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Audit news: Issue 67 January 2021

Welcome to Audit News 67, your regulatory update containing the latest technical guidance and best practice advice.

In this issue

End of the transition period: New UK Audit Regulations

In the UK new January 2021 Audit Regulations are now effective. The major changes involve the qualification of EEA auditors and firms that could affect responsible individual (RI) status and ownership tests.

Points to note include:

  • EU qualified RIs on the UK audit register at 31 December 2020 are grandfathered through to 2021 and beyond and can continue to be part of the audit firm ownership tests.
  • EU audit firms can no longer count towards the audit firm ownership tests.
  • In the absence of a mention in the trade agreement, no EEA qualification is recognised for UK audit registrations from 1 January 2021 until mutual recognition is established.

End of the transition period: arrangements for Irish audits

The joint UK and Ireland Regulations issued in January 2020 remain in effect for Irish audits. Following the end of the Brexit transition period, some changes to eligibility are due. These will take effect once the Irish government has issued the appropriate legislation.

  • Find out more

Audit eligibility – please stay alert

The Audit Registration Committee continues to see cases where structural issues mean that a firm is not eligible for audit registration. These issues can prevail for months or years. ICAEW tries to highlight any issues that come to its attention, but audit eligibility is the sole responsibility of the audit firm.

Our case studies may help you to assess your firm’s eligibility:

Eligibility case study 1

The sole responsible individual (RI) appointed their non-accountant spouse as a director several years previously. The spouse did not have any involvement in client-facing work. The firm had not notified ICAEW of the appointment of a second director, and did not contact ICAEW subsequently despite the inclusion of only one director on annual returns.

The firm was ineligible for audit registration under Audit Regulation 2.03a as the spouse did not have audit affiliate status. It had not complied with Audit Regulation 2.11 by not informing ICAEW of the additional director. In addition, the firm had not complied with Audit Regulation 6.06 by not recognising and correcting the omission in the list of directors on subsequent annual returns.

The firm had incorrectly saved fees relating to the:

  • application, and annual fees for audit affiliate status, and
  • annual audit registration fee for a sole practice compared to a two principal firm.

New webinar: Audit monitoring update

Watch our latest webinar which contains an introduction from the Chair of the Audit Registration Committee, Rama Krishnan. Rama discusses the role of the Audit Registration Committee, the sort of issues it sees and what tools are available to assist in improving audit practice. The second half of the webinar is presented by Kevin Sharman from our Quality Assurance team. Kevin discusses where firms could improve on current common issues and provides examples of best practice.

ICAEW insights: Remote auditing

A challenge for auditors during the COVID-19 crisis

Regulatory news: Stay connected

All the latest ICAEW regulatory and disciplinary news is now in one place.

Suspicious Activity Reports (SARs): Does your firm know what to do?

Access our latest guidance on AML procedures and processes for firms.

PII, Appeal and Fitness Committee Regulations updated

Minor updates to the PII, Appeal and Fitness Committee Regulations took effect on 1 January 2021.

  • PII Regulations: Guidance for the consideration of dispensation applications by the PII Committee and the requirement for firms to put in place run-off cover on ceasing practice have been updated.
  • Appeal and Fitness Committee Regulations: The updates are to the procedural changes for the committees.