What are the new rules?
Under Regulation 2.02A, sole practitioners must nominate an alternate who can step in to manage client transitions if the practitioner is unable to continue. The alternate is not expected to take over the business but must be able to act quickly and competently to ensure clients are not left unsupported: The alternate’s role is to facilitate a smooth transition of clients to another auditor, not to assume control of the practice.
Key criteria for alternates are as follows:
- must be a member of ICAEW, ICAS, CAI, or ACCA;
- do not need to be a Responsible Individual (RI); and
- do not need to hold a Practising Certificate.
Full detail of the regulations for arrangements for alternates can be found in the following ICAEW helpsheets:
- Arrangements for alternates - guidance for sole principals
- Arrangements for alternates - guidance for alternates
How to notify
Once you has agreed arrangements for an alternate, you need to notify ICAEW by completing this form and emailing it to annualreturns@icaew.com
Audit Regulations require a sole practitioner to inform ICAEW as soon as possible, but within ten working days, of any change in the name and address of the alternate, or whether the arrangement has ceased.
What to do if you are struggling to find an alternate?
The eligibility criteria for who can act as an alternate have been widened in the latest version of the Audit Regulations, significantly increasing the pool of potential candidates. If your firm is finding it difficult to identify someone suitable, consider the following approaches.
- Engage with your ICAEW Local Network: These networks often host events and forums that can help you connect with other practitioners who may be open to acting as an alternate.
- Establish reciprocal arrangements with peers: Reach out to fellow sole practitioners to set up mutual support agreements. These informal partnerships can provide peace of mind and ensure compliance with the new regulations.