(1) No person within subsection (2) is to be liable in damages for anything done or omitted in the discharge or purported discharge of functions to which this subsection applies.
(2) The persons within this subsection are—
(a) any recognised supervisory body,
(b) any officer or employee of a recognised supervisory body, and
(c) any member of the governing body of a recognised supervisory body.
(3) Subsection (1) applies to the functions of a recognised supervisory body so far as relating to, or to matters arising out of, any of the following—
(a) rules, practices, powers and arrangements of the body to which the requirements of Part 2 of Schedule 10 apply;
(b) the obligations with which paragraph 20 of that Schedule requires the body to comply;
(c) any guidance issued by the body;
(d) the obligations imposed on the body by or by virtue of this Part or by or by virtue of the Statutory Auditors and Third Country Auditors Regulations 2016;
(e) the obligations imposed on the body by or by virtue of the Audit Regulation.
(4) The reference in subsection (3)(c) to guidance issued by a recognised supervisory body is a reference to any guidance or recommendation which is—
(a) issued or made by it to all or any class of its members or persons seeking to become members, and
(b) relevant for the purposes of this Part , the Statutory Auditors and Third Country Auditors Regulations 2016 or the Audit Regulation,
including any guidance or recommendation relating to the admission or expulsion of members of the body, so far as relevant for the purposes of this Part , the Statutory Auditors and Third Country Auditors Regulations 2016 or the Audit Regulation.
(5) Subsection (1) does not apply—
(a) if the act or omission is shown to have been in bad faith, or
(b) so as to prevent an award of damages in respect of the act or omission on the ground that it was unlawful as a result of section 6(1) of the Human Rights Act 1998 (c. 42) (acts of public authorities incompatible with Convention rights).
(1) A person holds an appropriate qualification for the purposes of this Chapter if and only if—
(a) he holds a recognised professional qualification obtained in the United Kingdom,
(b) immediately before the commencement of this Chapter, he—
(i) held an appropriate qualification for the purposes of Part 2 of the Companies Act 1989 (c. 40) (eligibility for appointment as company auditor) by virtue of section 31(1)(a) or (c) of that Act, or
(ii) was treated as holding an appropriate qualification for those purposes by virtue of section 31(2), (3) or (4) of that Act,
(c) immediately before the commencement of this Chapter, he—
(i) held an appropriate qualification for the purposes of Part III of the Companies (Northern Ireland) Order 1990 (S.I. 1990/593 (N.I. 5)) by virtue of Article 34(1)(a) or (c) of that Order, or
(ii) was treated as holding an appropriate qualification for those purposes by virtue of Article 34(2), (3) or (4) of that Order,
(d) he is within subsection (2), or
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(f) subject to any direction under section 1221(5), he is regarded for the purposes of this Chapter as holding an approved third country qualification.
(2) A person is within this subsection if—
(a) before 1st January 1990, he began a course of study or practical training leading to a professional qualification in accountancy offered by a body established in the United Kingdom,
(b) he obtained that qualification on or after 1st January 1990 and before 1st January 1996, and
(c) the Secretary of State approved his qualification before 1st October 2018 as an appropriate qualification for the purposes of this Chapter.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1220 Qualifying bodies and recognised professional qualifications
(1) In this Part a “qualifying body” means a body established in the United Kingdom (whether a body corporate or an unincorporated association) which offers a professional qualification in accountancy.
(2) In this Part references to the rules of a qualifying body are to the rules (whether or not laid down by the body itself) which the body has power to enforce and which are relevant for the purposes of this Part.
This includes, so far as so relevant, rules relating to—
(a) admission to or expulsion from a course of study leading to a qualification,
(b) the award or deprivation of a qualification, or
(c) the approval of a person for the purposes of giving practical training or the withdrawal of such approval.
(3) Schedule 11 has effect with respect to the recognition for the purposes of this Part of a professional qualification offered by a qualifying body.
(1) The Secretary of State may declare that the following are to be regarded for the purposes of this Chapter as holding an approved third country qualification—
(a) persons who are qualified to audit accounts under the law of a specified third country, or
(b) persons who hold a specified professional qualification in accountancy obtained in a specified third country.
(1A) A declaration under subsection (1)(a) or (b) must contain provision to the effect that a person is not to be regarded as holding an approved third country qualification for the purposes of this Chapter unless the person—
(a) already holds a professional qualification which—
(i) covers subjects and skills which are the same or substantially the same as the subjects and skills that are covered by a recognised professional qualification, where the knowledge of those subjects and skills is essential for the pursuit of the profession of statutory auditor, and
(ii) demonstrates knowledge of those subjects and skills to the same or substantially the same standard as that demonstrated by the recognised professional qualification, or
(b) holds a professional qualification which does not comply with paragraph (a) and has met whichever of the requirements of subsection (1B) as is specified in the declaration.
(1B) The declaration must specify that the condition in subsection (1A)(b) is satisfied in one of the following ways—
(a) only by passing an aptitude test in accordance with subsection (7A),
(b) only by completing an adaptation period in accordance with subsections (7C) and (7D), or
(c) either by passing an aptitude test in accordance with subsection (7A) or by completing an adaptation period in accordance with subsections (7C) and (7D), according to the choice of the person.
(2) A declaration under subsection (1)(b) may be expressed to be subject to the satisfaction of any specified requirement or requirements.
(3) The Secretary of State may make a declaration under subsection (1) only if he is satisfied that—
(a) in the case of a declaration under subsection (1)(a), the fact that the persons in question are qualified to audit accounts under the law of the specified third country, taken with any requirement or requirements to be specified under subsection (1A), or
(b) in the case of a declaration under subsection (1)(b), the specified professional qualification taken with any requirement or requirements to be specified under subsections (1A) or (2),
affords an assurance of professional competence equivalent to that afforded by a recognised professional qualification.
(4) The Secretary of State may make a declaration under subsection (1) only if he is satisfied that the treatment that the persons who are the subject of the declaration will receive as a result of it is comparable to the treatment which is, or is likely to be, afforded in the specified third country or a part of it to—
(a) in the case of a declaration under subsection (1)(a), some or all persons who are eligible to be appointed as a statutory auditor, and
(b) in the case of a declaration under subsection (1)(b), some or all persons who hold a corresponding recognised professional qualification.
(5) The Secretary of State may direct that persons holding an approved third country qualification are not to be treated as holding an appropriate qualification for the purposes of this Chapter unless they hold such additional educational qualifications as the Secretary of State may specify for the purpose of ensuring that such persons have an adequate knowledge of the law and practice in the United Kingdom relevant to the audit of accounts.
(6) The Secretary of State may give different directions in relation to different approved third country qualifications.
(7) The Secretary of State may, if he thinks fit, having regard to the considerations mentioned in subsections (3) and (4), withdraw a declaration under subsection (1) in relation to—
(a) persons becoming qualified to audit accounts under the law of the specified third country after such date as he may specify, or
(b) persons obtaining the specified professional qualification after such date as he may specify.
(7A) An aptitude test required for the purposes of subsection (1B) —
(a) must test the person’s knowledge of required subjects and skills,
(b) may test the person's knowledge of rules of professional conduct;
(c) must not test the person's knowledge of any other matters.
(7AA) For the purposes of subsection (7A), a subject or skill is a required subject or skill if it is covered by a recognised professional qualification and knowledge of it is essential for the pursuit of the profession of statutory auditor, but—
(a) the professional qualification already held by the person (“the existing qualification”) does not cover the same or substantially the same subject or skill, or
(b) the existing qualification does not demonstrate knowledge of that subject or skill to the same or substantially the same standard as that demonstrated by the recognised professional qualification.
(7B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7C) An adaptation period is a period, not exceeding three years, in which the person (“the applicant”) pursues the profession of statutory auditor under the supervision of another person who holds an appropriate qualification, subject to an assessment (“the ability assessment”) of the applicant’s ability to pursue the profession of statutory auditor in the United Kingdom.
(7D) The adaptation period must be completed, and the ability assessment must be carried out, in accordance with the rules and practices of a recognised supervisory body (see paragraph 7A of Schedule 10).
(8) The Secretary of State may, if he thinks fit, having regard to the considerations mentioned in subsections (3) and (4), vary or revoke a requirement specified under subsection (2) from such date as he may specify.
(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1222 Eligibility of individuals retaining only 1967 Act authorisation
(1) A person whose only appropriate qualification is based on his retention of an authorisation originally granted by the Board of Trade or the Secretary of State under section 13(1) of the Companies Act 1967 (c. 81) is eligible only for appointment as auditor of an unquoted company.
(2) A company is “unquoted” if, at the time of the person's appointment, neither the company, nor any parent undertaking of which it is a subsidiary undertaking, is a quoted company within the meaning of section 385(2).
(3) References to a person eligible for appointment as a statutory auditor by virtue of this Part in enactments relating to eligibility for appointment as auditor of a person other than a company do not include a person to whom this section applies.
1223 Matters to be notified to the Secretary of State
(1) The Secretary of State may require a recognised supervisory body or a recognised qualifying body—
(a) to notify him immediately of the occurrence of such events as he may specify in writing and to give him such information in respect of those events as is so specified;
(b) to give him, at such times or in respect of such periods as he may specify in writing, such information as is so specified.
(2) The notices and information required to be given must be such as the Secretary of State may reasonably require for the exercise of his functions under this Part.
(3) The Secretary of State may require information given under this section to be given in a specified form or verified in a specified manner.
(4) Any notice or information required to be given under this section must be given in writing unless the Secretary of State specifies or approves some other manner.
1223ZA Matters to be notified to the competent authority
(1) The competent authority may require a recognised supervisory body—
(a) to notify the competent authority immediately of the occurrence of such events as the competent authority may specify in writing and to give the competent authority such information in respect of those events as is so specified;
(b) to give the competent authority, at such times or in respect of such periods as the competent authority may specify in writing, such information as is so specified.
(2) The notices and information required to be given must be such as the competent authority may reasonably require for the exercise of its functions under this Part, the Statutory Auditors and Third Country Auditors Regulations 2016 or the Audit Regulation .
(3) The competent authority may require information given under this section to be given in a specified form or verified in a specified manner.
(4) Any notice or information required to be given under this section must be given in writing unless the competent authority specifies or approves some other manner.
1223A Notification of matters relevant to approved third country competent authorities
(1) A recognised supervisory body must notify the Secretary of State—
(a) if a notifiable person becomes eligible for appointment as a statutory auditor, unless the notifiable person is an individual;
(b) if a notifiable person’s eligibility for appointment as a statutory auditor is withdrawn;
(c) of the reasons for any such withdrawal.
(2) A recognised supervisory body must also notify the Secretary of State of any reasonable grounds it has for suspecting that—
(a) a person has contravened the law of the United Kingdom, or an equivalent third country or transitional third country, and
(b) the act or omission constituting that contravention took place on the territory of an equivalent third country or transitional third country.
(3) In this section “ notifiable person ” means a member of the recognised supervisory body in question—
(a) who is also a third country auditor that has been approved by an approved third country competent authority; and
(b) in respect of whom the approved third country competent authority is not the recognised supervisory body itself.
1224 The Secretary of State's power to call for information
(1) The Secretary of State may by notice in writing require a person within subsection (2) to give him such information as he may reasonably require for the exercise of his functions under this Part.
(2) The persons within this subsection are—
(a) any recognised supervisory body,
(b) any recognised qualifying body, and
(c) any person eligible for appointment as a statutory auditor by virtue of this Chapter.
(3) The Secretary of State may require that any information which he requires under this section is to be given within such reasonable time and verified in such manner as he may specify.
1224ZA The competent authority’s power to call for information
(1) The competent authority may by notice in writing require any recognised supervisory body to give the competent authority such information as it may reasonably require for the exercise of its functions under this Part, the Statutory Auditors and Third Country Auditors Regulations 2016 or the Audit Regulation.
(2) The competent authority may require that any information which it requires under this section is to be given within such reasonable time and verified in such manner as it may specify.
(1) This section applies to information (in whatever form)—
(a) relating to the private affairs of an individual, or
(b) relating to any particular business,
that is provided to a body to which this section applies in connection with the exercise of its functions under this Part sections 522 to 524 (notification to appropriate audit authority of resignation or removal of auditor), the Statutory Auditors and Third Country Auditors Regulations 2016 or the Audit Regulation
(2) This section applies to—
(a) a recognised supervisory body,
(b) a recognised qualifying body,
(c) the competent authority,
(d) the Independent Supervisor,
(e) the Secretary of State, and
(f) a body designated by the Secretary of State under section 1252 (delegation of the Secretary of State's functions).
(3) No such information may, during the lifetime of the individual or so long as the business continues to be carried on, be disclosed without the consent of that individual or (as the case may be) the person for the time being carrying on that business.
(4) Subsection (3) does not apply to any disclosure of information that—
(a) is made for the purpose of facilitating the carrying out by the body of any of its functions,
(b) is made to a person specified in Part 1 of Schedule 11A,
(c) is of a description specified in Part 2 of that Schedule, or
(d) is made in accordance with Part 3 of that Schedule.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) This section does not prohibit the disclosure of information if the information is or has been available to the public from any other source.
(7) Nothing in this section authorises the making of a disclosure in contravention of the data protection legislation.
1224B Offence of disclosure in contravention of section 1224A
(1) A person who discloses information in contravention of section 1224A (restrictions on disclosure) is guilty of an offence, unless—
(a) he did not know, and had no reason to suspect, that the information had been provided as mentioned in section 1224A(1), or
(b) he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.
(2) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);
(b) on summary conviction—
(i) in Scotland, to imprisonment for a term not exceeding 12 months or to a fine not exceeding the statutory maximum, or to both;
(ii) in England and Wales or Northern Ireland, to imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum, or to both.
(1) This section applies if at any time it appears to the Secretary of State—
(a) in the case of a recognised supervisory body, that any requirement of Part 2 or 3 of Schedule 10 is not satisfied,
(b) in the case of a recognised professional qualification offered by a recognised qualifying body, that any requirement of Part 2 of Schedule 11 is not satisfied, ...
(c) that a recognised supervisory body or a recognised qualifying body has not complied with an obligation imposed on it by or by virtue of this Part (other than an obligation to pay a financial penalty under section 1225D) or
(d) that a recognised supervisory body has not complied with an obligation imposed on it by or by virtue of the Statutory Auditors and Third Country Auditors Regulations 2016.
(2) The Secretary of State may do any one or more of the following—
(a) give a direction to the body under section 1225A;
(b) make an application to the court in respect of the body under section 1225C;
(c) impose a financial penalty on the body under section 1225D.
(3) Subsection (2) is without prejudice to the powers of the Secretary of State under paragraph 3 of Schedule 10 and paragraph 3 of Schedule 11 (revocation of recognition orders) or the powers of the competent authority under regulation 3 of the Statutory Auditors and Third Country Auditors Regulations 2016.
(1) A direction under this section is one directing a body to take such steps as the Secretary of State considers will—
(a) secure that the requirement in question is satisfied or the obligation in question is complied with, or
(b) mitigate the effect, or prevent the recurrence, of the failure to satisfy the requirement or comply with the obligation.
(2) A direction under this section—
(a) may only require a body to take steps which it has power to take;
(b) may require a body to refrain from taking a particular course of action.
(3) The power to give a direction under this section is subject to any provision made by or under any other enactment.
(4) The Secretary of State may take such steps as the Secretary of State considers appropriate to monitor the extent to which a direction under this section is being, or has been, complied with.
(1) Before giving a direction to a body under section 1225A, the Secretary of State must give the body a notice (a “notice of proposed direction”) accompanied by a copy of the proposed direction.
(2) A notice of proposed direction must—
(a) state that the Secretary of State proposes to give the body a direction in the form of the accompanying draft,
(b) identify the requirement or obligation in question and state why it appears to the Secretary of State that the requirement is not satisfied or the obligation has not been complied with,
(c) specify a period within which the body may make written representations with respect to the proposal.
(3) The period specified under subsection (2)(c)—
(a) must begin with the date on which the notice of proposed direction is given to the body, and
(b) must not be less than 14 days.
(4) Written representations made by the body within the period specified under subsection (2)(c) must be considered by the Secretary of State.
(5) After considering any such representations or, in their absence, on the expiry of the period specified under subsection (2)(c), the Secretary of State must decide whether to give the body the proposed direction.
(6) The Secretary of State must give notice of the decision (a “direction decision notice”) to the body.
(7) Where the Secretary of State decides to give the proposed direction, the direction decision notice must—
(a) contain the direction,
(b) state the time at which the direction is to take effect, and
(c) specify the Secretary of State's reasons for the decision to give the direction.
(8) Where the Secretary of State decides to give the proposed direction, the Secretary of State must publish the direction decision notice in such manner as the Secretary of State considers appropriate for bringing the direction to the attention of persons likely to be affected.
(9) The Secretary of State may revoke a direction given to a body under section 1225A and, where doing so, must—
(a) give the body notice of the revocation, and
(b) publish the notice in the same manner as the direction decision notice was published.
(1) If on an application under this section in respect of a body, the court decides that a requirement is not satisfied or an obligation has not been complied with, the court may, subject to subsection (2), order the body to take such steps as it considers will secure that the requirement is satisfied or the obligation is complied with.
(2) Where the obligation is an obligation to comply with a direction under section 1225A, the court may not order compliance with the direction unless it also decides that—
(a) the requirement in respect of which the direction was given is not satisfied, or
(b) the obligation in respect of which the direction was given has not been complied with.
(3) In this section, “ the court ” means the High Court or, in Scotland, the Court of Session.
(1) A financial penalty imposed on a body under this section is a financial penalty of such amount as the Secretary of State considers appropriate, subject to subsection (2).
(2) In deciding what amount is appropriate the Secretary of State—
(a) must have regard to the nature of the requirement which is not satisfied or the obligation which has not been complied with; and
(b) must not take into account the Secretary of State's costs in discharging functions under this Part.
(3) A financial penalty under this section is payable to the Secretary of State.
(4) In sections 1225E to 1225G, references to a penalty are to a financial penalty under this section.
(1) Before imposing a penalty on a body, the Secretary of State must give the body a notice (a “notice of proposed penalty”)—
(a) stating that the Secretary of State proposes to impose a penalty and the amount of the penalty proposed,
(b) identifying the requirement or obligation in question and stating why it appears to the Secretary of State that the requirement is not satisfied or the obligation has not been complied with, and
(c) specifying a period within which the body may make written representations with respect to the proposed penalty.
(2) The period specified under subsection (1)(c)—
(a) must begin with the date on which the notice of proposed penalty is given to the body, and
(b) must not be less than 21 days.
(3) Written representations made by the body before the end of the period specified under subsection (1)(c) must be considered by the Secretary of State.
(4) After considering any such representations or, in their absence, on the expiry of the period specified under subsection (1)(c), the Secretary of State must decide—
(a) whether to impose a penalty, and
(b) where the Secretary of State decides to do so, whether to reduce the proposed amount of the penalty.
(5) The Secretary of State must give notice of the decision (a “penalty decision notice”) to the body.
(6) Where the Secretary of State decides to impose a penalty, the penalty decision notice must—
(a) state that the Secretary of State has imposed a penalty on the body and its amount,
(b) identify the requirement or obligation in question and state—
(i) why it appears to the Secretary of State that the requirement is not satisfied or the obligation has not been complied with, or
(ii) where, by that time, the requirement is satisfied or the obligation has been complied with, why it appeared to the Secretary of State when giving the notice of proposed penalty that the requirement was not satisfied or the obligation had not been complied with, and
(c) specify a time by which the penalty is required to be paid.
(7) The time specified under subsection (6)(c) must be at least 3 months after the date on which the penalty decision notice is given to the body.
(8) Where the Secretary of State decides to impose a penalty, the Secretary of State must publish the penalty decision notice and must do so in such manner as the Secretary of State considers appropriate for bringing the penalty to the attention of persons likely to be affected.
(9) The Secretary of State may rescind a penalty imposed on a body under section 1225D and, where doing so, must—
(a) give the body notice of the rescission, and
(b) publish the notice in the same manner as the penalty decision notice was published.
(1) A body on which a penalty is imposed may appeal to the court on one or more of the appeal grounds.
(2) The appeal grounds are—
(a) that, before the giving of the notice under section 1225E(1), the requirement in respect of which the penalty was imposed was satisfied or the obligation in respect of which the penalty was imposed had been complied with;
(b) that, where the penalty was imposed in respect of a failure to comply with a direction under section 1225A, before the giving of the notice under section 1225B(6), the requirement in respect of which the direction was given was satisfied or the obligation in respect of which the direction was given had been complied with;
(c) that any of the requirements of section 1225E have not been complied with in relation to the imposition of the penalty and the interests of the body have been substantially prejudiced by the non-compliance;
(d) that the amount of the penalty is unreasonable;
(e) that it was unreasonable of the Secretary of State to require the penalty imposed to be paid by the time specified in the notice under section 1225E(5).
(3) An appeal under subsection (1) must be made within the period of 3 months beginning with the day on which the notice under section 1225E(5) is given to the body in respect of the penalty.
(4) On any such appeal, where the court considers it appropriate to do so in all the circumstances of the case and is satisfied of one or more of the appeal grounds, the court may—
(a) quash the penalty,
(b) substitute a penalty of such lesser amount as the court considers appropriate, or
(c) in the case of the appeal ground in subsection (2)(e), substitute a later time for the time specified in the notice under section 1225E(5).
(5) Where the court substitutes a penalty of a lesser amount, it may require the payment of interest on the substituted penalty, accruing from the time specified in the notice under section 1225E(5) or such later time as the court considers just and equitable.
(6) Where the court substitutes a later time for the time specified in the notice under section 1225E(5), it may require the payment of interest on the penalty, accruing from the substituted time or such later time as the court considers just and equitable.
(7) Where the court dismisses the appeal, it may require the payment of interest on the penalty, accruing from the time specified in the notice under section 1225E(5).
(8) Where the court requires the payment of interest under this section, the interest is payable at such rate as the court considers just and equitable.
(9) Except as provided by this section, the validity of a penalty is not to be questioned by any legal proceedings whatever.
(10) In this section “ the court ” means the High Court or, in Scotland, the Court of Session.
(1) If the whole or any part of a penalty is not paid by the time by which it is required to be paid, the unpaid balance from time to time carries interest at the rate for the time being specified in section 17 of the Judgments Act 1838 (c 110) (unless a different rate is specified by the court under section 1225F(8)).
(2) If an appeal is made under section 1225F in relation to a penalty, the penalty is not required to be paid until the appeal has been determined or withdrawn.
(3) Subsection (2) does not prevent the court from specifying that interest is to accrue from an earlier date under section 1225F.
(4) Where a penalty, or any portion of it, has not been paid by the time when it is required to be paid and—
(a) no appeal relating to the penalty has been made under section 1225F during the period within which such an appeal can be made, or
(b) an appeal has been made under that section and has been determined or withdrawn,
the Secretary of State may recover from the body, as a debt due to the Secretary of State, any of the penalty and any interest which has not been paid.
1226 Auditors General: eligibility for appointment as a statutory auditor
(1) In this Part “Auditor General” means—
(a) the Comptroller and Auditor General,
(b) the Auditor General for Scotland,
(c) the Auditor General for Wales, or
(d) the Comptroller and Auditor General for Northern Ireland.
(2) An Auditor General is eligible for appointment as a statutory auditor.
(3) Subsection (2) is subject to any suspension notice having effect under section 1234 (notices suspending eligibility for appointment as a statutory auditor).
1227 Individuals responsible for audit work on behalf of Auditors General
An Auditor General must secure that each individual responsible for statutory audit work on behalf of that Auditor General is eligible for appointment as a statutory auditor by virtue of Chapter 2.
(1) The Secretary of State must appoint a body (“the Independent Supervisor”) to discharge the function mentioned in section 1229(1) (“the supervision function”).
(2) An appointment under this section must be made by order.
(3) The order has the effect of making the body appointed under subsection (1) designated under section 5 of the Freedom of Information Act 2000 (c. 36) (further powers to designate public authorities).
(4) A body may be appointed under this section only if it is a body corporate or an unincorporated association which appears to the Secretary of State—
(a) to be willing and able to discharge the supervision function, and
(b) to have arrangements in place relating to the discharge of that function which are such as to be likely to ensure that the conditions in subsection (5) are met.
(5) The conditions are—
(a) that the supervision function will be exercised effectively, and
(b) where the order is to contain any requirements or other provisions specified under subsection (6), that that function will be exercised in accordance with any such requirements or provisions.
(6) An order under this section may contain such requirements or other provisions relating to the exercise of the supervision function by the Independent Supervisor as appear to the Secretary of State to be appropriate.
(7) An order under this section is subject to negative resolution procedure.
1229 Supervision of Auditors General by the Independent Supervisor
(1) The Independent Supervisor must supervise the performance by each Auditor General of his functions as a statutory auditor.
(2) The Independent Supervisor must discharge that duty by—
(a) establishing supervision arrangements itself, or
(b) entering into supervision arrangements with one or more recognised supervisory bodies.
(2A) If the Independent Supervisor enters into supervision arrangements with one or more bodies, it must oversee the effective operation of those supervision arrangements.
(3) For this purpose “supervision arrangements” are arrangements established by the Independent Supervisor or entered into by the Independent Supervisor with a body, for the purposes of this section, in accordance with which the Independent Supervisor or the body does . . . the following—
(a) determines standards relating to professional integrity and independence which must be applied by an Auditor General in statutory audit work;
(b) determines technical standards which must be applied by an Auditor General in statutory audit work and the manner in which those standards are to be applied in practice;
(c) monitors the performance of statutory audits carried out by an Auditor General;
(d) investigates any matter arising from the performance by an Auditor General of a statutory audit;
(e) holds disciplinary hearings in respect of an Auditor General which appear to be desirable following the conclusion of such investigations;
(f) decides whether (and, if so, what) disciplinary action should be taken against an Auditor General to whom such a hearing related.
(3A) The requirements of paragraphs 9 to 10C and 12 to 16 of Schedule 10 (requirements for recognition of a supervisory body) apply in relation to supervision arrangements as they apply in relation to the rules, practices and arrangements of supervisory bodies.
(4) The Independent Supervisor may enter into supervision arrangements with a body despite any relationship that may exist between the Independent Supervisor and that body.
(5) The Independent Supervisor must notify each Auditor General in writing of any supervision arrangements that it establishes or enters into under this section.
(5A) The Independent Supervisor must, at least once in every calendar year, deliver to the Secretary of State a summary of the results of any inspections conducted for the purposes of subsection (3)(c).
(6) Supervision arrangements within subsection (3)(f) may, in particular, provide for the payment by an Auditor General of a fine to any personor, in the case of the Auditor General for Wales, for payment by the Wales Audit Office of such a fine.
(7) Any fine received by the Independent Supervisor under supervision arrangements is to be paid into the Consolidated Fund.
1230 Duties of Auditors General in relation to supervision arrangements
(1) Each Auditor General must—
(a) comply with any standards of the kind mentioned in subsection (3)(a) or (b) of section 1229 determined under the supervision arrangements,
(b) take such steps as may be reasonably required of that Auditor General to enable his performance of statutory audits to be monitored by means of inspections carried out under the supervision arrangements, and
(c) comply with any decision of the kind mentioned in subsection (3)(f) of that section made under the supervision arrangements.
(2) Each Auditor General must—
(a) if the Independent Supervisor has established supervision arrangements, pay to the Independent Supervisor;
(b) if the Independent Supervisor has entered into supervision arrangements with a body, pay to that body,
such proportion of the costs incurred by the Independent Supervisor or body for the purposes of the arrangements as the Independent Supervisor may notify to him in writing.
(3) Expenditure under subsection (2) is—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) in the case of expenditure of the Comptroller and Auditor General for Northern Ireland, to be regarded as expenditure of the Northern Ireland Audit Office for the purposes of Article 6(1) of the Audit (Northern Ireland) Order 1987 (S.I. 1987/460 (N.I. 5)).
(c) in the case of expenditure of the Auditor General for Wales, to be regarded as expenditure of the Wales Audit Office for the purposes of section 20 of the Public Audit (Wales) Act 2013.
(4) In this section “the supervision arrangements” means the arrangements established or entered into under section 1229.
(1) The Independent Supervisor must, at least once in each calendar year, prepare a report on the discharge of its functions.
(2) The Independent Supervisor must give a copy of each report prepared under subsection (1) to—
(a) the Secretary of State;
(b) the First Minister in Scotland;
(c) the First Minister and the deputy First Minister in Northern Ireland;
(d) The First Minister for Wales.
(3) The Secretary of State must lay before each House of Parliament a copy of each report received by him under subsection (2)(a).
(3A) The First Minister for Wales must lay before the National Assembly for Wales a copy of each report received by him under subsection (2)(d).
(4) In relation to a calendar year during which an appointment of a body as the Independent Supervisor is made or revoked by an order under section 1228, this section applies with such modifications as may be specified in the order.
1232 Matters to be notified to the Independent Supervisor
(1) The Independent Supervisor may require an Auditor General—
(a) to notify the Independent Supervisor immediately of the occurrence of such events as it may specify in writing and to give it such information in respect of those events as is so specified;
(b) to give the Independent Supervisor, at such times or in respect of such periods as it may specify in writing, such information as is so specified.
(2) The notices and information required to be given must be such as the Independent Supervisor may reasonably require for the exercise of the functions conferred on it by or by virtue of this Part.
(3) The Independent Supervisor may require information given under this section to be given in a specified form or verified in a specified manner.
(4) Any notice or information required to be given under this section must be given in writing unless the Independent Supervisor specifies or approves some other manner.
1233 The Independent Supervisor's power to call for information
(1) The Independent Supervisor may by notice in writing require an Auditor General to give it such information as it may reasonably require for the exercise of the functions conferred on it by or by virtue of this Part.
(2) The Independent Supervisor may require that any information which it requires under this section is to be given within such reasonable time and verified in such manner as it may specify.
(1) The Independent Supervisor may issue—
(a) a notice (a “suspension notice”) suspending an Auditor General's eligibility for appointment as a statutory auditor in relation to all persons, or any specified person or persons, indefinitely or until a date specified in the notice;
(b) a notice amending or revoking a suspension notice previously issued to an Auditor General.
(2) In determining whether it is appropriate to issue a notice under subsection (1), the Independent Supervisor must have regard to—
(a) the Auditor General's performance of the obligations imposed on him by or by virtue of this Part, and
(b) the Auditor General's performance of his functions as a statutory auditor.
(3) A notice under subsection (1) must—
(a) be in writing, and
(b) state the date on which it takes effect (which must be after the period of three months beginning with the date on which it is issued).
(4) Before issuing a notice under subsection (1), the Independent Supervisor must—
(a) give written notice of its intention to do so to the Auditor General, and
(b) publish the notice mentioned in paragraph (a) in such manner as it thinks appropriate for bringing it to the attention of any other persons who are likely to be affected.
(5) A notice under subsection (4) must—
(a) state the reasons for which the Independent Supervisor proposes to act, and
(b) give particulars of the rights conferred by subsection (6).
(6) A person within subsection (7) may, within the period of three months beginning with the date of service or publication of the notice under subsection (4) or such longer period as the Independent Supervisor may allow, make written representations to the Independent Supervisor and, if desired, oral representations to a person appointed for that purpose by the Independent Supervisor.
(7) The persons within this subsection are—
(a) the Auditor General, and
(b) any other person who appears to the Independent Supervisor to be affected.
(8) The Independent Supervisor must have regard to any representations made in accordance with subsection (6) in determining—
(a) whether to issue a notice under subsection (1), and
(b) the terms of any such notice.
(9) If in any case the Independent Supervisor considers it appropriate to do so in the public interest it may issue a notice under subsection (1), without regard to the restriction in subsection (3)(b), even if—
(a) no notice has been given or published under subsection (4), or
(b) the period of time for making representations in pursuance of such a notice has not expired.
(10) On issuing a notice under subsection (1), the Independent Supervisor must—
(a) give a copy of the notice to the Auditor General, and
(b) publish the notice in such manner as it thinks appropriate for bringing it to the attention of persons likely to be affected.
(11) In this section “specified” means specified in, or of a description specified in, the suspension notice in question.
(1) An Auditor General must not act as a statutory auditor at any time when a suspension notice issued to him in respect of the audited person has effect.
(2) If at any time during an Auditor General's term of office as a statutory auditor a suspension notice issued to him in respect of the audited person takes effect, he must immediately—
(a) resign his office (with immediate effect), and
(b) give notice in writing to the audited person that he has resigned by reason of his becoming ineligible for appointment.
(3) A suspension notice does not make an Auditor General ineligible for appointment as a statutory auditor for the purposes of section 1213 (effect of ineligibility: criminal offences).
(1) If at any time it appears to the Independent Supervisor that an Auditor General has failed to comply with an obligation imposed on him by or by virtue of this Part, the Independent Supervisor may make an application to the court under this section.
(2) If on an application under this section the court decides that the Auditor General has failed to comply with the obligation in question, it may order the Auditor General to take such steps as the court directs for securing that the obligation is complied with.
(3) In this section “the court” means the High Court or, in Scotland, the Court of Session.
1237 Proceedings involving the Independent Supervisor
(1) If the Independent Supervisor is an unincorporated association, any relevant proceedings may be brought by or against it in the name of any body corporate whose constitution provides for the establishment of the body.
(2) For this purpose “relevant proceedings” means proceedings brought in or in connection with the exercise of any function by the body as the Independent Supervisor.
(3) Where an appointment under section 1228 is revoked, the revoking order may make such provision as the Secretary of State thinks fit with respect to pending proceedings.
In section 16 of the Companies (Audit, Investigations and Community Enterprise) Act 2004 (c. 27) (grants to bodies concerned with accounting standards etc), after subsection (2)(k) insert—
(ka) exercising functions of the Independent Supervisor appointed under Chapter 3 of Part 42 of the Companies Act 2006;
.
(1) The Secretary of State must make regulations requiring the keeping of a register of—
(a) the persons eligible for appointment as a statutory auditor, and
(b) third country auditors (see Chapter 5) who apply to be registered in the specified manner and in relation to whom specified requirements are met.
(2) The regulations must require each person's entry in the register to contain—
(a) his name and address,
(b) in the case of an individual eligible for appointment as a statutory auditor, the specified information relating to any firm on whose behalf he is responsible for statutory audit work,
(c) in the case of a firm eligible for appointment as a statutory auditor, the specified information relating to the individuals responsible for statutory audit work on its behalf,
(d) in the case of an individual or firm eligible for appointment as a statutory auditor by virtue of Chapter 2, the name of the relevant supervisory body, . . .
(e) in the case of a firm eligible for appointment as a statutory auditor by virtue of Chapter 2 . . . , the information mentioned in subsection (3), and
(f) in the case of a third country auditor which is a firm, the name and address of each person who is—
(i) an owner or shareholder of the firm, or
(ii) a member of the firm's administrative or management body.
and may require each person's entry to contain other specified information.
(3) The information referred to in subsection (2)(e) is—
(a) in relation to a body corporate, except where paragraph (b) applies, the name and address of each person who is a director of the body or holds any shares in it;
(b) in relation to a limited liability partnership, the name and address of each member of the partnership;
(c) in relation to a corporation sole, the name and address of the individual for the time being holding the office by the name of which he is the corporation sole;
(d) in relation to a partnership, the name and address of each partner.
(4) The regulations may provide that different parts of the register are to be kept by different persons.
(5) The regulations may impose such obligations as the Secretary of State thinks fit on—
(a) recognised supervisory bodies,
(b) any body designated by order under section 1252 (delegation of Secretary of State's functions),
(c) persons eligible for appointment as a statutory auditor,
(d) third country auditors,
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(f) the Independent Supervisor appointed under section 1228.
(g) the competent authority
(6) The regulations may include—
(a) provision requiring that specified entries in the register be open to inspection at times and places specified or determined in accordance with the regulations;
(b) provision enabling a person to require a certified copy of specified entries in the register;
(c) provision authorising the charging of fees for inspection, or the provision of copies, of such reasonable amount as may be specified or determined in accordance with the regulations.
(7) The Secretary of State may direct in writing that the requirements imposed by the regulations . . . , or such of those requirements as are specified in the direction, are not to apply, in whole or in part, in relation to a particular registered third country auditor or class of registered third country auditors.
(8) The obligations imposed by regulations under this section on such persons as are mentioned in subsection (5)(b) or (e) are enforceable on the application of the Secretary of State by injunction or, in Scotland, by an order under section 45 of the Court of Session Act 1988 (c. 36).
(9) In this section “specified” means specified by regulations under this section.
(10) Regulations under this section are subject to negative resolution procedure.
(1) The Secretary of State may make regulations requiring a person eligible for appointment as a statutory auditor, or a member of a specified class of such persons, to keep and make available to the public specified information, including information regarding—
(a) the person's ownership and governance,
(b) the person's internal controls with respect to the quality and independence of its audit work,
(c) the person's turnover, and
(d) the audited persons of whom the person has acted as statutory auditor.
(2) Regulations under this section may—
(a) impose such obligations as the Secretary of State thinks fit on persons eligible for appointment as a statutory auditor;
(b) require the information to be made available to the public in a specified manner.
(3) In this section “specified” means specified by regulations under this section.
(4) Regulations under this section are subject to negative resolution procedure.
1240A Power to approve third countries as equivalent or transitional third countries
(1) The Secretary of State may by regulations grant to a third country, or make provision for the grant to a third country of—
(a) approval as an equivalent third country,
(b) provisional approval, for a period of up to seven years, as an equivalent third country, or
(c) transitional approval, for a period of up to seven years, as a transitional third country,
in relation to the comparability of the third country’s audit regulatory regime to the audit regulatory regime of the United Kingdom.
(2) Regulations under subsection (1) may (among other things)—
(a) specify the procedure for assessing the audit regulatory regime of a third country;
(b) set out the considerations which must be taken into account, or may be taken into account, by the Secretary of State when determining—
(i) whether the third country has an audit regulatory regime comparable to that of the United Kingdom,
(ii) whether to grant approval, provisional approval or transitional approval, and
(iii) the period for which provisional approval or transitional approval should be granted;
(c) specify the procedure for the granting of approval, provisional approval or transitional approval;
(d) set out a list of third countries that have been granted approval, provisional approval or transitional approval;
(e) make provision for the amendment, suspension or withdrawal of approval, provisional approval or transitional approval.
(3) In this section, “audit regulatory regime” in relation to a country or territory, means the system of public oversight, quality assurance, investigations and sanctions for auditors in that country or territory.
(4) Regulations under this section are subject to negative resolution procedure.
1240B Power to approve third country competent authorities
(1) The Secretary of State may by regulations grant to a third country competent authority, or make provision for the grant to a third country competent authority of—
(a) approval as an approved third country competent authority, or
(b) provisional approval, for a period of up to seven years, as an approved third country competent authority,
in relation to the exchange of audit working papers and investigation reports.
(2) Regulations under subsection (1) may (among other things)—
(a) specify the procedure for assessing the adequacy of the third country competent authority, in relation to the authority’s ability to co-operate with the competent authority on the exchange of audit working papers and investigation reports;
(b) set out the considerations which must be taken into account, or may be taken into account, by the Secretary of State when determining—
(i) whether to grant approval or provisional approval, and
(ii) in relation to the granting of provisional approval, the period of the approval;
(c) specify the procedure for the granting of an approval or a provisional approval;
(d) set out a list of third country competent authorities that have been granted an approval or a provisional approval;
(e) make provision for the amendment, suspension or withdrawal of an approval or a provisional approval.
(3) Regulations under this section are subject to negative resolution procedure.
1241 Meaning of “registered third country auditor” and “UK-traded third country company”
(1) In this Part—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“registered third country auditor” means a third country auditor who is entered in the register kept in accordance with regulations under section 1239(1).
(2) In this Part “UK-traded third country company” means a body corporate—
(a) which is incorporated or formed under the law of a third country ,
(b) whose transferable securities are admitted to trading on a UK regulated market ..., and
(c) which has not been excluded, or is not of a description of bodies corporate which has been excluded, from this definition by an order made by the Secretary of State.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) An order under this section is subject to negative resolution procedure.
(1) A registered third country auditor who audits the accounts of a UK-traded third country company must participate in—
(a) arrangements within paragraph 1 of Schedule 12 (arrangements for independent monitoring of audits . . . ), and
(b) arrangements within paragraph 2 of that Schedule (arrangements for independent investigation for disciplinary purposes ...).
(2) A registered third country auditor must—
(a) take such steps as may be reasonably required of it to enable its performance of audits of accounts of UK-traded third country companies to be monitored by means of inspections carried out under the arrangements mentioned in subsection (1)(a), and
(b) comply with any decision as to disciplinary action to be taken against it made under the arrangements mentioned in subsection (1)(b).
(3) Schedule 12 makes further provision with respect to the arrangements in which registered third country auditors are required to participate.
(4) The Secretary of State may direct in writing that subsections (1) to (3) are not to apply, in whole or in part, in relation to
(a) a particular registered third country auditor or class of registered third country auditors.
(b) audits of the accounts of a particular UK-traded third country company or class of UK-traded third country companies;
(c) audits by a particular registered third country auditor or class of registered third country auditors of the accounts of a particular UK-traded third country company or class of UK-traded third country companies.
1243 Matters to be notified to the Secretary of State
(1) The Secretary of State may require a registered third country auditor—
(a) to notify him immediately of the occurrence of such events as he may specify in writing and to give him such information in respect of those events as is so specified;
(b) to give him, at such times or in respect of such periods as he may specify in writing, such information as is so specified.
(2) The notices and information required to be given must be such as the Secretary of State may reasonably require for the exercise of his functions under this Part.
(3) The Secretary of State may require information given under this section to be given in a specified form or verified in a specified manner.
(4) Any notice or information required to be given under this section must be given in writing unless the Secretary of State specifies or approves some other manner.