S.I. No. 312/2016 - European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016

ARRANGEMENT OF REGULATIONS

PART 1 PRELIMINARY MATTERS

1.

2.

3.

4.

PART 2 AMENDMENT OF COMPANIES ACT 2014

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

PART 3 DESIGNATION OF COMPETENT AUTHORITY AND ASSIGNMENT OF FUNCTIONS

32.

33.

34.

35.

36.

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

37.

38.

39.

40.

41.

42.

43.

44.

45.

46.

47.

48.

Chapter 2 Aptitude Test

49.

50.

51.

Chapter 3 Withdrawal of Approval

52.

53.

54.

55.

56.

PART 5 STANDARDS AND PROVISIONS APPLICABLE TO STATUTORY AUDITORS AND AUDIT FIRMS

Chapter 1 Appointment of Statutory Auditors or Audit Firms

57.

58.

59.

60.

61.

Chapter 2 Standards for Statutory Auditors

62.

63.

64.

65.

66.

Chapter 3 Confidentiality and Professional Secrecy

67.

68.

69.

70.

71.

72.

73.

74.

75.

76.

Chapter 4 Auditing Standards and Audit Reporting

77.

78.

79.

80.

81.

Chapter 5 Record keeping

82.

Chapter 6 Objectivity

83.

PART 6 PUBLIC REGISTER

84.

85.

86.

87.

88.

89.

90.

PART 7 INDEPENDENCE

91.

92.

93.

94.

95.

96.

97.

98.

99.

100.

101.

102.

103.

104.

105.

106.

PART 8 QUALITY ASSURANCE OF STATUTORY AUDITORS AND AUDIT FIRMS

Chapter 1 Quality assurance

107.

108.

109.

110.

111.

Chapter 2 Investigations and Sanctions

112.

113.

114.

PART 9 AUDIT COMMITEES

115.

PART 10 REGULATORY ARRANGEMENTS BETWEEN MEMBER STATES

Chapter 1 Cooperation with other Member States

116.

117.

118.

119.

120.

121.

122.

123.

124.

125.

126.

127.

128.

129.

Chapter 2 Mutual Recognition of Regulatory Arrangements between Member States

130.

Chapter 3 Transfer of Working Papers to Third-country Competent Authorities

131.

132.

133.

PART 11 THIRD-COUNTRY AUDITORS

Chapter 1 International Aspects

134.

Chapter 2 Registration and Oversight of Third-country Auditors and Audit Entities

135.

136.

137.

138.

139.

140.

141.

PART 12 MISCELLANEOUS

142.

143.

144.

SCHEDULE 1 Standards relating to training and qualifications for approval of individual as statutory auditor

SCHEDULE 2 Information required, by Part 6, to be Supplied and Entered in Public Register

S.I. No. 312 of 2016

EUROPEAN UNION (STATUTORY AUDITS) (DIRECTIVE 2006/43/EC, AS AMENDED BY DIRECTIVE 2014/56/EU, AND REGULATION (EU) NO 537/2014) REGULATIONS 2016

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 17th June, 2016.

I, MARY MITCHELL O’CONNOR, Minister for Jobs, Enterprise 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 2006¹ 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, as amended by Directive 2014/56/EU of the European Parliament and of the Council of 16 April 2014² amending Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts, and giving effect to certain provisions of Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014³ on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC, hereby make the following regulations:

PART 1 PRELIMINARY MATTERS

Citation, commencement and construction

• (2) These Regulations shall come into operation on 17 June 2016.

• (3) These Regulations shall be read as one with the Companies Act 2014 (No. 38 of 2014).

Revocation and savings

• (2) Subject to Regulation 143(3), the 2010 Audits Regulations, as in force immediately before 17 June 2016—

• (a) in so far as they related to the conduct of statutory audits and the duties and powers of statutory auditors and audit firms in relation thereto for financial years commencing before that date, shall continue to apply to the conduct of statutory audits and the duties and powers of statutory auditors and audit firms in relation thereto for those financial years, and

• (b) as regards each other matter provision for which was made by those Regulations before that date, shall continue to make such provision before that date.

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 17 June 2016, and

• (b) as regards each other matter provision for which is made by these Regulations, on and from 17 June 2016.

Interpretation — general

“2010 Audits Regulations” means the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 revoked by Regulation 2(1);

“AAPA report” means the annual audit programme and activity report referred to in Regulation 34(1);

“additional report to the audit committee” means the report submitted to the audit committee of a public-interest entity by the statutory auditor or audit firm carrying out statutory audits as set out in Article 11 of Regulation (EU) No 537/2014;

“affiliate”, in relation to a statutory audit firm, means any undertaking, regard-less 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;

“aptitude test” means an aptitude test referred to in Regulation 49(1);

“audit committee”, in relation to a public-interest entity, means the audit committee established for the entity under Regulation 115;

“Audit Directive” means Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 as amended by Directive 2014/56/EU of the European Parliament and of the Council of 16 April 2014 on statutory audits of annual accounts and consolidated accounts;

“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 a Member State auditor or audit firm, or a third-country auditor or audit entity, shall be read accordingly;

“auditing standards” means the standards adopted by the Supervisory Authority under Regulation 77 in accordance with which statutory audits shall be carried out;

“Commission” means Commission of the European Union;

“counterpart authority” shall be construed in accordance with Regulation 116;

“disciplinary committee” has the same meaning as in section 900 of the Companies Act 2014 ;

“EEA Agreement” has the same meaning as in section 2 of the Companies Act 2014 ;

“EEA state” has the same meaning as in section 2 of the Companies Act 2014 ;

“enactment” has the same meaning as in section 2 of the Companies Act 2014 ;

“financial year”—

• (a) in relation to the Supervisory Authority and an audited entity, shall be construed in accordance with section 288 of the Companies Act 2014 , and

• (b) in relation to a statutory auditor or audit firm, means—

• (i) subject to subparagraph (ii), 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

• (ii) in the case of a statutory audit firm that is a company, any period in respect of which accounts under the Companies Act 2014 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 statu-tory audit of the group accounts concerned;

“home Member State” means the Member State in which a statutory auditor or audit firm is approved in accordance with Article 3(1) of the Audit Directive;

“host Member State” means—

• (a) a Member State in which a statutory auditor approved by his or her home Member State seeks to be also approved in accordance with Article 14 of the Audit Directive, or

• (b) a Member State in which an audit firm approved by its home Member State seeks to be registered, or is registered, in accordance with Article 3a of the Audit Directive;

“key audit partner” 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,

• (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;

“medium-sized undertakings” means the undertakings referred to in Article 3(3) of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013⁴ on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC;

“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 Audit Directive by the counterpart authority of another Member State to carry out audits of annual or group accounts as required by European Union law;

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

“Minister” means the Minister for Jobs, Enterprise 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;

• (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 pro-fessional resources;

“public-interest entities” means—

• (a) entities 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 of the European Parliament and of the Council of 21 April 2004⁵ on markets in financial instruments amending Council Directives 85/611/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EC,

• (b) credit institutions as defined in point 1 of Article 3(1) of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013⁶ on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (but excluding credit institutions referred to in Article 2 of Directive 2013/36/EU), and

• (c) insurance undertakings within the meaning of Article 2(1) of Directive 91/674/EEC of 19 December 1991⁷ on the annual accounts and consolidated accounts of insurance undertakings;

“public register” shall be construed in accordance with Regulation 84;

“recognised accountancy body” has the same meaning as in section 900 of the Companies Act 2014 ;

“Regulation (EU) No 537/2014” means Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC;

“small undertakings” means the undertakings referred to in Article 3(2) of Directive 2013/34/EU;

“standards” means those standards, as defined in section 900 of the Companies Act 2014 , of a prescribed accountancy body which is a recognised accountancy body;

“statutory audit” means an audit of individual accounts or group accounts in so far as—

• (a) required by European Union law, or

• (b) required by national law as regards small undertakings;

“statutory audit firm” means—

• (a) an audit firm which is approved in accordance with these Regulations to carry out statutory audits, or

• (b) an audit firm which is registered in accordance with Regulation 38 to carry out statutory audits;

“statutory auditor” means an individual who is approved in accordance with these Regulations to carry out statutory audits;

“statutory auditors’ report” means the report made under section 391 of the Companies Act 2014 in the form required by section 336 of that Act;

“Supervisory Authority” has the same meaning as in section 900 of the Companies Act 2014 ;

“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, regardless of its legal form, which carries out audits of the annual or consolidated financial statements of a company incorporated in a third country, other than an entity which is registered as an audit firm in any Member State as a consequence of approval in accordance with Article 3 of the Audit Directive;

“third-country auditor” means an individual who carries out audits of the annual or consolidated financial statements of a company incorporated in a third country, other than an individual who is registered as a statutory auditor in any Member State as a consequence of approval in accordance with Articles 3 and 44 of the Audit Directive;

“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 the Supervisory Authority.

• (2) A reference in these Regulations to a registered third-country auditor or audit entity is a reference to a third-country auditor or audit 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 Audit Directive shall have in these Regulations the same meaning as it has in the Audit Directive.

• (4) The definition of “court” in section 2(1) of the Companies Act 2014 shall, with any necessary modifications, apply to references in these Regulations to a court as that definition applies to references to a court in that Act.

PART 2 AMENDMENT OF COMPANIES ACT 2014

Definition

Amendment of section 2 of Principal Act

• (a) in the definition of “statutory auditor”, by the substitution of “2016 Audits Regulations, and includes a firm registered in accordance with Regulation 38 of those Regulations” for “European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 ( S.I. No. 220 of 2010 )”, and

• (b) by the insertion of the following definition:

“‘2016 Audits Regulations’ means the European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016 (S.I. No. [-] of 2016);”.

Amendment of section 35 of Principal Act

• “(7) An electronic filing agent shall not, by virtue of his or her authorisation under this section to act as such, be regarded as an officer or servant of the company concerned for the purposes of Regulation 93(2) or (3) of the 2016 Audits Regulations.”.

Amendment of section 322 of Principal Act

Amendment of section 336 of Principal Act

• (a) by the substitution of the following subsection for subsection (2):

• “(2) The statutory auditors’ report shall be in writing and shall—

  • (a) include an introduction identifying the entity financial statements, and where appropriate, the group financial statements, that are the subject of the audit and the financial reporting framework that has been applied in their preparation,

  • (b) include a description of the scope of the audit identifying the auditing standards in accordance with which the audit was conducted, and

  • (c) identify the place of establishment of the statutory auditors who made the report.”,

• (b) by the substitution of the following subsection for subsection (5):

• “(5) The statutory auditors’ report shall—

  • (a) state whether, in their opinion, based on the work undertaken in the course of the audit—

    • (i) the information given in the directors’ report for the financial year for which statutory financial statements are prepared is consistent with the company’s statutory financial statements in respect of the financial year concerned, and

    • (ii) the directors’ report has been prepared in accordance with applicable legal requirements,

    and

  • (b) state whether, based on their knowledge and understanding of the company and its environment obtained in the course of the audit, they have identified material misstatements in the directors’ report and, where they have so identified such misstatements, give an indication of the nature of each of such misstatements.”,

• (c) by the insertion of the following subsection after subsection (5):

• “(5A) The statutory auditors’ report shall provide a statement on any material uncertainty relating to events or conditions that may cast significant doubt about the entity’s ability to continue as a going concern.”,

and

• (d) by the insertion of the following subsection after subsection (9):

“(9A)(a) Subject to paragraph (b), where the statutory audit was carried out by more than one statutory auditor, the statutory auditors shall agree on the results of the statutory audit and submit a joint report and opinion.

• (b) In the case of disagreement, each statutory auditor shall submit his, her or its opinion in a separate paragraph of the audit report and shall state his, her or its reason for such disagreement.”.

Amendment of section 337 of Principal Act

• “(2) Where the auditor is—

  • (a) a statutory auditor (within the meaning of the 2016 Audits Regulations), the report shall be signed by the statutory auditor (or, where more than one, each statutory auditor), or

  • (b) a statutory audit firm (within the meaning of the 2016 Audits 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,

    • (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,

    • (iii) where more than one statutory audit firm has been simultaneously engaged, by the statutory auditors designated by the statutory audit firms for the particular audit engagement as being primarily responsible for carrying out the statutory audit on behalf of the audit firm, or

    • (iv) in the case of a group audit, where more than one statutory audit firm has been simultaneously engaged, by the statutory auditors designated by the statutory audit firms for the particular audit engagement 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.”.

Amendment of section 380 of Principal Act

• “(iii) the person’s becoming disqualified from holding office by virtue of the 2016 Audits Regulations.”.

Amendment of section 390 of Principal Act

Amendment of section 394 of Principal Act

Amendment of section 900 of Principal Act

• (a) in subsection (1)—

• (i) by the deletion of the definition of “2010 Audits Regulations”,

• (ii) in the definition of “recognised accountancy body”, by the substitution of “2016 Audits Regulations” for “2010 Audits Regulations”, and

• (iii) by the insertion of the following definition:

“‘CEAOB’ has the meaning assigned to it by section 905(3)(c);”,

and

• (b) by the insertion of the following subsection after subsection (2):

• “(3) Regulation 4 (except the definitions of ‘standards’ and ‘statutory auditor’) of the 2016 Audits Regulations shall apply to the interpretation of this Chapter as that Regulation applies to the interpretation of those Regulations.”.

Amendment of section 904 of Principal Act

• (a) in paragraph (c), by the substitution of “IAS Regulation,” for “IAS Regulation, and”,

• (b) in paragraph (d), by the substitution of “matters, and” for “matters.”, and

• (c) by the insertion of the following paragraph after paragraph (d):

• “(e) oversee statutory auditors and the conduct of statutory audits in accordance with the 2016 Audits Regulations and Regulation (EU) No 537/2014 and perform functions under those Regulations and that Regulation.”.

Amendment of section 905 of Principal Act

• (a) in subsection (2)—

• (i) by the substitution of the following paragraph for paragraph (a):

• “(a) grant recognition to bodies of accountants for the purposes of the 2016 Audits Regulations, Regulation (EU) No 537/2014 and section 1441,”,

• (ii) by the substitution of the following paragraphs for paragraph (i):

• “(i) monitor the effectiveness of provisions of the 2016 Audits Regulations and Regulation (EU) No 537/2014 relating to the independence of statutory auditors,

• (ia) monitor developments in the market for audit services to public-interest entities as required by Regulation (EU) No 537/2014,”,

and

• (iii) by the substitution of the following paragraphs for paragraph (n):

• “(ma) adopt auditing standards for the purposes of the 2016 Audits Regulations and Regulation (EU) No 537/2014,

• (n) oversee, in accordance with the 2016 Audits Regulations and Regulation (EU) No 537/2014, the performance of (and, where permitted by those Regulations, that Regulation or this Act, perform) the following functions with respect to statutory auditors:

  • (i) the approval and registration of statutory auditors (including the registration of Member State audit firms);

  • (ii) continuing education;

  • (iii) quality assurance systems;

  • (iv) investigative and administrative disciplinary systems,”,

and

• (b) by the insertion of the following subsections after subsection (2):

• “(3) The Supervisory Authority shall—

  • (a) cooperate with competent authorities in other Member States to achieve the convergence of the educational qualifications required for the approval of an individual as a statutory auditor,

  • (b) when engaging in such operation, take into account developments in auditing and the audit profession and, in particular, convergence that has already been achieved by the profession, and

  • (c) cooperate with the Committee of European Auditing Oversight Bodies (in this Chapter referred to as ‘CEAOB’) established under Article 30 of Regulation (EU) No 537/2014 and the competent authorities referred to in Article 20 of that Regulation in so far as such convergence relates to the statutory audit of public-interest entities.

• (4) The Supervisory Authority shall—

  • (a) cooperate within the framework of the CEAOB with a view to achieving the convergence of the requirements of the aptitude test,

  • (b) enhance the transparency and predictability of those requirements, and

  • (c) cooperate with the CEAOB and with the competent authorities referred to in Article 20 of Regulation (EU) No 537/2014 in so far as such convergence relates to statutory audits of public-interest entities.

• (5) With regard to the cooperation that the State is required to engage in by virtue of Article 33 of the Audit Directive, the Supervisory Authority is assigned responsibility in that behalf.

• (6) For the purpose of discharging the responsibility referred to in subsection (5), the Supervisory Authority shall put in place appropriate mechanisms, including arrangements with competent authorities in other Member States.”.

Amendment of section 906 of Principal Act

• (a) in subsection (3), by the insertion of “(including its functions under Regulation (EU) No 537/2014)” after “its functions”, and

• (b) in subsection (5)—

• (i) in paragraph (a), by the substitution of “Chapter),” for “Chapter), or”,

• (ii) in paragraph (b), by the substitution of “section 905(2)(m),” for “section 905(2)(m).”, and

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

• “(c) provisions of the 2016 Audits Regulations or Regulation (EU) No 537/2014, or

• (d) rules adopted by the Supervisory Authority under subsection (3) concerning matters that relate to its functions under section 905(2)(n).”.

Amendment of section 907 of Principal Act

• (a) in subsection (2), by the insertion of “subsections (2A) and (2B) and” after “Subject to”, and

• (b) by the insertion of the following subsections after subsection (2):

• “(2A) On and from 17 June 2016, the Minister shall not appoint a person under subsection (2) as a director unless the Minister is satisfied that the person is knowledgeable in areas relevant to the conduct of statutory audits as specified in Schedule 1 to the 2016 Audits Regulations.

• (2B) On and from 17 June 2016, the Minister shall not appoint a person as a director under subsection (2) if the person—

  • (a) on the proposed date of his or her appointment as a director—

    • (i) carries out statutory audits,

    • (ii) holds voting rights in an audit firm,

    • (iii) is a director or member of an audit firm, or

    • (iv) is employed by or otherwise contracted with an audit firm,

    or

  • (b) has, at any time during the 3 years immediately preceding the proposed date of his or her appointment as a director—

    • (i) carried out statutory audits,

    • (ii) held voting rights in an audit firm,

    • (iii) was a director or member of an audit firm, or

    • (iv) was employed by or otherwise contracted with an audit firm.”.

Amendment of section 918 of Principal Act

• (a) by the deletion of subsection (1), and

• (b) by the substitution of the following subsection for subsection (3):

• “(3) Money received by the Supervisory Authority under this section may be used only for the purposes of meeting expenses properly incurred by it in performing its functions as the competent authority under the 2016 Audits Regulations, Regulation (EU) No 537/2014 or this Act (including a function referred to in section 905(2)(n) that it may perform by virtue of Regulations 33(2) and 33(3)(b) of the 2016 Audit Regulations) in relation to statutory auditors of public-interest entities.”.

Amendment of section 919 of Principal Act

• (a) in subsection (4)—

• (i) in paragraph (b), by the deletion of “and”,

• (ii) in paragraph (c), by the substitution of “934(7), and” for “934(7).”, and

• (iii) by the insertion of the following paragraph after paragraph (c):

• “(d) any amounts paid to the Supervisory Authority under section 935C(1)(f)(i) or (ii).”,

and

• (b) by the insertion of the following subsection after subsection (5):

• “(6) Amounts referred to in subsection (4)(d) may only be used by the Supervisory Authority to fund the performance of its functions under section 935B.”.

Amendment of section 930 of Principal Act

Amendment of section 932 of Principal Act

• “(a) the 2016 Audits Regulations, or”.

Supplemental provisions in relation to section 934 (including as concerns its relationship to provisions of 2016 Audits Regulations)

“935.(1) For the avoidance of doubt, the following matters may, without prejudice to the generality of the provisions of section 934, be the subject of an investigation by the Supervisory Authority under that section, namely matters—

• (a) in relation to which a recognised accountancy body has decided not to withdraw a person’s approval under the 2016 Audits Regulations as a statutory auditor or audit firm, or

• (b) which either—

  • (i) have not been considered by a recognised accountancy body 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.

• (2) 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,

  section 934(7) shall be read as requiring or enabling (depending on whether the breach of standards found falls within Part 4 or Chapter 2 of Part 8 of the 2016 Audits Regulations) the Supervisory Authority to withdraw the approval under those Regulations of the person concerned as a statutory auditor or audit firm.

• (3) Where such an approval is withdrawn by the Supervisory Authority, the following provisions of the 2016 Audits Regulations shall, with any necessary modifications, apply (and not subsections (10) and (11) of section 934) to that withdrawal, namely Regulation 52 (14) to (17) (or, as the case may be, Regulation 53(14) to (17)) and Regulation 54.

• (4) Subsection (2) does not prejudice the imposition, in the circumstances concerned, by the Supervisory Authority of another sanction referred to in section 934(7) in addition to a withdrawal of approval (where withdrawal of the approval is mandatory under the 2016 Audits Regulations) or in lieu of a withdrawal of approval (where such withdrawal is not so mandatory).

• (5) For the purposes of section 934, ‘member’, in addition to the meaning given to that expression by section 900(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 2016 Audits Regulations.”.

Amendment of Principal Act

“Interpretation of sections 935A to 935D and 941A

935A. (1) In this section and sections 935B to 935D and 941A—

‘client’ includes an individual, a body corporate, an unincorporated body of persons and a partnership;

‘publication sanction’, in relation to a statutory auditor or relevant director, means the publication in accordance with section 935D(1) of the auditor’s or director’s particulars referred to in that section together with the other related particulars referred to in that section;

‘relevant contravention’, in relation to a statutory auditor, means a contravention by the statutory auditor of a provision of—

• (a) the 2016 Audits Regulations,

• (b) Regulation (EU) No 537/2014, or

• (c) section 336, 337 or 935C(3);

‘relevant decision’—

• (a) means a decision under section 935B(6) by the Supervisory Authority that a statutory auditor has committed a relevant contravention, and

• (b) if, in consequence of that decision—

  • (i) the Supervisory Authority decides under that section to impose a relevant sanction on the auditor, or

  • (ii) the Director of Corporate Enforcement decides under that section to impose a relevant sanction on a relevant director,

  includes the decision to impose that sanction;

  ‘relevant director’ means a director or former director of a public-interest entity;

  ‘relevant person’, in relation to an investigation of a statutory auditor, means—

• (a) the statutory auditor,

• (b) if the statutory auditor is an individual, a person who is or was an employee or agent of the statutory auditor,

• (c) if the statutory auditor is an audit firm, a person who is or was an officer, member, partner, employee or agent of the statutory auditor,

• (d) a client or former client of the statutory auditor,

• (e) if the client or former client is a body corporate, a person who is or was an officer, employee or agent of the client or former client, or

• (f) any person whom the Supervisory Authority reasonably believes has information or documents relating to the investigation other than information or documents the disclosure of which is prohibited or restricted by law;

‘relevant sanction’—

• (a) in relation to a statutory auditor, means a sanction referred to in section 935C(1)(a)(i), (b), (c), (d) or (f)(i), and

• (b) in relation to a relevant director, means a sanction referred to in section 935C(1)(a)(ii), (e) or (f)(ii);

‘statutory auditor’ includes a former statutory auditor.

• (2) A reference in this section and sections 935B to 935D and 941A to the imposition of a relevant sanction on a statutory auditor or relevant director includes a reference to the taking of an administrative measure against the statutory auditor or relevant director.

Investigation of possible relevant contraventions

935B. (1) If, in the Supervisory Authority’s opinion, Regulation 33(2) or (3) of the 2016 Audits Regulations permits it to undertake an investigation into a possible relevant contravention committed by a statutory auditor, the Authority may do so—

- (*a*) following a complaint, or

- (*b*) on its own initiative.

• (2) For the purposes of an investigation under this section, the Supervisory Authority may require a relevant person to do one or more of the following:

  • (a) produce to the Supervisory Authority all books or documents relating to the investigation that are in the relevant person’s possession or control;

  • (b) attend before the Supervisory Authority;

  • (c) give the Supervisory Authority any other assistance in connection with the investigation that the relevant person is reasonably able to give.

• (3) For the purposes of an investigation under this section, the Supervisory Authority may—

  • (a) examine on oath, either by word of mouth or on interrogatories in writing, a relevant person,

  • (b) administer oaths for the purposes of the examination, and

  • (c) record, in writing, the answers of a person so examined and require that person to sign them.

• (4) The Supervisory Authority may certify the refusal or failure to the court if a relevant person refuses or fails to do one or more of the following:

  • (a) produce to the Supervisory Authority any book or document that it is the person’s duty under this section to produce;

  • (b) attend before the Supervisory Authority when required to do so under this section;

  • (c) answer a question put to the person by the Supervisory Authority with respect to the matter under investigation.

• (5) On receiving a certificate of refusal or failure concerning a relevant person, the court may enquire into the case and after hearing any evidence that may be adduced, may do one or more of the following:

  • (a) direct that the relevant person attend or re-attend before the Supervisory Authority or produce particular books or documents or answer particular questions put to him or her by the Supervisory Authority;

  • (b) direct that the relevant person need not produce particular books or documents or answer particular questions put to him or her by the Supervisory Authority;

  • (c) make any other ancillary or consequential order or give any other direction that the court thinks fit.

  (6)(a) Subject to subsection (12) and section 935C(2), if the Supervisory Authority finds that the statutory auditor has committed a relevant contravention, the Supervisory Authority may impose such relevant sanction on the auditor as the Supervisory Authority considers appropriate in all the relevant circumstances.

  • (b) Subject to subsection (12) and section 935C(2), if the Supervisory Authority finds that the statutory auditor has committed a relevant contravention, and the Director of Corporate Enforcement finds that a relevant director engaged in conduct giving rise (whether in whole or in part) to that contravention, the Director of Corporate Enforcement may impose such relevant sanction on the relevant director as the Director of Corporate Enforcement considers appropriate in all the relevant circumstances.

• (7) Subject to subsection (8), the statutory auditor or relevant director who is the subject of a relevant decision made under subsection (6) may appeal to the court against the decision.

• (8) An appeal under subsection (7) shall be brought within 3 months after the date on which the statutory auditor or relevant director concerned was notified of that decision by—

  • (a) in so far as the relevant decision falls within paragraph (a) or (b)(i) of the definition of ‘relevant decision’, the Supervisory Authority, and

  • (b) in so far as the relevant decision falls within paragraph (b)(ii) of the definition of ‘relevant decision’, the Director of Corporate Enforcement.

• (9) The production of any books or documents under this section by a person who claims a lien on them does not prejudice the lien.

• (10) Any information produced or answer given by a relevant person in compliance with a requirement under this section may be used in evidence against the relevant person in any proceedings whatsoever, save proceedings for an offence (other than perjury in respect of such an answer).

• (11) A finding or relevant decision of the Supervisory Authority or Director of Corporate Enforcement under this section is not a bar to any civil or criminal proceedings against the statutory auditor or relevant director who is the subject of the finding or relevant decision.

• (12) A relevant decision, in so far as it relates to the imposition of a relevant sanction on a statutory auditor or relevant director, shall not take effect unless the relevant decision is confirmed by the court under section 941(2)(a) or 941A(2).

• (13) Subsections (14) and (15) apply if—

  • (a) the Supervisory Authority finds that the statutory auditor has committed a relevant contravention, and

  • (b) that contravention relates, whether directly or indirectly, to the audit of a public-interest entity.

• (14) The Supervisory Authority shall, as soon as is practicable, give the Director of Corporate Enforcement—

  • (a) particulars of the statutory auditor,

  • (b) particulars of the relevant contravention, and

  • (c) particulars of the public-interest entity.

• (15) The Supervisory Authority shall, in addition to complying with subsection (14), give the Director of Corporate Enforcement such information and documents and assistance as the Director may reasonably require for the Director to decide whether or not—

  • (a) to investigate a relevant director, or

  • (b) to impose, under subsection (6)(b), a relevant sanction on a relevant director,

  or both.

  Sanctions which Supervisory Authority or Director of Corporate Enforcement may impose

  935C. (1) Subject to section 935B(6) and (12) and subsection (2), the Supervisory Authority may impose on a statutory auditor, and the Director of Corporate Enforcement may impose on a relevant director, one or more of the following sanctions in relation to a relevant contravention committed by the statutory auditor:

  • (a) a direction—

    • (i) by the Supervisory Authority to the statutory auditor that the auditor cease the conduct giving rise (whether in whole or in part) to the contravention and abstain from any repetition of that conduct, or

    • (ii) a direction by the Director of Corporate Enforcement to the relevant director that the director cease the conduct giving rise (whether in whole or in part) to the contravention and abstain from any repetition of that conduct;

  • (b) a direction by the Supervisory Authority to the statutory auditor (being any one or more of a statutory auditor, audit firm or key audit partner) banning him, her or it, for the period specified in the direction (being a period of not more than 3 years’ duration), from carrying out statutory audits or signing statutory auditors’ reports, or both;

  • (c) a declaration by the Supervisory Authority that the statutory auditors’ report concerned does not meet the requirements of section 336 or 337 or, where applicable, Article 10 of Regulation (EU) No 537/2014;

  • (d) if the statutory auditor is an audit firm, a direction by the Supervisory Authority to an officer, member or partner of the audit firm banning the officer, member or partner, for the period specified in the direction (being a period of not more than 3 years’ duration), from performing functions in audit firms or public-interest entities;

  • (e) a direction by the Director of Corporate Enforcement to the relevant director banning the director, for the period specified in the direction (being a period of not more than 3 years’ duration), from performing functions in audit firms or public-interest entities;

  • (f) a direction—

    • (i) subject to paragraphs (6), (8), (10) and (12), by the Supervisory Authority to the statutory auditor to pay, as an administrative pecuniary sanction, a sum, as specified in the direction but not exceeding €100,000 in the case of a statutory auditor who is an individual or, in the case of a statutory auditor which is an audit firm, not exceeding €500,000, to the Supervisory Authority, or

    • (ii) subject to paragraphs (7), (9), (11) and (13), by the Director of Corporate Enforcement to the relevant director to pay, as an administrative pecuniary sanction, a sum, as specified in the direction but not exceeding €100,000, to the Supervisory Authority.

• (2) The relevant circumstances referred to in section 935B(6)(a) or (b) include, where appropriate, one or more of the following:

  • (a) the gravity and duration of the relevant contravention;

  • (b) the degree of responsibility of the statutory auditor or relevant director;

  • (c) the financial strength of the statutory auditor or relevant director (for example, as indicated by the total turnover of the statutory auditor if the auditor is not an individual, or, in the case of a statutory auditor who is an individual or in the case of the relevant director, the annual income of the individual or relevant director);

  • (d) the amount of profits gained or losses avoided by the statutory auditor or relevant director in consequence of the relevant contravention, in so far as they can be determined;

  • (e) the level of cooperation of the statutory auditor or relevant director with the Supervisory Authority;

  • (f) previous relevant contraventions committed by the statutory auditor or previous impositions of relevant sanctions on the relevant director.

• (3) A person the subject of a direction under subsection (1) shall comply with the direction.

• (4) The Supervisory Authority shall immediately communicate to the CEAOB particulars of—

  • (a) any direction given by the Authority under subsection (1)(b) or (d), and

  • (b) any direction given by the Director of Corporate Enforcement under subsection (1)(e).

• (5) The Supervisory Authority shall, as soon as may be after the end of a year, give to the CEAOB aggregated information in relation to—

  • (a) all relevant sanctions imposed by it or the Director of Corporate Enforcement during the year in accordance with the 2016 Audits Regulations and this Act, and

  • (b) all publication sanctions imposed by it during the year in accordance with the 2016 Audits Regulations and this Act.

• (6) If the Supervisory Authority decides to impose an administrative pecuniary sanction on a statutory auditor under subsection (1)(f)(i), the Supervisory Authority may not impose an amount—

  • (a) that would be likely to cause the statutory auditor to cease business, or

  • (b) that would, if the statutory auditor is an individual, be likely to cause the statutory auditor to be adjudicated bankrupt.

• (7) If the Director of Corporate Enforcement decides to impose an administrative pecuniary sanction on a relevant director under subsection (1)(f)(ii), the Director of Corporate Enforcement may not impose an amount that would be likely to cause the relevant director to be adjudicated bankrupt.

• (8) If the conduct engaged in by the statutory auditor has given rise (whether in whole or in part) to 2 or more relevant contraventions, the Supervisory Authority may not impose more than one administrative pecuniary sanction under subsection (1)(f)(i) on the statutory auditor in respect of the same conduct.

• (9) If the conduct engaged in by the relevant director has given rise (whether in whole or in part) to 2 or more relevant contraventions, the Director of Corporate Enforcement may not impose more than one administrative pecuniary sanction under subsection (1)(f)(ii) on the relevant director in respect of the same conduct.

• (10) If the Supervisory Authority imposes an administrative pecuniary sanction under subsection (1)(f)(i) on a statutory auditor and the conduct engaged in by the statutory auditor that has given rise (whether in whole or in part) to the relevant contravention is an offence under the law of the State, the statutory auditor shall not be liable to be prosecuted or punished for the offence under that law.

• (11) If the Director of Corporate Enforcement imposes an administrative pecuniary sanction under subsection (1)(f)(ii) on a relevant director and the conduct engaged in by the relevant director that has given rise (whether in whole or in part) to the relevant contravention is an offence under the law of the State, the relevant director shall not be liable to be prosecuted or punished for the offence under that law.

• (12) The Supervisory Authority may not impose an administrative pecuniary sanction under subsection (1)(f)(i) on a statutory auditor if—

  • (a) the statutory auditor has been charged with having committed an offence under a law of the State and has either been found guilty or not guilty of having committed the offence, and

  • (b) the offence involves the conduct engaged in by the statutory auditor that has given rise (whether in whole or in part) to the relevant contravention.

• (13) The Director of Corporate Enforcement may not impose an administrative pecuniary sanction under subsection (1)(f)(ii) on a relevant director if—

  • (a) the relevant director has been charged with having committed an offence under a law of the State and has either been found guilty or not guilty of having committed the offence, and

  • (b) the offence involves the conduct engaged in by the relevant director that has given rise (whether in whole or in part) to the relevant contravention.

  Publication of relevant sanction imposed, etc

  935D. (1) Subject to subsections (2) and (3), the Supervisory Authority shall, in so far as a relevant decision imposes a relevant sanction on a statutory auditor or relevant director, as soon as is practicable after—

  • (a) that decision has been confirmed by the court under section 941(2)(a) or 941A(2), or

  • (b) a decision of the court under section 941(2)(b) has been made to impose a different relevant sanction on the statutory auditor or relevant director,

  publish on its website particulars of the relevant contravention for which the relevant sanction was imposed, particulars of the relevant sanction imposed and particulars of the statutory auditor or relevant director on whom the relevant sanction was imposed.

• (2) Subject to subsection (4), if there is an appeal from the court from a confirmation referred to in subsection (1)(a), or a decision referred to in subsection (1)(b), the Supervisory Authority shall from time to time, as it considers appropriate, publish particulars on its website of the status or outcome of the appeal.

• (3) The Supervisory Authority shall publish particulars referred to in subsection (1) on an anonymous basis on its website in any one or more of the following circumstances:

  • (a) the Supervisory Authority, following an assessment of the proportionality of the publication of those particulars in accordance with subsection (1) in so far as personal data is concerned, is of the opinion that, in relation to the relevant sanction imposed on a statutory auditor who is an individual or on a relevant director, such publication would be disproportionate;

  • (b) the Supervisory Authority is of the opinion that the publication of those particulars in accordance with subsection (1) would jeopardize the stability of financial markets or an ongoing criminal investigation;

  • (c) the Supervisory Authority is of the opinion that the publication of those particulars in accordance with subsection (1) would cause disproportionate damage to the statutory auditor or relevant director concerned.

• (4) Subsection (2) shall not apply in any case where subsection (3) applies.

• (5) The Supervisory Authority shall ensure that particulars published on its website in accordance with subsection (1) or (2) remain on its website for at least 5 years.”.

Amendment of section 938 of Principal Act

• (a) in subsection (1), by the substitution of “, 935 or 935B” for “or 935”,

• (b) in subsection (3), by the insertion of “, 935B” after “935”, and

• (c) in subsection (4), by the substitution of “, 935 and 935B” for “and 935”.

Amendment of section 941 of Principal Act

Application to court to confirm decision to impose relevant sanction

“941A.(1) Where a statutory auditor or relevant director does not, within the period allowed under section 935B(8), appeal to the court against a relevant decision made by the Supervisory Authority or Director of Corporate Enforcement to impose a relevant sanction on the auditor or director, the Supervisory Authority or Director of Corporate Enforcement, as appropriate, shall, as soon as is practicable after the expiration of that period and on notice to the auditor or director, make an application in a summary manner to the court for confirmation of the relevant decision.

• (2) The court shall, on the hearing of an application under subsection (1), confirm the relevant decision the subject of the application unless the court considers that there is good reason not to do so.”.

Amendment of section 1097 of Principal Act

• (a) by the substitution of “Regulation 115” for “Regulation 91”, and

• (b) by the substitution of “2016 Audits Regulations” for “European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010”.

Amendment of section 1305 of Principal Act

Amendment of section 1441 of Principal Act

• “(f) a person who is disqualified under Regulation 93 of the 2016 Audits Regulations for appointment as statutory auditor of a company that is a subsidiary or holding company of the society,”.

Amendment of section 1448 of Principal Act

• (a) by the substitution of the following subsection for subsection (1):

• “(1) In this section—

‘third-country audit entity’ has the same meaning as in Regulation 4 of the 2016 Audits Regulations;

‘third-country auditor’ has the same meaning as in Regulation 4 of the 2016 Audits Regulations.”,

and

• (b) in subsection (2)—

• (i) by the substitution of “sections 935A to 941A shall apply (with such modification to those sections as are specified in the regulations)” for “Chapter 3 of Part 8 of the 2010 Audits Regulations”, and

• (ii) by the substitution of “Regulation 135(3) of the 2016 Audits Regulations” for “Regulation 113(2) of the 2010 Audits Regulations”.

PART 3 DESIGNATION OF COMPETENT AUTHORITY AND ASSIGNMENT OF FUNCTIONS

Designation of competent authority

• (2) Subject to paragraph (4), the Director of Corporate Enforcement is designated as the competent authority with the power to take the administrative measures or impose the sanctions referred to in Article 30 of the Audit Directive (except the sanction referred to in Article 30a (1)(b) of the Audit Directive) in so far as such administrative measures are taken against, or such sanctions are imposed on, directors of public-interest entities.

• (3) The Supervisory Authority is designated as the competent authority for the purposes of—

• (a) public oversight, quality assurance, investigations and penalties of third-country auditors and audit entities registered under Regulation 135(1), and

• (b) public oversight, investigations and penalties of third-country auditors and audit entities referred to in Regulation 135(7), (8) and (9).

(4)(a) Subject to subparagraph (b), to the extent that the Director of Corporate Enforcement is a competent authority by virtue of paragraph (2), a reference in these Regulations (other than this Regulation) to the Supervisory Authority shall include a reference to the Director of Corporate Enforcement.

• (b) The Supervisory Authority shall perform the functions under these Regulations that would, but for this paragraph, otherwise fall to be performed by the Director of Corporate Enforcement by virtue of being the competent authority referred to in subparagraph (a).

• (c) The Director of Corporate Enforcement shall cooperate with the Supervisory Authority so as to enable the Supervisory Authority to perform the functions referred to in subparagraph (b).

• (5) The Supervisory Authority shall, as soon as is practicable on or after 17 June 2016, publish on its website information on the designation of competent authorities effected by this Regulation between the Supervisory Authority and the Director of Corporate Enforcement.

Assignment of functions

• (2) Subject to Regulation 32(2), the Supervisory Authority shall perform the functions referred to in points (a), (b) and (c) of Article 24(1) of Regulation (EU) No 537/2014.