Registration and management of cross-border structures and shared services centres
Reflecting the ongoing internationalisation of client needs, cross-border structures and the use of shared services centres have become increasingly important within accountancy networks and associations.
Why does it matter?
In recent years, the UK has seen the registration of cross-border structures, permissible due to the Europeanisation (since 2006) of audit firm ownership rules. These structures have been established with the objective of achieving consistent approaches in relation to methodologies (especially audit), quality control and the overall management of transnational assignments.
UK and EU27 firms also make use of shared services centres, for example for tax compliance (or audit) work, central IT or human capital services. Shared services centres, which provide services throughout all or part of an accountancy network / association, may be outsourced to third-party suppliers or may be staffed by the network itself. They typically operate under a service level agreement, increasing the quality and professionalism of services provided, offering strategic flexibility and cost flexibility.
Why are we concerned?
Post-Brexit, UK auditors would no longer meet EU audit firm ownership rules. This could lead to a restructuring and relocation of trans-national audit partnerships registered in the UK. This could impact on the capacity of accounting firms to transmit through the networks and associations the professional expertise generated from servicing the EU’s largest capital market and from investments in technology.
Any undermining of existing arrangements for the cross-border management of specific assignments and of shared services centres would result in additional costs and add complexity in relation to key activities such as oversight, training and quality assurance.
What are we calling for?
We call for the inclusion within a UK-EU27 future arrangement of the broader regulatory framework for statutory audit, covering also provisions relating to audit ownership control requirements. Equivalence and adequacy decisions as well as reciprocal recognition of statutory auditors will help avoid disruption to current cross-border management of assignments, pooling of resources through shared services centres and the outsourcing of some functions. These measures will need to be accompanied by a broader agreement on the collection and transfer of data.