The impact on Brexit on audit rights in the UK and Ireland
Following the approval by the EU27 states of a withdrawal agreement for the UK to leave the EU, Brexit took place on 31 January 2020. The withdrawal agreement includes a transition period through to 31 December 2020.
Guidance issued prior to Brexit by ICAEW on audit regulation largely addressed the potential need for immediate action should withdrawal occur with no agreement, a no-deal Brexit. As a withdrawal agreement has been signed, the steps identified as part of a no-deal do not apply on 1 February 2020, but potentially will still come into force on 31 December 2020. This applies to arrangements both in the UK and Ireland.
Arrangements during the transition period
Between 1 February 2020 and 31 December 2020, the arrangements for registration as a registered auditor in the UK and Ireland remain the same as they were before Brexit day.*
The joint regulations for UK and Ireland issued with effect from 1 January 2020 continue to apply.
BEIS and the FRC have issued guidance letters to audit firms on the transition period in the UK.
*Although, due to other concurrent changes, firms must now opt-in to carry out Irish audits.
Arrangements after the transition period ends
The position at 1 January 2021 may however, be different. Factors that will influence the shape of eligibility for registration in both UK and Irish jurisdictions after 1 January 2021 and operational matters like the exchange of working papers include;
- The outcome of the Trade Agreement.
- The transposition of that agreement into UK and Irish law (and where relevant the other 26 states).
- The timing of implementation – the transition period could be extended beyond 31 December 2020 (the withdrawal agreement allows the decision on this to be taken up to 30 June 2020).
- The speed and effectiveness of adequacy and equivalence decisions by relevant countries once the framework has been put in place. (The UK’s enabling framework was approved by statutory instrument on 3 February 2020).
ICAEW is in close discussion with BEIS and the FRC and will advise firms as the likely outcomes become clearer. As an interim measure, the audit regulations that would be applicable in the UK post Brexit have been updated to reflect the transition period and what would be in place at 1 January 2021 should there be no trade agreement. These regulations are purely indicative and are subject to change.
The principal differences to the current regulations relate to the qualification of EEA auditors and firms that may affect RI status and ownership tests.
However until further notice the joint regulations for UK and Ireland issued with effect from 1 January 2020 continue to apply.
In Ireland the position is more complex and guidance on Irish registration during and after the transition period is given here.
Changes to firm stationery and websites
If your firm is no longer on the Irish Audit Register, you will need to need to update your stationery/website with the following ‘Registered to carry out audit work in the UK’ or similar to exclude Ireland.