This has not been an easy decision to take, as ICAEW has been a RAB since 1963, but it is the only sensible course of action now given:
- the diminishing number of ICAEW firms currently on the Irish Audit Register;
- the difficulty many of those firms have in complying with the new eligibility criteria;
- the divergence of regulatory regimes; and,
- the increasing demands on ICAEW from the Irish Audit and Accountancy Supervisory
Authority (IAASA), which has created a disproportionate amount of work for ICAEW given the amount of Irish audit work being carried out.
Historically, any firm applying for audit registration with ICAEW secured approval for both the UK and Ireland automatically. However, IAASA has become increasingly concerned about the competency of individuals to perform compliant audits in Ireland without a full understanding of the discreet requirements of Irish company and tax law, as divergences started to become more pronounced.
At the same time, in recent years it has become apparent that the audit regulations in meeting Irish obligations risked imposing additional burdens on UK auditors when they had no Irish audits – something that is inconsistent with the Hampton principles on effective regulation under UK law.
In recognition of the falling level of Irish audits, we required firms from January 2020 to opt-in for the first time if they wanted to hold Irish audit registration and to make a formal application for the firm (and separate applications for each proposed Irish responsible individual (RI)) demonstrating the competency levels expected by IAASA. As a result of this opt-in process, the number of Irish firms registered by ICAEW dropped from around 2,700 to fewer than 40.
As more than 30 of the remaining ICAEW firms on the Irish Audit Register have only one audit, we anticipate that most firms will surrender their audits rather than restructure their boards.
Consideration of revocation
Since the Brexit referendum of 2016, divergence had caused the ICAEW Regulatory Board (IRB) some concern. Consequently, when IAASA indicated it thought ICAEW should consider a possible revocation of its RAB status, the issue was assessed by both the IRB and the ICAEW Board and a decision was made to start the process.
While the precise timetable is being agreed with IAASA, and subject to satisfying all the governance steps involved, it is likely that our RAB status will end by 30 June 2021.
Steps Irish audit registered firms should take
The 32 firms that are currently registered by ICAEW as statutory auditors in Ireland have been contacted directly as they need to start planning alternative arrangements to:
- Complete in-progress Irish audits
- Hand any Irish audit clients over
- Apply to another RAB.