Eligibility for firm control
ICAEW updated the Audit Regulations to ensure they align with the Companies Act 2006 and the FRC Eligibility Criteria. The amendments focus on confirming that audit firms are genuinely controlled by audit qualified persons.
What changed?
- Voting rights were redefined to include rights to vote on matters that direct the firm’s overall policy or change its constitution.
- The definition of ‘majority’ has been clarified to mean more than 50%, unless the firm’s constitution sets a higher threshold (in which case that higher bar applies).
Why this matters
From 1 April 2025, firms must be able to show that audit qualified persons can pass key decisions on policy or constitutional change – a veto alone is not sufficient. Where constitutional voting thresholds exceed 50%, audit qualified persons must be able to reach those higher thresholds.
Tools and guidance
- Eligibility considerations when making changes to firm structure – common problem areas and examples
- Check your eligibility status – ongoing responsibility reminder and signposting
New duty to notify ICAEW about certain relevant audits
ICAEW-registered audit firms must now notify ICAEW within 21 business days when appointed to specific audit engagements that may be complex or high risk.
When notification is required
Notification applies from 1 June 2025 when your firm is appointed as auditor to:
- a listed entity;
- an entity with turnover over £750m, or an Other Entity of Public Interest under the FRC Ethical Standard;
- an audit where the expected first-year fee is more than twice the firm’s previous highest audit fee, subject to a £25k de minimis;
- a large/complex group (combined turnover over £750m under common ownership/control) where the firm has three or fewer responsible individuals.
Notification is also required where an existing audit engagement starts to meet one or more of the criteria after 1 June 2025.
Notification isn’t needed where firms already notify the FRC (eg, PIE audits).
Waiver option
Firms with significant relevant experience can apply for a waiver from the 21-day requirement and instead notify annually via a template.
Tools and guidance
- Guidance note for Audit Regulations 3.15A–3.15D – background, definitions, and examples
- Notify ICAEW about the movement of a relevant audit
- Waiver application route – via the Audit Registration Committee.
Sole practice auditors must appoint an alternate
A new regulation (2.02A) requires sole practice audit firms to appoint an alternate to ensure continuity if the sole auditor cannot practise. This applies to sole traders and corporate firms with one director.
Key points
- The alternate can be a member of ICAEW, ICAS, CAI or ACCA.
- They do not need to be a responsible individual or hold a practising certificate.
- The role is to support continuity/transition, not to take on audit work.
A number of firms have not told us about their alternate
The deadline to appoint an alternate was 1 December 2025 and sole practice auditors need to inform us of their alternate’s details. Our current list of alternates is incomplete. Sole practice auditors should complete the form to notify us of their alternate’s details as soon as possible so that we can confirm they are compliant.
Tools and guidance
- Alternate appointment form (send completed forms to annual.returns@icaew.com)
- Guidance for sole principals and alternates