The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2020

Publication Date:January 01, 2020
 
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2020No. 108

EXITING THE EUROPEAN UNION

AUDITORS

INSURANCE

The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2020

Made31stJanuary2020

Laid before Parliament3rdFebruary2020

Coming into force in accordance with regulation 1(2)

The Secretary of State makes the following Regulations in exercise of the powers conferred by section 2(2) of the European Communities Act 1972( 1), sections 484(1), 1240A, 1240B and 1292(1) of the Companies Act 2006( 2) and sections 15 and 17(3) of the Limited Liability Partnerships Act 2000( 3).

The Secretary of State is a Minister designated( 4) for the purposes of section 2(2) of the European Communities Act 1972 in relation to auditors and the audit of accounts.

PART 1

Introductory

Citation, commencement and application

1.—(1) These Regulations may be cited as the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2020.

(2) These Regulations come into force—

(a) in the case of Part 2, immediately before IP completion day;

(b) otherwise on the 21st day after the day on which these Regulations are made.

(3) The amendments made by regulation 16 apply in relation to financial years beginning on or after 6th April 2020.

PART 2

Amendments to the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019

2. The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019( 5) are amended by this Part.

3. In Schedule 2 (approval of third country competent authorities), in Table 3—

(a) after the entry for “The Canadian Public Accountability Board” insert—

“The Ministry of Finance of the People's Republic of China

14 November 2024

The Securities Regulatory Commission of the People's Republic of China

14 November 2024”;

(b) omit the entry for “The Finance Professions Supervisory Centre of Indonesia”;

(c) in the entry for “The Independent Regulatory Board for Auditors of South Africa”, in column 2 for “31 July 2019” substitute “31 July 2022”.

4. In Schedule 4 (transitional provision)—

(a) in paragraph 1, before sub-paragraph (a) insert—

“(za) regulations 4 and 50(b);( 6)”;

(b) after paragraph 1 insert—

1A. In its continuing application in relation to audits of accounts for financial years that begin before IP completion day, section 479A(1)(b) of the Companies Act 2006( 7) (including as modified by regulation 34A of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008( 8)) must be treated as if the reference to a parent undertaking being established under the law of an EEA State included a reference to a parent undertaking being established under the law of any part of the United Kingdom.”.

PART 3

Equivalent third countries and approved third country competent authorities

CHAPTER 1

Procedures relating to approvals for equivalent third countries and transitional third countries

Application and interpretation

5.—(1) This Chapter applies in relation to the grant of—

(a) approval to a third country as an equivalent third country;

(b) provisional approval to a third country as an equivalent third country; or

(c) transitional approval to a third country as a transitional third country;

by relevant regulations.

(2) In this Chapter, “relevant regulations” means regulations under section 1240A(1) of the Companies Act 2006 made by the Secretary of State.

Definition of a comparable audit regulatory regime

6. For the purposes of these Regulations, the audit regulatory regime of a third country is comparable to that of the United Kingdom if there are comparable requirements to those in regulations 3, 5, 6 and 9 of the Statutory Auditors and Third Country Auditors Regulations 2016( 9) in that country's audit regulatory regime.

Power of Secretary of State to take into account a report from the competent authority

7.—(1) Before granting approval, provisional approval or transitional approval to a third country by relevant regulations, the Secretary of State may take into account a report prepared by the competent authority( 10) that assesses the extent to which the third country's audit regulatory regime is comparable to that of the United Kingdom.

(2) The report of the competent authority may take account of any assessments of the third country's audit regulatory regime carried out by or on behalf of an equivalent third country or a transitional third country.

Conditions for grant of approval

8.—(1) The Secretary of State may not grant to a third country—

(a) approval as an equivalent third country unless the Secretary of State is satisfied that condition A is met;

(b) provisional approval as an equivalent third country unless the Secretary of State is satisfied that condition B is met; or

(c) transitional approval as a transitional third country unless the Secretary of State is satisfied that condition C is met.

(2) Condition A is that the third country has an audit regulatory regime that is comparable to that of the United Kingdom.

(3) Condition B is that it is likely that—

(a) the third country has an audit regulatory regime that is comparable to that of the United Kingdom; and

(b) that comparability can reasonably be expected to have been established before the end of the period of provisional approval.

(4) Condition C is that it is likely that—

(a) the third country's audit regulatory regime will be comparable to that of the United Kingdom before the end of the period of transitional approval; or

(b) the third country will make acceptable progress towards its audit regulatory regime being so comparable before the end of the period of transitional approval.

Suspension of approval

9.—(1) If, in relation to a third country which has been granted approval, provisional approval or transitional approval by relevant regulations, the Secretary of State is no longer satisfied that condition A, B or C is met, the Secretary of State may direct that the approval, provisional approval or transitional approval is suspended with effect—

(a) from a date specified in the direction; or

(b) for financial years beginning or ending on or after a date specified in the direction;

for a period of no longer than two years beginning on the date of the direction.

(2) A suspension under paragraph (1) may be extended so that the suspension is for a total period of no longer than three years beginning on the date of the direction.

(3) The Secretary of State may revoke a direction to suspend approval, provisional approval or transitional approval.

(4) The Secretary of State must inform the competent authority of—

(a) any suspension of approval, provisional approval or transitional approval;

(b) any extension of such a suspension; and

(c) any revocation of a direction to suspend approval, provisional approval or transitional approval.

(5) The Secretary of State must make arrangements for—

(a) publication on a publicly accessible website of details of—

(i) any suspension of approval, provisional approval or transitional approval;

(ii) any extension of such a suspension; and

(iii) any revocation of a direction to suspend approval, provisional approval or transitional approval; and

(b) informing any registered third country auditors of any UK-traded third country companies incorporated or formed under the law of a third country whose approval, provisional approval or transitional approval has been suspended—

(i) of that suspension;

(ii) of any extension of that suspension; and

(iii) where there is subsequently a revocation of the direction to suspend approval, provisional approval or transitional approval, of that revocation.

(6) For the purposes of this regulation—

(a) approval granted for an indefinite period under Schedule 1 to the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 is to be treated as if it were granted under relevant regulations on the basis that condition A were met;

(b) approval granted for a finite period of time under that Schedule is to be treated as if it were granted under relevant regulations on the basis that condition B were met;

(c) transitional approval granted under that Schedule is to be treated as if it were granted under relevant regulations on the basis that condition C were met.

CHAPTER 2

Procedures relating to approvals for third country competent authorities

Application and interpretation

10.—(1) This Chapter applies in relation to the grant of—

(a) approval to a third country competent authority as an approved third country competent authority; or

(b) provisional approval to a third country competent authority as an approved third country competent authority;

by relevant regulations.

(2) In this Chapter, “relevant regulations” means regulations under section 1240B(1) of the Companies Act 2006 made by the Secretary of State.

Definition of when a third country competent authority is adequate in relation to exchange of papers and reports

11. For the purposes of these Regulations, a third country competent authority is adequate, in relation to the authority's ability to co-operate with the competent authority on the exchange of audit working papers and investigation reports, if provisions with content comparable to that of sections 1224A( 11), 1224B( 12) and 1253A to 1253C( 13) of, and Schedule 11A( 14) to, the Companies Act 2006, or provisions which are expected to achieve comparable outcomes, apply in the country of that competent authority.

Power of Secretary of State to take into account a report from the competent authority

12.—(1) Before granting approval or provisional approval to a third country competent authority by relevant regulations, the Secretary of State may take into account a report prepared by the competent authority that assesses the extent to which the third country competent authority is adequate in relation to that authority's ability to co-operate with the competent authority on the exchange of audit working papers and investigation reports.

(2) The...

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