Audit in Ireland
This page provides information for firms that undertake audits of Irish entities.
The auditing regulations in Ireland are largely governed by the Companies Act 2014 as updated by the Companies Act 2018 which implemented the EU’s Statutory Audit Directive and Regulation 2014.
Copies of the above legislation can be obtained from the Irish Auditing and Accounting Supervisory Authority.
SI 220 removed the prohibition in section 187 of the Companies Act 1990 that prevented corporate firms being auditors. Auditors who are constituted as companies or limited liability partnerships can accept appointment as company auditor in Ireland.
Until 2018, corporate auditors (such as LLPs) could not act as ‘public auditors’ (auditors of societies registered under the Industrial and Provident Societies Acts 1893 to 1978, or the Friendly Societies Acts 1896 to 1993). The restriction under section 187 of the Companies Act 1990 (as transcribed into section 1441 of the Companies Act 2014) was repealed by the Companies Act 2018.
Chapter 4 of the Audit Regulations states that although the audit qualifications of ICAEW, Chartered Accountants Ireland, Institute of Chartered Accountants of Scotland and the ACCA are recognised in the UK and Ireland, other qualifications are not.
Individuals who hold an EEA audit qualification need to pass an aptitude test. The test in the UK is different to the one in Ireland, so passing an aptitude test in one country does not give the holder of an EEA qualification the right to be a responsible individual in the other country. They can, however, still count towards the control requirement of an audit firm in each country.
For audit qualifications from outside the EEA, a similar position arises. As well as different aptitude tests, the underlying qualification may not have been recognised in both countries. At present, the UK recognises certain Australian and Canadian qualifications. Ireland has yet to recognise any. People can only be responsible individuals (and count towards the control requirement) in the country in which they have taken an aptitude test.
Brexit: Removal of audit rights in Ireland
The Irish audit authorities have indicated that they interpret the Audit Directive to mean that non-Irish resident accountancy firms currently on the Irish Audit Register, are unlikely to retain automatic audit rights in Ireland in the event of a no-deal Brexit. Your firm will be directly affected by this.
ICAEW, the other recognised accountancy bodies (RABs), BEIS and the FRC are seeking further discussions and transitional arrangements with the Irish Authorities. For scenario planning purposes firms should assume that these may not be forthcoming.
Most of the current licensing for audit in Ireland is based on membership of/or registration by a RAB which is also a recognised supervisory body (RSB) in the UK. Consequently, individuals and firms receive audit rights for both the UK and the ROI simultaneously.
However from Brexit day (31 October 2019 or later), we expect that UK audit firms will need to seek separate approval as a statutory auditor in Ireland. This may include a requirement for responsible individuals (RIs) to undertake an aptitude test for the differences between UK and Irish law. This process will begin from 1 January 2020 through the introduction of new Audit Regulations that implement the 2018 Companies Act. Additionally, UK firms that audit companies listed on the Irish Stock Exchange will need to be registered by IAASA as third country auditors.
The process for applying to be a third country auditor in respect of audits of Irish entities is currently undefined. It will not be agreed or take effect until after Brexit day (31 October 2019 or later). This makes a roll-over of existing registrations extremely difficult to plan and it could be some months before it is in place. However, on 14 January 2019, IAASA signified that a provisional registration process was in place (Form B) for third country auditor status for those who audit UK entities with listings on the Irish Stock Exchange.
As a consequence, and in the absence of transitional arrangements, it should be assumed that in the event of a no-deal Brexit, UK firms will have to cease audit services to existing Irish clients after Brexit day (31 October 2019 or later). In such circumstances firms need to consider the following approaches in their scenario planning.
- Firms must immediately identify their audits of Irish (ROI) entities that could be affected by this Irish ruling and the timing of their audit opinions.
- All responsible individuals (RIs) who sign Irish audit opinions need to be separately identified and analysed according to whether their residential address is in the UK or in the ROI.
- All audits where the Irish records are retained in the UK need to be identified.
Management of audits
- For audit opinions normally expressed in early April; consider advancing this to March.
- For audit opinions normally expressed after June; consider if this can be delayed for one/two months to leave more time for discussions with the Irish authorities to reach a conclusion.
- Consider whether the only feasible option is to resign as auditors and the timing thereof.
- Consider moving the audit and the RI responsibility to your Irish network firm, including:
- Agree the resignation of the UK firm and replacement by the Irish firm with the client.
- Consider the resource capability within the Irish network firm and either; second staff where appropriate; or retain the underlying work within the UK firm under ISA600.
- If the latter, the Irish firm will need to agree the necessary increase in audit fee to cover the ISA220 supervision.
- Agree the revised timetable for delivery of the audit opinion with the client.
- For Irish accounting records that are retained in the UK, consider if these records need repatriations or a visit from an Irish audit firm that retains its registration.
- In all options the client needs to be alerted to the operating timescales and needs to consider:
- The impact on filing requirements under company law and listing requirements.
- The impact on taxation payments.
- The impact on banking and other covenants.
Management of registration
Where your firm is likely to need separate registration as a statutory auditor in Ireland:
- Consider if the Irish registration is necessary for the firm;
- If no current audits – is it of strategic value?
- If only a few audits – whether continued engagement is of strategic value?
- If the re-registration requires aptitude tests – which of your firm’s RIs should undertake them?
There are a number of questions that arise as part of this planning. The RABs are seeking clarification with IAASA, the Department of Business Enterprise and Innovation in Ireland, BEIS and the FRC on;
- the definition of a firm’s residency;
- the ability to second staff from the UK to Ireland post Brexit day;
- the application of Brexit day as a cut-off date; and
- the process for re-registering post Brexit day.
We will update you as soon as we receive further information. Further guidance on Brexit is available at icaew.com/brexit or please contact our technical helpline on +44 (0)1908 248 250.
Updates on audit registrations in Ireland
Update: 09 October 2019
From 1 January 2020, firms that wish to be registered for audit in Ireland will need to opt in and demonstrate eligibility. Your firm will no longer be automatically registered on the Irish Audit Register. The other changing requirements are:
- Revised ownership rules – 50% control by audit qualified personnel will be based on membership numbers rather than voting rights at management board and possibly ownership level.
- Tighter tests on competence for eligibility and CPD – detailed record keeping will be required to demonstrate Irish law and standards competence.
These changes are due to the Irish Companies (Statutory Audits) Act 2018 and the subsequent revision of the Audit Regulations. These will be issued shortly once formalised with detailed guidance notes.
Ireland – future registration requirements
There are no material changes to the instructions provided earlier this year. The following should be noted:
- ICAEW won’t remove firms from the Irish Audit Register from Brexit day as it is not empowered to do so under current Irish law. After Brexit day, it will be unwise for firms to sign an audit opinion as retrospective legislation could close this gap.
- It is expected that UK firms wishing to sign Irish audit opinions from Brexit day will have to re-apply to be registered as third country auditors.
- Re-application may involve an aptitude test (arrangements for which are still to be defined) unless evidence of sufficient experience of Irish law and audit may warrant an exemption. Firms with no Irish audit clients are unlikely to qualify. The current aptitude test is based on the Chartered Accountants Ireland’s Company Law and Tax papers.
- No recognition can be exercised in the absence of a reciprocity arrangement between the UK and Ireland. A draft MoU for reciprocity arrangements between the UK and Ireland has been agreed in principle. Further steps are needed before reciprocity is formalised.
- Scenario planning is still required. Even if firms can demonstrate entitlement to the exemption for responsible individuals (RIs) on Brexit day, it is unlikely audit signing rights will be secured for some time after.
UK Brexit Audit Regulations
Draft UK Audit Regulations for Brexit have been approved by the ICAEW Regulatory Board (IRB). The principal changes relate to the qualifications of EEA auditors and firms. Transitional arrangements will apply until 31 December 2020 whether there is a deal or no-deal Brexit. As Irish eligibility post no-deal Brexit is not defined, these regulations are for the UK only.
In the event of a no-deal Brexit, both sets of Audit Regulations referenced above will be effective. The table below shows the different configurations:
||Regulations for both jurisdictions
||Separate Regulations for the UK only
||Separate Regulations for Ireland only|
|No-deal Brexit: 31.10.19
||2017 Audit Regulations used for Ireland only
||Brexit Audit Regulations
To be developed when eligibility rules established
|Deal Brexit: 31.10.19
||2017 Audit Regulations up to 31.12.19 for both.
To be used for Ireland only post 1.1.2020
|Brexit Audit Regulations from 1.1.2020
To be developed when eligibility rules established
|Brexit still outstanding at 1.1.2020
||2019 Audit Regulations used for UK and Ireland from 1.1.2020
||Development of UK version of the 2019 Audit Regulations for April 2020
May be developed when eligibility rules established
|Brexit day delayed until eg, 31.3.2020
||2019 Audit Regulations for UK and Ireland up to 31.3.2020.
To be used for Ireland only post 1 April 2020
|Brexit Audit Regulations from 1.4.2020
To be developed when eligibility rules established
Changes to firm stationery and websites
Firms that state they are ‘Registered to carry out audit work in the UK and Ireland’ or similar on their stationery and websites will need to amend this to exclude Ireland as appropriate.
Update: 28 May 2019
On 11 April 2019 the Council of Ministers in Brussels agreed to the deadline for Brexit being extended to 31 October 2019. As a consequence the registration arrangements in operation continue to apply at this time. Audit opinions can continue to be signed until Brexit is implemented or until 31 October 2019. However while there has been some discussion as to what the nature of the eligibility requirement might be after Brexit, there has been no overt guidance issued by IAASA or the Irish government. The position therefore remains as it was at December in this respect.
In the UK the government and FRC asked that we prepare draft Audit Regulations for a no deal Brexit. We were able to do for the UK as stand-alone regulations which were shared with firms on 15 April 2019. However in the absence of details of the new eligibility criteria from IAASA for registration in Ireland we have not been able to replicate this for the audit of Irish entities post Brexit.
Update: 10 April 2019
As at this date the removal of firms from the Irish audit register and the processes for reapplication remain uncertain. ICAEW has been advised under current law the removal is not easily achieved but this may be facilitated by future legislation, possibly with retrospective effect. UK firms registered with ICAEW for audit in Ireland are therefore advised not to sign audit opinions on Irish statutory entities after the date of Brexit until the position is clarified.
Working in the regulated area of audit support: