Local Audit and Accountability Act 2014

Schedule 1D Professional qualifications

Section 6D Part 1 Requirements for registered providers Qualification requirement for individuals 1 (1) This paragraph applies for the purposes of paragraph 4(1)(a) of Schedule 1C. (2) An individual meets the qualification requirement if the individual— (a) holds an appropriate qualification, or (b) falls within paragraph 4 or 5 of this Schedule. Qualified control requirement for firms 2 (1) This paragraph applies for the purposes of paragraphs 4(1)(b) and 6(2)(a) of Schedule 1C. (2) A firm meets the qualified control requirement if— (a) a majority of the members of the firm are qualified persons, and (b) where the firm’s affairs are managed by a board of directors, committee or other management body— (i) a majority of that body are qualified persons, or (ii) if the body consists of two persons only, at least one of them is a qualified person. (3) The following provisions apply for the purposes of sub-paragraph (2). (4) An individual is a qualified person if the individual— (a) holds an appropriate qualification, or (b) falls within paragraph 4 or 5 of this Schedule. (5) A firm is a qualified person if the firm— (a) meets the criteria to become a registered local audit provider, or (b) is eligible for appointment as a statutory auditor under Part 42 of the Companies Act 2006. (6) A majority of the members of a firm means— (a) where under the firm’s constitution matters are decided upon by the exercise of voting rights, members holding a majority of the rights to vote on all, or substantially all, matters; (b) in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its constitution. (7) A majority of the members of the management body of a firm means— (a) where matters are decided at meetings of the management body by the exercise of voting rights, members holding a majority of the rights to vote on all, or substantially all, matters at such meetings; (b) in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its constitution. (8) Paragraphs 5 to 11 of Schedule 7 to the Companies Act 2006 (rights to be taken into account and attribution of rights) apply for the purposes of sub-paragraphs (6) and (7) as they apply for the purposes of section 1162 of that Act. “Appropriate qualification” 3 (1) The Secretary of State may by regulations provide for a qualification to be an appropriate qualification for the purposes of paragraphs 1 and 2 if— (a) it is a professional qualification in accountancy, (b) it is obtained from a body established in the United Kingdom (whether a body corporate or an unincorporated association), and (c) it meets, or the Secretary of State thinks that it meets, specified requirements. (2) The regulations may, in particular, provide for a qualification to be an appropriate qualification if it is recognised in accordance with the regulations. (3) Regulations under this paragraph that contain provision under sub-paragraph (2) may in particular— (a) provide for the making (by the Secretary or State or otherwise) of an order (a “recognition order”) recognising a qualification; (b) make provision about applications for a recognition order; (c) provide for the giving of directions or imposition of requirements in connection with such applications; (d) make provision about the circumstances in which the making of a recognition order may or must be refused; (e) make provision about the steps to be taken on making or refusing to make a recognition order; (f) provide for a recognition order to be revoked by a further order (a “revocation order”); (g) make provision about the circumstances in which a revocation order may or must be made; (h) make provision about the date on which a revocation order may or must take effect; (i) provide for a revocation order to contain transitional provision; (j) make provision about the steps to be taken by the person making a revocation order before or on making it. (4) The requirements that may be specified for a qualification to be an appropriate qualification or to be the subject of a recognition order include, in particular, requirements as to— (a) the persons to whom the qualification is open; (b) the course of instruction undertaken by persons to whom the qualification is awarded; (c) the professional experience of such persons; (d) the examinations passed by such persons; (e) the practical training undertaken by such persons; (f) the rules and arrangements of the body offering the qualification for ensuring or monitoring compliance with other specified requirements. (5) Regulations under this paragraph may in particular— (a) provide for exceptions to a specified requirement; (b) confer power to give or withhold recognition or approval for the purposes of a specified requirement. (6) In this paragraph, “specified” means specified in regulations under this paragraph. Cases in which an individual need not hold appropriate qualification: domestic cases 4 (1) An individual falls within this paragraph if any of the following sub-paragraphs applies in respect of the individual. (2) This sub-paragraph applies where the individual holds an appropriate qualification for the purposes of Chapter 2 of Part 42 of the Companies Act 2006 (eligibility of individuals and firms to act as statutory auditors) (see section 1219 of that Act). (3) This sub-paragraph applies where, immediately before 16 December 2014, the individual was qualified for appointment as an auditor under section 3 of the Audit Commission Act 1998 by virtue of the individual’s membership of a body listed in subsection (7) of that section. (4) This sub-paragraph applies where— (a) before 16 December 2014, the individual began a course of study or practical training leading to a professional qualification in accountancy offered by a body listed in section 3(7) of the Audit Commission Act 1998, (b) the person would have been qualified for appointment as an auditor under section 3 of that Act by virtue of subsection (5)(b) of that section if that qualification had been obtained before that date, and (c) the person obtained that qualification within the period of 6 years beginning with that date. Cases in which an individual need not hold appropriate qualification: overseas cases 5 (1) An individual falls within this paragraph if any of the following sub-paragraphs applies in respect of the individual. (2) This sub-paragraph applies where the individual— (a) is eligible to conduct audits of the accounts of bodies corporate incorporated or formed under the law of a third country in accordance with the law of that country, and (b) holds a professional qualification which covers all the subjects that— (i) are covered by an appropriate qualification, and (ii) are subjects of which knowledge is essential for the pursuit of the profession of local auditor. (3) This sub-paragraph applies where the individual is a specified state auditor who— (a) holds professional qualifications obtained in a specified state that are comparable to an appropriate qualification, and (b) has met a requirement to take an aptitude test or to complete an adaptation period, or to undertake both, imposed on the individual in accordance with Part 2 of the principal Recognition Regulations, if such a requirement is so imposed. (4) This sub-paragraph applies where the individual is an EEA auditor who, on or before 31 December 2020, was eligible for appointment as a local auditor by virtue of paragraph 6(1)(b) of Schedule 10 to the Companies Act 2006 as substituted by paragraph 28(3) of Schedule 5 to this Act. (5) This sub-paragraph applies where the individual has been authorised to act as a local auditor pursuant to the European Communities (Recognition of Professional Qualifications) Regulations 2007 (S.I. 2007/2781), and complies with the requirements of those Regulations that apply to a person acting as a local auditor. (6) In this paragraph— “EEA auditor” has the meaning given by paragraph 20A(1) of Schedule 10 to the Companies Act 2006; “the principal Recognition Regulations” means the Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) Regulations 2023 (S.I. 2023/1286); “specified state” means one of the states specified in Schedule 1 to the principal Recognition Regulations; “specified state auditor” means an individual who is eligible to conduct audits of the accounts of bodies corporate that are incorporated or formed under the law of a specified state in accordance with the law of that state; “third country” means a country or territory outside the United Kingdom. Part 2 Recognised qualifying bodies “Recognised qualifying body” 6 In this Act, “recognised qualifying body” means a body that offers a qualification that is an appropriate qualification by virtue of regulations under paragraph 3(1) of Schedule 1C. Fees 7 The Secretary of State may by regulations provide for the payment of fees by a body in respect of its— (a) making an application that would result in its becoming a recognised qualifying body, or (b) becoming such a body further to an application made by it, or (c) remaining such a body, having become so further to an application made by it. Directions to secure compliance with international obligations 8 (1) If it appears to the Secretary of State— (a) that any action proposed to be taken by a recognised qualifying body would be incompatible with assimilated obligations or any other international obligations of the United Kingdom, or (b) that any action which a recognised qualifying body has power to take is required for the purpose of implementing any such obligations, the Secretary of State may direct the body not to take or, as the case may be, to take the action in question. (2) A direction under this paragraph may include such supplementary or incidental requirements as the Secretary of State thinks necessary or expedient. (3) A direction under this paragraph is enforceable by injunction by the High Court on the application of the Secretary of State. Delegation of functions 9 (1) The Secretary of State may by regulations— (a) provide for the Secretary of State’s functions under paragraph 7 or 8 to be exercisable, concurrently with the Secretary of State, by another person designated in the regulations; (b) make the designated person’s ability to exercise the functions subject to exceptions or reservations; (c) confer on the designated person such other functions supplementary or incidental to those under this paragraph as appear to the Secretary of State to be appropriate; (d) make provision about the application of the Freedom of Information Act 2000 to the designated person. (2) Regulations under this paragraph do not have the effect that— (a) the designated person is to be regarded as acting on behalf of the Crown, or (b) that its members, officers or employees are to be regarded as Crown servants. (3) Where regulations under this paragraph apply to the making of regulations under paragraph 7— (a) section 43(1) and (5) does not apply to regulations made by the designated person; (b) the designated person may not make regulations without the approval of the Secretary of State; (c) the Secretary of State may, after consultation with the body, by regulations vary or revoke any regulations made by the designated person; (d) any regulations made by the designated person must be published immediately after they are made; (e) a person is not to be taken to have contravened such regulations if the person shows that at the time of the alleged contravention the regulations had not been published; (f) the production of a printed copy of regulations purporting to be made by the designated person on which is endorsed a certificate signed by or on behalf of that person and stating— (i) that the regulations were made by the person, (ii) that the copy is a true copy of the regulations, and (iii) that on a specified date the regulations were published, is evidence of the facts stated in the certificate; (g) a certificate purporting to be signed as mentioned in paragraph (f) is to be deemed to have been duly signed unless the contrary is shown; (h) any person wishing in any legal proceedings to cite regulations made by the designated person may require that person to cause a copy of them to be endorsed with a certificate as mentioned in paragraph (f).