the date of making of these Regulations.

Notification of information to competent authority with registration functions

• (2) On receipt of that notification and its having carried out any verification of the information as seems to it to be necessary, the competent authority shall notify to the competent authority with registration functions—

• (a) the relevant information contained in the first-mentioned notification; and

• (b) (i) the individual identification number assigned by it to the auditor, audit firm or third-country auditor under Regulation 19(6); and

• (ii) where—

• (I) under Regulation 19(6) such a number exists; and

• (II) by reason of the circumstances referred to in paragraph (4)(b) the relevant information notified to the competent authority does not include that number,

the number referred to in paragraph 1(c)(ii) or 2(g) of Schedule 1.

• (3) The notifications under paragraphs (1) and (2) shall each be made in such form and manner as the competent authority with registration functions specifies.

• (4) In this Regulation “relevant information” means the information set out in paragraph 1 or 2, as the case may be, of Schedule 1, other than that set out—

• (a) in subparagraph (b) of that paragraph 1 or 2; or

• (b) if, due to the simultaneous registration of a statutory audit firm and the statutory auditors that comprise that firm, the number there referred to is not available at that time, in subparagraph (c)(ii) of that paragraph 1 or subparagraph (g) of that paragraph 2.

Prohibition on certain acts unless registered

• (a) act as; or

• (b) represent himself or herself, or hold himself or herself out, as being,

a person falling within a category of person entered, or entitled to be entered, in the public register unless the person is entitled to be entered, and the name of the person is duly entered, in the public register.

• (2) The date referred to in paragraph (1) is the date falling 3 months after the date of making of these Regulations.

• (3) A person who contravenes paragraph (1) is guilty of an offence and is liable—

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

• (b) on conviction on indictment, to a fine not exceeding €50,000.

• (4) If the contravention in respect of which a person is convicted of an offence under paragraph (3) 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.

Obligation of statutory auditor or audit firm to notify certain information

• (2) On receipt of that notification and its having carried out any verification of the information stated to have changed as seems to it to be necessary, the competent authority shall notify the change in information to the competent authority with registration functions.

• (3) The competent authority with registration functions shall, as soon as may be but not later than one month after receipt of the notification referred to in paragraph (2), amend the public register to reflect the change of information so notified.

• (4) A person who fails, without reasonable excuse, to comply with paragraph (1) is guilty of an offence and is liable, on summary conviction, to a fine not exceeding €5,000.

Information must be signed

• (2) The signature referred to in paragraph (1) may be an electronic signature (as defined in point 1 of Article 2 of Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures) if the provision of a signature in that form complies with any requirements in that behalf of the competent authority with registration functions of the kind referred to in section 13(2)(a) of the Electronic Commerce Act 2000 (No. 27 of 2000).

• (3) If information is notified under Regulation 64(1) or 66(1) without being signed as required by paragraph (1), the statutory auditor or audit firm concerned is guilty of an offence and is liable, on summary conviction, to a fine not exceeding €5,000.

Transitional provision

• (2) A person referred to in Regulation 25(2) shall, within one month after the commencement of these Regulations, notify to the competent authority with registration functions the relevant information (within the meaning of Regulation 64) in respect of him or her.

• (3) A person who fails, without reasonable excuse, to comply with paragraph (1) or (2) is guilty of an offence and is liable, on summary conviction, to a fine not exceeding €5,000.

Language of information to be entered in register

PART 7 Independence

Requirement for independence — general

• (a) the statutory auditor or audit firm, as the case may be; and

• (b) in the latter case, any statutory auditor of the statutory audit firm,

shall be independent of, and not involved in the decision-taking of, the audited entity.

Prohibited relationships — specific provisions to secure independence

• (2) That relationship is any direct or indirect financial, business, employment or other relationship (which may include the provision of additional non-audit services) from which an objective, reasonable and informed third party would conclude that the statutory auditor’s or audit firm’s independence is compromised.

• (3) If the statutory auditor’s or audit firm’s independence is affected by threats, such as self-review, self-interest, advocacy, familiarity or trust or intimidation, the statutory auditor or audit firm shall apply safeguards in order to mitigate those threats. If the significance of the threats compared to the safeguards applied is such that his, her or its independence is compromised, the statutory auditor or audit firm shall not carry out the statutory audit.

• (4) Without prejudice to the generality of the preceding paragraphs, a person shall not act as a statutory auditor of a company if he or she is—

• (a) an officer or servant of the company,

• (b) a person who has been an officer or servant of the company within a period in respect of which accounts would fall to be audited by the person if he or she were appointed auditor of the company,

• (c) a parent, spouse, brother, sister or child of an officer of the company,

• (d) a person who is a partner of or in the employment of an officer of the company,

• (e) a person who is disqualified under this paragraph for appointment as auditor of any other body corporate that is a subsidiary or holding company of the company or a subsidiary of the company’s holding company, or would be so disqualified if the body corporate were a company,

• (f) a person who is disqualified under section 187(2)(f) of the Act of 1990 for appointment as a public auditor of a society that is a subsidiary or holding company of the company or a subsidiary of the company’s holding company, or

• (g) a person in whose name a share in the company is registered, whether or not that person is the beneficial owner of the share.

• (5) Without prejudice to the generality of paragraphs (1) to (3), a statutory audit firm, regardless of its legal structure, shall not carry out a statutory audit of a company if—

• (a) any principal of the audit firm is an officer or servant of the company,

• (b) any principal of the audit firm has been an officer or servant of the company within a period in respect of which accounts would fall to be audited by the firm if the firm was appointed auditor of the company,

• (c) the firm is disqualified under this paragraph for appointment as auditor of any other body corporate that is a subsidiary or holding company of the company or a subsidiary of the company’s holding company, or would be so disqualified if the body corporate were a company, or

• (d) the firm is disqualified under section 187(2)(f) of the Act of 1990 for appointment as a public auditor of a society that is a subsidiary or holding company of the company or a subsidiary of the company’s holding company.

• (6) Without prejudice to the generality of paragraphs (1) to (3), a person shall not carry out a statutory audit of a company on behalf of a statutory audit firm if he or she is—

• (a) a person in whose name a share in the company is registered, whether or not that person is the beneficial owner of the share; or

• (b) a parent, spouse, brother, sister or child of an officer of the company.

• (7) In this Regulation “society” means a society registered under the Industrial and Provident Societies Acts 1893 to 1978.

Additional requirements in case of public-interest entities

• (a) in circumstances which involve a case of self-review or self-interest, and

• (b) from the circumstances of which case an objective, reasonable and informed third party would conclude that (so as to safeguard the statutory auditor’s or audit firm’s independence) the auditor’s or firm’s not carrying out that audit would be appropriate.

Threats to independence and other information to be recorded

Non-intervention by certain persons in execution of audit

• (a) the owners or shareholders of a statutory audit firm or the owners or shareholders of an affiliated firm; nor

• (b) the members of the administrative, management or supervisory body of such a firm or of an affiliated firm,

shall intervene in the execution of a statutory audit in any way which jeopardises the independence and objectivity of the statutory auditor who carries out the statutory audit on behalf of the statutory audit firm.

Restrictions with regard to fees

• (a) are not to be influenced by, or determined by, the provision of additional services to the audited entity; and

• (b) are not to be based on any form of contingency.

Additional reporting and other requirements in case of public-interest entities

• (a) confirm annually, in writing, to the audit committee of the entity his, her or its independence from the public-interest entity;

• (b) disclose annually to such audit committee any additional services provided to the public-interest entity; and

• (c) discuss with such audit committee the threats to the independence of the auditor or firm and the safeguards applied to mitigate those threats as documented by him, her or it under Regulation 73.

Rotation of key audit partner in cases of public-interest entities

“7 year period” shall be read in accordance with paragraph (2);

“relevant date” means the date of appointment, being a date falling on or after 29 June 2008—

• (a) of the statutory auditor or audit firm (to which the key audit partner or partners referred to in paragraph (2) belongs or belong);

• (b) to the entity referred to in that paragraph.

• (2) The key audit partner or partners responsible for carrying out a statutory audit of a public-interest entity shall not engage in a statutory audit of the entity at any time that, subject to paragraph (3), is subsequent to the period of 7 years after the relevant date (in paragraphs (3) and (4) referred to as the “7 year period”).

• (3) The prohibition imposed by paragraph (2) on the key audit partner or partners concerned engaging in a statutory audit of the entity concerned shall cease to have effect 2 years after the 7 year period, but this is without prejudice to paragraph (4).

• (4) This Regulation shall be construed and have effect so that, in the event of any period—

• (a) elapsing subsequent to the 7 year period, and

• (b) being a period of a duration of 7 years during which the statutory auditor or audit firm referred to in paragraph (1) continues to stand appointed to the public-interest entity concerned,

a like prohibition, and a like cessation of that prohibition, to that provided by paragraphs (2) and (3), respectively, shall apply to key audit partner or partners responsible for carrying out a statutory audit of that entity.

Moratorium on taking up management position in audited public-interest entity

• (a) a statutory auditor who carries out a statutory audit of a public-interest entity; or

• (b) the key audit partner who carries out, on behalf of a statutory audit firm, a statutory audit of a public-interest entity,

a key management position in that entity before a period of at least 2 years has elapsed since the day following (should such occur) his or her resignation as a statutory auditor or key audit partner from the audit engagement.

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

Chapter 1 Public Oversight

Amendment of section 10 of Act of 2003

• (a) in subsection (4), by inserting “(whether an individual or otherwise)” after “person” in paragraph (c); and

• (b) in subsection (5)—

• (i) in paragraph (a), by substituting “Part),” for “Part), or”,

• (ii) in paragraph (b), by substituting “section 9(2)(ma),” for “section 9(2)(ma).”, and

• (iii) by inserting the following paragraphs after paragraph (b):

• “(c) provisions of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010, or

• (d) rules adopted by the Supervisory Authority under subsection (3) concerning the matters that relate to its functions under section 9(2)(mb).”.

System of public oversight — responsibility of competent authority with supervisory and other functions

• (a) the provisions of the Act of 2003 and the rules, regulations and guidelines made or adopted under them by the competent authority with supervisory and other functions;

• (b) the provisions of these Regulations; and

• (c) the provisions generally of the Companies Acts.

• (2) The competent authority with supervisory and other functions shall be the competent authority in the State with respect to the system of public oversight of statutory auditors and audit firms.

• (3) As such, and without prejudice to its functions as provided under the Act of 2003 or Regulation 83, the competent authority with supervisory and other functions shall generally superintend—

• (a) the approval and registration of statutory auditors and audit firms;

• (b) the adoption of standards on professional ethics, internal quality control of audit firms and auditing; and

• (c) continuing education, quality assurance, and investigative and disciplinary systems.

Further amendments of Act of 2003

• (a) in section 11—

• (i) in paragraph (b) of subsection (1), by substituting “office, is a director,” for “office, is a director.”, and

• (ii) by inserting at the end of subsection (1) the following:

“and the persons appointed as such directors shall be persons who are knowledgeable in areas relevant to statutory audit.”;

• (b) in section 23, by adding the following subsection:

• “(13) For the purposes of this section ‘member’, in addition to the meaning assigned to that expression by section 4(1), includes, in relation to a prescribed accountancy body that is a recognised accountancy body, an individual or firm who or which, though not a member of the recognised accountancy body, is an individual or firm in relation to whom that body may exercise powers under the European Communities (Statutory Audits) (Directive 2006/43/EC) 2010.”; and

• (c) in section 24, by adding the following subsection:

• “(13) For the purposes of this section ‘member’, in addition to the meaning assigned to that expression by section 4(1), includes, in relation to a prescribed accountancy body that is a recognised accountancy body, an individual or firm who or which, though not a member of the recognised accountancy body, is an individual or firm in relation to whom that body may exercise powers under the European Communities (Statutory Audits) (Directive 2006/43/EC) 2010.”.

Chapter 2 Quality Assurance

Competent authority with supervisory and other functions to engage in oversight of quality assurance

• (2) The terms and conditions referred to in section 9(2)(b)(i) and (ii) of the Act of 2003 (which relate to the powers, under section 192 of the Act of 1990, of the competent authority with supervisory and other functions) may be attached to the recognition of bodies of accountants for the purpose of facilitating the performance by that competent authority of its function of public oversight of quality assurance under this Chapter as well as for any other lawful purpose.

System of quality assurance to be put in place

• (a) its members’ activities as statutory auditors and audit firms; and

• (b) the activities, as statutory auditors and audit firms, of persons who, though not members of the authority, are persons in relation to whom it may perform functions under these Regulations.

• (2) On and from the date specified in paragraph (3), the competent authority with supervisory and other functions shall ensure that it has in place a system of quality assurance of registered third-country auditors and audit entities to whom this Part applies by virtue of Regulation 114(1).

• (3) The date referred to in paragraph (2) is the date falling 6 months after the date of the making of these Regulations.

Organisation of quality assurance system

• (a) the system is independent of the reviewed statutory auditors and audit firms;

• (b) the funding for the system is secure and free from any possible undue influence by statutory auditors or audit firms;

• (c) the system has adequate resources;

• (d) the persons who carry out quality assurance reviews have appropriate professional education and relevant experience in statutory audit and financial reporting combined with specific training on quality assurance reviews;

• (e) the selection of reviewers for specific quality assurance review assignments is effected in accordance with an objective procedure designed to ensure that there are no conflicts of interest between reviewers and the statutory auditor or audit firm under review;

• (f) the scope of quality assurance reviews, supported by adequate testing of selected audit files, includes an assessment of:

• (i) compliance with applicable auditing standards and independence requirements;

• (ii) the quantity and quality of resources spent;

• (iii) the audit fees charged; and

• (iv) the internal quality control system of the audit firm;

• (g) each quality assurance review is the subject of a written report which includes the main conclusions of the review;

• (h) a quality assurance review of each statutory auditor or audit firm takes place:

• (i) in the case of a statutory auditor or audit firm that carries out audits of one or more public-interest entities, at least, subject to paragraph (3), every 3 years;

• (ii) in the case of a statutory auditor or audit firm that does not carry out audits of any public-interest entity, at least, subject to paragraph (4), every 6 years;

• (i) statutory auditors and audit firms take all reasonable steps to ensure that recommendations arising from quality assurance reviews of them are implemented within a reasonable period; and

• (j) there is published annually by it the overall results of quality assurance reviews carried out by it in the year in question.

• (2) If a statutory auditor or audit firm fails to take all reasonable steps to ensure that recommendations arising from a quality assurance review of him, her or it are implemented within a reasonable period, the competent authority concerned shall take appropriate action, including, where applicable, subjecting the statutory auditor or audit firm, as the case may be, to the system of disciplinary actions or penalties referred to in Regulation 86 and Chapter 3.

• (3) For the purpose of paragraph (1)(h)(i), the period of 3 years there mentioned that shall first apply shall be reckoned from a date beginning no earlier than the date of the making of these Regulations.

• (4) For the purpose of paragraph (1)(h)(ii), the period of 6 years there mentioned that shall first apply shall be reckoned from a date beginning no earlier than the date of the making of these Regulations.

Quality assurance review deemed to include individual auditors in certain cases

Right of competent authority as regards professional discipline

• (2) The powers, under paragraph (c) of section 9(2) of the Act of 2003, of the competent authority with supervisory and other functions to require changes of the kind, and to approve the matters, referred to in that paragraph (c) may be exercised for the purpose of facilitating the performance by that competent authority of its function of public oversight of quality assurance under this Chapter as well as for any other lawful purpose.

Chapter 3 Systems of investigations and penalties

System of investigation and penalties

Duty of each competent authority with regard to sanctions

• (2) Those contractual and other arrangements shall comply with the requirements of procedural fairness.

• (3) By virtue of this Regulation, the contractual and other arrangements referred to in paragraph (1) that subsist for the time being between a competent authority and its members shall operate and have effect so as to enable the imposition by the competent authority—

• (a) of penalties of a like character to those; and

• (b) in the cases,

referred to in that paragraph in respect of persons who, though not members of the authority, are persons in relation to whom it may, by virtue of Regulation 17, perform functions under these Regulations.

Scope of penalties and publicity in relation to their imposition

• (2) Paragraph (1) is without prejudice to Regulations 33 and 34 (conditions for mandatory withdrawal in case of statutory auditor or audit firm).

• (3) Unless there do not exist internal appeal procedures of the competent authority as referred to in Regulation 33(7)(a) or 34(7)(a), the reference in paragraph (4) to a competent authority shall be read as a reference to a competent authority acting through the disciplinary committee that deals with matters at first instance.

• (4) Without prejudice to Regulation 17(8) and (9), a competent authority may, save where, in its opinion, proceeding in this manner would not be in the public interest, adopt procedures analogous to those in Regulation 33(5) or 34(5) as regards affording the statutory auditor or audit firm an opportunity to rectify the matters that have occasioned the investigation concerned and the proposed exercise of the power of withdrawal of approval referred to in paragraph (1).

• (5) If—

• (a) there exist internal appeal procedures, as referred to in Regulation 33(7)(a) or 34(7)(a), 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 (3), 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).

• (6) If—

• (a) there exist internal appeal procedures, as referred to in Regulation 33(7)(a) or 34(7)(a), of the competent authority; and

• (b) the investigation and disciplinary procedures of the competent authority do not provide, as mentioned in paragraph (5)(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 or audit firm 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, she or it is making under those internal appeal procedures and, where such an application is made, paragraphs (9) to (12) 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.

• (7) If the relevant appellate committee referred to in paragraph (6) 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 procedures analogous to those, as mentioned in paragraph (4), provided by Regulation 33(5) or 34(5) being adopted by it, then, in disposing of that appeal, it shall adopt procedures analogous to those in Regulation 33(5) or 34(5).

• (8) The competent authority shall take all reasonable steps to ensure that any appeal to the relevant appellate committee referred to in paragraph (6) 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.

• (9) Where a competent authority has made a decision to withdraw the approval of an auditor or 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 auditor or 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 he, she or it is making against the withdrawal.

• (10) On the hearing of an application under paragraph (9), the High Court may, subject to paragraph (12), 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 or audit firm not to carry out statutory audits save under the supervision of one or more other statutory auditors or audit firms or not to carry out such audits save in specified circumstances).

• (11) The High Court may, on application to it by the auditor or audit firm or competent authority concerned, vary or discharge an order under paragraph (10)(a) if it considers it just to do so.

• (12) In considering an application under paragraph (9) or (11), 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, her or it 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.

• (13) The fact of one or more—

• (a) measures having been taken against, or

• (b) one or more penalties having been imposed on,

a statutory auditor or audit firm (whether under this Part or Part 4) by a competent authority shall be disclosed by the competent authority to the public and that disclosure shall, if the competent authority considers it appropriate, include such further particulars with respect to the matter as it thinks fit.

• (14) Subject to paragraph (15), the manner of such disclosure, and the time at which it is made, shall be such as the competent authority determines to be appropriate.

• (15) The competent authority shall establish, and reduce to writing, criteria the purpose of which is to govern the determination by it of the matters referred to in paragraph (14); those criteria shall require the prior approval of the competent authority with supervisory and other functions.

Further amendment of section 24 of Act of 2003

• (a) in paragraph (b) of subsection (7), by substituting “subsection (6),” for “subsection (6).”;

• (b) by inserting at the end of subsection (7) the following:

“and the fact of a sanction having been imposed on the member by the Supervisory Authority shall be disclosed by the Authority to the public and that disclosure shall include—

• (i) in a case where the member is making an appeal to the High Court against the decision of the Supervisory Authority, an indication that that is so, and

• (ii) if the Supervisory Authority considers it appropriate, such further particulars with respect to the matter as it thinks fit.”;

and

• (c) by inserting the following after subsection (7):

• “(7A) The manner of a disclosure under subsection (7), and the time at which it is made, shall be such as the Supervisory Authority determines to be appropriate.”.

PART 9 Audit Committees

Audit committees in respect of public-interest entities

• (2) The date referred to in paragraph (1) is the date falling 6 months after the date of the making of these Regulations.

• (3) The members of the audit committee shall include not less than 2 independent directors of the public-interest entity, that is to say, directors—

• (a) the terms of appointment of whom indicate or state that they are being appointed in a non-executive capacity; and

• (b) who otherwise possess the requisite degree of independence (particularly with regard to each of them satisfying the condition in paragraph (4)) so as to be able to contribute effectively to the committee’s functions.

• (4) The condition referred to in paragraph (3)(b) is that each director there referred to does not have, and at no time during the period of 3 years preceding his or her appointment to the committee did have—

• (a) a material business relationship with the public-interest entity, either directly, or as a partner, shareholder, director or senior employee of a body that has such a relationship with the entity; or

• (b) a position of employment in the public-interest entity.

• (5) One of the directors referred to in paragraph (3) shall be a person who has competence in accounting or auditing.

• (6) Without prejudice to the responsibility of the board of directors, the responsibilities of the audit committee shall include:

• (a) the monitoring of the financial reporting process;

• (b) the monitoring of the effectiveness of the entity’s systems of internal control, internal audit and risk management;

• (c) the monitoring of the statutory audit of the annual and consolidated accounts; and

• (d) the review and monitoring of the independence of the statutory auditor or audit firm, and in particular the provision of additional services to the audited entity.

• (7) Any proposal of the board of directors of a public-interest entity with respect to the appointment of a statutory auditor or audit firm to the entity shall be based on a recommendation made to the board by the audit committee.