Updated audit regulations, June 2012
The Audit Regulations have been updated with effect from 1 June 2012 following their review and approval by the Irish regulator, the Irish Auditing and Accounting Supervisory Authority (IAASA).
The revised regulations are available in the Regulations, standards and guidance area of this website.
In 2010, the Irish government enacted SI 220 - European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 of Ireland. This enacted various parts of the EC Statutory Audit Directive which, in the UK, had largely been achieved through the Companies Act 2006. The Audit Regulations were substantially reorganised in 2008 to take account of the changes brought about by the 2006 Companies Act, including the obligations under the Statutory Audit Directive.
As SI220 also enacts the Statutory Audit Directive, the changes to the regulations needed for SI220 are mainly ones of cross-referencing. However, a small number of our registered firms with only Irish audits have, until now, been operating under the 1995 regulations. Those regulations are now replaced by new regulations, which are significantly different in structure and content. This is reflected in the deletion of regulation 1.07 and the addition of 1.04A.
For all firms there are one or two additional nuances that are necessary and these are summarised below.
- ‘Republic of Ireland’ is now defined as Ireland.
- The UK Act requires the accountancy bodies to make regulations to implement a number of legislative provisions; in Ireland, where the requirement is included in the text of the Irish SI itself, there is no equivalent requirement for a regulation. Consequently, the relevant regulations are not applicable in Ireland. Guidance has been included in the regulations to explain this. In summary the relevant regulations are:
- regulation 3.09- successor’s access to working papers;
- regulation 3.14- transfer of audit working papers to another competent authority in an EEA member state.
- Regulation 3.15, Notification to a registration committee where the registered auditor is appointed as auditor of a 'major audit' client, does not apply to Irish entities.
A number of other changes have been made which affect UK audits, Irish audits or both.
- Definition of audit working papers- SI220 of 2010 includes a definition of audit working papers. As audit working papers are referred to in the SI the definition has now been included in the Regulations.
- Definition of appropriate qualification:
- the definition has been expanded to ensure all references to the 2006 Act have been included; and
- a new definition for Irish entities as required by the SI220 of 2010 has been included.
Further guidance — through flowcharts on qualifications — is set out in a new schedule at the end of Chapter 4 to help you interpret the definitions.
- An obligation for registered auditors to provide returns and other information required by the registration committee under new regulation 2.10A.
- Email is now accepted as form of notice under the regulation 1.08 (formerly 1.09).
- There are some additional guidance notes around firm eligibility under regulation 2.03, in particular the continued prohibition in Ireland of audit firm body corporates acting as auditors for certain small entities outside the scope of SI220.
- Additional independence rules in Ireland set out in schedule 1 to Chapter 3.
In terms of what the new regulations mean for existing practices in the UK, there are not many changes needed, but the guidance in firm disclosure at the start of Chapter 2 may require some amendments. Registration with ICAEW as an audit firm enables that firm to express opinions as a statutory auditor in both the UK and Ireland, and stationery, marketing materials and websites need to be amended to that effect. If, however, audits are unlikely to be undertaken in Ireland, the sole UK reference is acceptable on stationery but the Irish registration needs to be disclosed somewhere, usually on the firm’s website or office wall in the reception area.