The Statutory Auditors and Third Country Auditors (Amendment) Regulations 2011

Made: 19th July 2011

Laid before Parliament: 26th July 2011

Coming into force in accordance with regulation 1(2), (3) and (4)

The Secretary of State is a Minister designated for the purposes of section 2(2) of the European Communities Act 1972 in relation to auditors and the audit of accounts.

The Secretary of State makes these Regulations in exercise of the powers conferred by section 2(2) of the European Communities Act 1972, and by sections 1239(1)(b), (2) and (5)(d), 1246(1) and 1292(1)(c) of the Companies Act 2006 .

PART 1 — Introduction

Citation, commencement and application

1

• (1) These Regulations may be cited as the Statutory Auditors and Third Country Auditors (Amendment) Regulations 2011.

• (2) These Regulations, except for the provisions referred to in paragraphs (3) and (4), come into force on 1st September 2011.

• (3) Regulations 2, 3, 5 and 6 come into force on 1st October 2011.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) A direction given under section 1242(4) of the Companies Act 2006 by virtue of the amendments made by regulation 4 does not apply in respect of the audit of accounts for a period beginning before 2nd July 2010.

• (6) The amendments made by regulations 2, 3, 5 and 6 apply in relation to audits of accounts for periods beginning on or after 1st October 2011.

PART 2 — Amendment to the Companies (Audit, Investigations and Community Enterprise) Act 2004

Grants to bodies concerned with accounting standards etc

2

In section 16(2)(f) of the Companies (Audit, Investigations and Community Enterprise) Act 2004 (grants to bodies concerned with accounting standards etc) after “23(1)” insert “ , 23A(1) ”.

PART 3 — Amendments to the Companies Act 2006

Restrictions on disclosure

3

In section 1224A(2)(c) of the Companies Act 2006 (restrictions on disclosure), after “(independent monitoring of certain audits)” insert “ , paragraph 23A(1) (independent monitoring of third country audits) ”.

Power to disapply duties of registered third country auditors

4

In section 1242(4) of the Companies Act 2006 (power to disapply duties of registered third country auditors)—

• (a) after “in relation to” insert “(a)”; and

• (b) at the end add—

(b) audits of the accounts of a particular UK-traded non-EEA company or class of UK-traded non-EEA companies; (c) audits by a particular registered third country auditor or class of registered third country auditors of the accounts of a particular UK-traded non-EEA company or class of UK-traded non-EEA companies.

Recognised supervisory bodies

5

• (1) Schedule 10 to the Companies Act 2006 (recognised supervisory bodies) is amended as follows.

• (2) In paragraph 10A(4)(b) after “23” insert “ , 23A ”.

• (3) In paragraph 13 (monitoring of audits)—

• (a) in sub-paragraph (1)(a)—

• (i) omit “in the case of members of the body who do not perform any statutory audit functions in respect of major audits,”;

• (ii) after “of statutory audit functions” insert “ , other than statutory audit functions in respect of major audits, ”;

• (b) omit the “and” at the end of sub-paragraph (1)(b);

• (c) after sub-paragraph (1)(b) insert—

(ba) in the case of members of the body who perform any third country audit functions, participate in arrangements within paragraph 23A(1); and

• (d) in sub-paragraph (1)(c) after “statutory audit functions” insert “ or third country audit functions ”;

• (e) for sub-paragraph (2) substitute—

(2) Any monitoring of members of the body under the arrangements within paragraph 23(1) or 23A(1) is to be regarded (so far as their performance of statutory audit functions in respect of major audits, or of third country audit functions, is concerned) as monitoring of compliance with the body's rules for the purposes of paragraph 12(1) and (1A).

• (f) in sub-paragraph (10) at the end insert—

“third country audit function” means any function related to the audit of a UK-traded non-EEA company.

• (4) After paragraph 23 (arrangements for independent monitoring of major audits) insert—

(23A) (1) The arrangements referred to in paragraph 13(1)(ba) are appropriate arrangements— (a) for enabling the performance by members of the body of third country audit functions to be monitored by means of inspections carried out under the arrangements, and (b) for ensuring that the carrying out of such monitoring and inspections is done independently of the body. (2) Those arrangements must provide that the body performing the inspections— (a) may decide that an inspection referred to in sub-paragraph (1) is not required, or that part of an inspection is not required, in relation to a member, and (b) may direct that the arrangements referred to in sub-paragraph (3) apply in relation to the member or apply to such extent as may be specified in the direction. (3) The supervisory body must have adequate arrangements for enabling the performance by its members of third country audit functions to be monitored by means of inspections for cases where a direction is given under sub-paragraph (2)(b). (4) In this paragraph “third country audit function” means any function related to the audit of a UK-traded non-EEA company.

• (5) In paragraph 24 (arrangements for independent investigation for disciplinary purposes)—

• (a) in sub-paragraph (1)(a) after “the performance of statutory audit functions” insert “ or third country audit functions ”;

• (b) in sub-paragraph (2) at the end insert—

“third country audit function” means any function related to the audit of a UK-traded non-EEA company.

• (6) In paragraph 25(1)(arrangements to operate independently of body)—

• (a) omit the “or” at the end of paragraph (c);

• (b) after paragraph (c) insert—

(ca) paragraph 23A(1)(b), or

• (7) In paragraph 26 (funding of arrangements) after “23” insert “ , 23A ”.

• (8) In paragraph 27 (scope of arrangement) after “23” insert “ , 23A ”.

Specified persons, descriptions, disclosures etc for the purposes of section 1224A

6

In Schedule 11A to the Companies Act 2006 (specified persons, descriptions, disclosures etc for the purposes of section 1224A)—

• (a) in paragraph 16, after “23” insert “ or 23A ”;

• (b) in paragraph 62, after “23(1)” insert “ or 23A(1) ” and after “bodies” insert “ and of UK-traded non-EEA companies ”.

PART 4 — Amendments to the Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494)

Registration of third country auditors

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 5 — Final provisions

Exercise of functions of Secretary of State

8

In article 4(1) of the Statutory Auditors (Delegation of Functions etc) Order 2008 (transfer of Secretary of State functions to Professional Oversight Board) the reference to Part 42 of the Companies Act 2006 includes a reference to that Part as amended by these Regulations.

Transitional and saving provisions

9

The amendments made by regulation 7 to the Statutory Auditors and Third Country Auditors Regulations 2007 do not apply in relation to—

• (a) audits of accounts for periods beginning on or before 1st July 2010; and

• (b) any application for registration delivered to the designated body before 1st September 2011.

Signed

Edward Davey — Minister for Employment Relations, Consumer and Postal Affairs — 2011-07-19

Explanatory note

(This note is not part of the Regulations)

Footnotes

[^f00001]: S.I. 2007/1679.

[^f00002]: 1972 c.68. Section 2(2) was amended by section 27 of the Legislative and Regulatory Reform Act 2006 (c.51) and section 3 of, and Part 1 of the Schedule to, the European Union (Amendment) Act 2008 (c.7).

[^f00003]: 2006 c.46.

[^f00004]: 2004 c.27. Section 16(2)(f) was amended by paragraphs 1(1) and (2) of Schedule 14 to the Companies Act 2006 (c.46). There are other amendments to section 16 not relevant to these Regulations.

[^f00005]: Section 1224A was inserted by S.I. 2007/3494.

[^f00006]: Section 1242 was amended by S.I. 2007/3494.

[^f00007]: Schedule 10 was amended by S.I. 2007/3494 and 2010/2537.

[^f00008]: Schedule 11A was inserted into the Companies Act 2006 by S.I. 2007/3494.

[^f00009]: S.I. 2007/3494, amended by S.I. 2008/499, 2008/2639, and 2009/2798.

[^f00010]: S.I. 2008/496 amended by S.I. 2010/2537.

Editorial notes

[^c20955191]: S.I. 2007/1679.

[^c20955201]: 1972 c.68. Section 2(2) was amended by section 27 of the Legislative and Regulatory Reform Act 2006 (c.51) and section 3 of, and Part 1 of the Schedule to, the European Union (Amendment) Act 2008 (c.7).

[^c20955211]: 2006 c.46.

[^c20955221]: 2004 c.27. Section 16(2)(f) was amended by paragraphs 1(1) and (2) of Schedule 14 to the Companies Act 2006 (c.46). There are other amendments to section 16 not relevant to these Regulations.

[^c20955231]: Section 1224A was inserted by S.I. 2007/3494.

[^c20955241]: Section 1242 was amended by S.I. 2007/3494.

[^c20955251]: Schedule 10 was amended by S.I. 2007/3494 and 2010/2537.

[^c20955261]: Schedule 11A was inserted into the Companies Act 2006 by S.I. 2007/3494.

[^c20955281]: S.I. 2008/496 amended by S.I. 2010/2537.

[^key-2673a0500d9562e2617ab6faa1dd5242]: Reg. 1(4) revoked (31.7.2013) by The Statutory Auditors and Third Country Auditors Regulations 2013 (S.I. 2013/1672), reg. 2, Sch.

[^M_F_77b9eaba-74a7-4606-dff2-032866bd577b]: Reg. 7 revoked (31.7.2013) by The Statutory Auditors and Third Country Auditors Regulations 2013 (S.I. 2013/1672), reg. 2, Sch.