Definitions and terms for audit regulations.
The committee of the registering Institute appointed under the Institute's Bye-laws, regulations or Rules with responsibility for hearing appeals against a decision of the Review Committee under these regulations. When a committee discharges these functions its members are to be treated as officers of the Institute for the purpose of regulation 2.04e.
a) In relation to the audit of UK entities, a person holds an appropriate qualification if it is:
b) In relation to the audit of Irish entities, a person holds an appropriate qualification if it is:
Note. The Institutes and the ACCA are ‘recognised qualifying bodies’ for the purposes of the UK legislation and ‘recognised accountancy bodies’ for the purposes if Irish legislation. So the appropriate qualification they award is recognised in both jurisdictions.
For EEA qualifications the aptitude test is different in the UK and Ireland, so passing the aptitude test in one country does not give audit rights in the other. For overseas qualifications, the approval process is different in each country, so a qualification approved in one country may not be approved in the other. Even if approved in both countries, the aptitude test will be different so audit rights will only be obtained in the country of the aptitude test.
Holding a qualification under b) above will meet the qualification requirement under S187 of the 1990 Act for a public auditor
In relation to an entity, another entity in which it holds an interest on a long-term basis for the purpose of securing a contribution to its own activities by the exercise of control or influence arising from or related to that interest, or which holds such an interest in it. A holding of 20% or more is presumed to create an associate relationship.
In relation to a body corporate: a parent undertaking or subsidiary undertaking of the body corporate referred to; or a subsidiary undertaking of a parent undertaking of the body corporate
Guidance: The reference above to an 'official list' is to the official list as defined in the Financial Services and Markets Act 2000, Part 6 or to the official list of the Irish Stock Exchange in Ireland. It therefore does not include companies whose shares are publicly traded but that are not included in the official list.
The reference above to a 'listing authority' is to the Financial Services Authority in the UK and the Central Bank in Ireland.
The reference above to a partnership is to a partnership where all the partners are companies or Scottish partnerships and in the latter case, each partner in the partnership is a limited company.
The reference to a United Kingdom traded non-EEA company means a body corporate;
Companies incorporated in Jersey, Guernsey and the Isle of Man have already been excluded, so this definition does not apply to them. The latest list of excluded companies can be viewed at www.frc-pob.org.uk.
Should a registered auditor consider that there is a conflict between the requirements of these regulations (as applied to a particular UK traded non-EEA company) and the non-EEA country law, then the firm should consider seeking a dispensation under audit regulation 2.17 from the Registration Committee.
Part a(iii) of the definition applies in respect of audits of accounting periods starting on or after 1 October 2010.
The definition does not extend to reports relating to entities other than those specified.
The definition only embraces those circumstances where a report is required to be provided by a registered auditor in respect of any of the entities specified and the requirement is express and emanates from legislation (whether primary or secondary) or the rules of a recognised stock exchange (in connection with a company admitted to the official list). The definition does not encompass situations where a report is required by a registered auditor but where the firm does not have to be appointed as auditor to the entity (for example, a report about non-cash consideration under section 593 of the Companies Act 2006).
The report must be required by legislation that is applicable solely to one of the entities listed above. Reports commissioned, for example by a grant making organisation, where the grant could have been made to any person, to ensure that beneficiaries of funds have used them appropriately would not fall within the definition (even where the requirement for the body to commission such a report itself emanates from statute).
Persons authorised under legislation relating to the conduct of investment, insurance or mortgage business are those who can undertake investment advice etc. In the UK these would be entities with permission under Part IV of the Financial Services and Markets Act 2000 (or regulations made under that Act) or equivalent legislation in Ireland.
This definition of 'audit' does not include an independent examination for charities. Nor does it include any report required as part of a public offer of securities (prospectus) required by investment business legislation or any report on a circular to shareholders, required by a stock exchange, to authorise a transaction.
where such function is expressly required to be discharged either by or under United Kingdom or Republic of Ireland legislation.
Guidance: The reference above to an 'official list' is to the official list as defined in the Financial Services and Markets Act 2000, Part 6 or to the official list of the Irish Stock Exchange in the Republic of Ireland. It therefore does not include companies whose shares are publicly traded but that are not included in the official list.
The reference above to a 'listing authority' is to the Financial Services Authority in the UK and the Irish Financial Services Regulatory Authority in the Republic of Ireland.
The reference above to a partnership is to a partnership where all the partners are companies or Scottish partnerships and in the latter case, each partner in the partnership is a limited company.
The definition does not extend to reports relating to entities other than those specified.
The definition only embraces those circumstances where a report is required to be provided by a registered auditor in respect of any of the entities specified and the requirement is express and emanates from legislation (whether primary or secondary) or the rules of a recognised stock exchange (in connection with a company admitted to the official list). The definition does not encompass situations where a report is required by a registered auditor but where the firm does not have to be appointed as auditor to the entity (for example, a report about non-cash consideration under section 593 of the Companies Act 2006).
The report must be required by legislation that is applicable solely to one of the entities listed above. Reports commissioned, for example by a grant making organisation, where the grant could have been made to any person, to ensure that beneficiaries of funds have used them appropriately would not fall within the definition (even where the requirement for the body to commission such a report itself emanates from statute).
Persons authorised under legislation relating to the conduct of investment, insurance or mortgage business are those who can undertake investment advice etc. In the UK these would be entities with permission under Part IV of the Financial Services and Markets Act 2000 (or regulations made under that Act) or equivalent legislation in the RoI
This definition of 'audit' does not include an independent examination for charities. Nor does it include any report required as part of a public offer of securities (prospectus) required by investment business legislation or any report on a circular to shareholders, required by a stock exchange, to authorise a transaction.
Any person whose accounts are being audited under these regulations by a Registered Auditor.
A responsible individual who is either a principal of the Registered Auditor (or a sole practitioner where the Registered Auditor is a sole practice) or a member of its management board who is responsible for monitoring that the Registered Auditor has complied, and is likely to continue to comply, with these regulations, and whose identity is notified in writing to the Institute and who is the first point of contact with the Institute in connection with these regulations.
Guidance: The role of the audit compliance principal is to be responsible for ensuring that the firm complies with the audit regulations. A major part of the responsibilities is to make sure the monitoring required by these regulations is carried out. The audit compliance principal need not carry out the reviews personally but should make sure that they are carried out satisfactorily and any appropriate action taken.
A report by a Registered Auditor which relates to an audit.
Any work done by or on behalf of the Registered Auditor in respect of an audit.
Material (whether in the form of data stored on paper, film, electronic media or other media or otherwise) prepared by or for, or obtained by the Registered Auditor in connection with the performance of the audit concerned and includes –
The basic principles and essential procedures (shown in bold type) in the International Standards on Auditing (UK and Ireland) which are to be construed and applied having regard to the explanatory text and other material in those standards; issued by the Auditing Practices Board.
The rules and practices of the Financial Reporting Council (the Auditors Regulatory Sanction Procedure) which provide for a sanction determined by it arising from independent monitoring of Major Audits under UK law to be treated as if it were a sanction which the Institute, acting as a Recognised Supervisory Body, had itself determined.
An entity that has a legal personality (including a limited liability partnership) and a similar body constituted under the laws of a country or territory outside the United Kingdom or Ireland.
A day excluding weekends and public holidays.
The bye-laws of the ICAEW, the ICAS or the ICAI.
The Institute of Chartered Accountants in Ireland (Charter Amendment) Act 1966 and The Institute of Chartered Accountants in Ireland (Charter Amendment) Act (Northern Ireland) 1966.
A person who, alone or with any associate or associates, is entitled to exercise or control 15% or more of the rights to vote on all or substantially all matters at general meetings of a body corporate, or of another body corporate of which it is a subsidiary undertaking.
A body corporate, excluding a limited liability partnership.
Any person occupying the position of director (called by whatever name) in a corporate practice. Also any person under whose directions or instructions the directors of the corporate practice are used to acting.
The committee of the registering Institute appointed under the Institute's Bye-laws, regulations or Rules with responsibility for disciplining members, firms and others in accordance with the Bye-laws, regulations or Rules. When a committee discharges these functions its member are to be treated as officers of the Institute for the purpose of regulation 2.04e.
Any investigation and discipline scheme in which the registering Institute participates for the purposes of the independent investigation of matters concerning members and firms.
A firm eligible for appointment as an auditor under the law of an EEA member state.
An individual who holds a qualification to audit accounts under the law of an EEA member state other than the UK and Ireland.
Guidance: While an EEA auditor can be counted towards those who control a registered auditor, unless any required aptitude test is taken, an EEA auditor cannot be a responsible individual and so in charge of audit work, see chapter 4.
Any country that is a signatory to the European Union and European Community Treaties (ie EU member states) and Iceland, Liechtenstein, Norway. Gibraltar is also treated as an EEA member state by the 2006 Act.
Anyone who carries out audit work for a Registered Auditor, including a sub-contractor or a consultant.
Guidance: A sub-contractor or consultant cannot become a responsible individual.
The basic principles and essential procedures (shown in bold type) in the Ethical Standards issued by the Auditing Practices Board which are to be construed and applied having regard to the explanatory text and other material in those standards.
The Financial Reporting Council Limited, a company limited by guarantee incorporated in England and Wales, number 2486368 and any other body which takes over its functions under the auditor sanctions procedure.
- an individual who engages in the profession of accountancy as a sole practitioner;
- a partnership which engages in the profession of accountancy;
- a limited liability partnership which engages in the profession of accountancy; or
- a corporate practice which engages in the profession of accountancy.
A corporate practice, any parent or subsidiary undertakings and any parent or subsidiary undertakings of any of them.
- the Institute of Chartered Accountants in England and Wales (ICAEW);
- the Institute of Chartered Accountants of Scotland (ICAS); or
- the Institute of Chartered Accountants in Ireland (ICAI) operating as Chartered Accountants Ireland.
The committee of the registering Institute appointed under the Institute's Bye-laws, regulations or Rules with responsibility for considering complaints against members, firms and others as specified in the Bye-laws, regulations or Rules. When a committee discharges these functions its members are to be treated as officers of the Institute for the purpose of regulation 2.04e.
An audit conducted under UK law in respect of:
Any committee, board or other management body that is responsible for setting and directing the implementation of the firm's policies.
The registering Institute or any body undertaking monitoring in accordance with paragraph 12 or paragraph 23 of schedule 10 of the 2006 Act or regulation 83 S.I. No.220 of 2010.
A body which pursuant to the Act is responsible for the regulation and/or supervision of Recognised Supervisory Bodies.
Guidance: In the UK the oversight body is the Financial Reporting Council and in Ireland it is the Irish Auditing and Accounting Supervisory Authority.
A sub-committee of the Registration Committee of the ICAS.
- the Professional Indemnity Insurance Regulations of the ICAEW;
- the Professional Indemnity Insurance Regulations of the ICAI; or
- the Professional Indemnity Insurance Bye-laws of the ICAS.
Practice notes and bulletins issued by, or with the authority of, the Auditing Practices Board.
Guidance: These give guidance on how auditing standards can be applied and on new or emerging issues.
A certificate issued to a member by an Institute authorising the member to engage in public practice.
An individual in sole practice, (where the firm is a sole practice), a person who is a partner (including both salaried and equity partners) (where the firm is a partnership), a member of a limited liability partnership (where the firm is a limited liability partnership) a director (where the firm is a company), or any individual who is held out as being a company director, partner or member.
Guidance: Corporate practices or limited liability partnerships may be principals, where these regulations allow.
The basic principles and essential procedures (shown in bold type) in the International Standards on Quality Control (UK and Ireland) which are to be construed and applied having regard to the explanatory text and other material in those standards, as issued by the Auditing Practices Board.
A body recognised under the 2006 Act, or the 1990 Act or the Companies (Audit and Accounting) Act 2003 for the purposes of the registration and supervision of Registered Auditors.
The register of auditors compiled under section 1239 of the 2006 Act or regulation 63 of S.I. No.220 of 2010 or section 198 of the 1990 Act.
A firm entered on the register as eligible for appointment as a statutory auditor under section 1239 of the 2006 Act or under regulation 63 of S.I. No.220 of 2010 or section 198 of the RI 1990 Act.
The register maintained under S198 is the Register of Public Auditors.
The Institute to which the firm is applying for or from which it has obtained registration. In the case of ICAI these functions are carried out by the Chartered Accountants Regulatory Board (CARB) established in accordance with the provisions of Bye-Law 41.
The committee of the registering Institute appointed under the Institute's Bye-laws, regulations or Rules with responsibility for discharging the functions set out in Chapter 6 or any sub-committee of that committee. When a committee discharges these functions its members are to be treated as officers of the Institute for the purpose of regulation 2.04e.
These regulations as modified or amended.
An amount imposed with the consent of a Registered Auditor as a penalty for breaches of these regulations which the Registered Auditor agrees have been committed.
A principal or employee responsible for audit work and designated as such under regulation 4.01.
Guidance: The 2006 Act uses the term "senior statutory auditor" for the individual identified by a registered auditor in relation to a specific audit of a UK company who signs the audit report in his own name on behalf of the registered auditor. This individual must be a responsible individual.
Any committee appointed under a registered Institute's Bye-laws, regulations or Rules with responsibility for reviewing decisions made by the Registration Committee as specified in these regulations. When a committee discharges these functions its members are to be treated as officers of the Institute for the purpose of regulation 2.04e.
The rules of the ICAS.
European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 of Ireland. You can view S.I. No.220 of 2010 online as a PDF.
Any regulatory action including the imposition of condition or restrictions, suspension or withdrawal of registration, and imposition of a regulatory penalty.
The Companies Act 1990 of Ireland.
The Companies Act 2006 of the UK.
The Companies Act 2006 of the United Kingdom or the Companies Acts 1963 to 2009 of Ireland and every other enactment which is made under, or is to be read together with or as one with, any of those Acts.
The rights to vote on all or substantially all matters at meetings of principals or shareholders of the body in question. In deciding what voting rights are to be taken into account, paragraphs 5 to 11 of schedule 7 to the 2006 Act apply to corporate practices and limited liability partnerships, and paragraphs 5 to 7 and 11 of that schedule apply to partnerships.