Auditors 2021 UK Guidance

Overview

This guidance is for EEA auditors and audit firms. There’s different guidance for UK auditors and audit firms.

Statutory auditors

You don’t need to do anything if you’re already registered as a statutory auditor with a UK recognised professional body.

Register in the UK

You must register as a UK statutory auditor before 1 January 2021 if you’re working in the UK and want to sign audit reports here based on your EEA qualification.

You can register with one of the UK’s Recognised Supervisory Bodies.

You will not need to register in the UK if you’re already registered in the Republic of Ireland. But you’ll need to take an aptitude test if you’re qualified as a member of CPA Ireland.

Ownership of EEA audit firms

You may need to restructure to continue as an EEA approved firm if your required majority of qualified owners and managers includes:

  • UK audit firms
  • people with UK audit qualifications

Ownership of UK audit firms

As an EEA auditor or firm you can still be included in a UK firm’s required majorities of qualified owners and managers up to 1 January 2021.

From 1 January 2021, you can only be included as an EEA auditor or firm if you’re both:

Published 24 May 2019

Overview

This guidance is for UK auditors and audit firms. There’s different guidance for EEA auditors and audit firms.

The rules for auditing UK companies operating solely in the UK will not change from 1 January 2021.

UK companies operating in European Economic Area (EEA) countries will need to meet regulations in those countries.

Recognition of UK audit qualifications in EEA countries

Your UK qualification may not continue to be recognised from 1 January 2021.

The recognition of UK audit qualifications in EEA countries may be agreed as part of the future relationship with the EU.

UK audit firms auditing EEA companies

You may not be able to sign an audit report for an EEA company from 1 January 2021.

The recognition of UK audit qualifications in EEA countries may be agreed as part of the future relationship with the EU.

Third country auditors of non-EEA firms listed on EEA regulated markets

To carry out these audits you should register with the competent authority of the EEA state where the market is based.

You should do this as soon as possible from 1 January 2021.

Businesses treated as public interest entities

Banks, building societies, insurers and issuers of securities that trade on UK regulated markets will be treated as public interest entities and must follow the EU Audit Regulation from 1 January 2021

Your business will no longer be treated as a public interest entity in the UK if it only issues securities that are admitted to trade on EEA regulated markets.

Auditing groups of companies

You do not need to do anything if you audit a group of companies across the EEA and the UK if your parent company is based in the UK.

Restrictions on subsidiary companies in the EEA

Check with the competent authority in the country where your subsidiary is incorporated if there are any restrictions that may apply from 1 January 2021 – for example, sharing information outside the EEA.

Blacklisted non-audit services

Non-audit services will be blacklisted for all overseas subsidiaries of UK public interest entities from 1 January 2021.

This means:

  • non-audit services will be prohibited if provided by the auditor of a UK public interest entity
  • firms in the same network as a UK auditor of a UK public interest entity will be prohibited from providing blacklisted services to non-EEA subsidiaries

Disclosure and Transparency Rules on Audit Committees

UK issuers of shares or debt securities that are only admitted to trading on EEA regulated markets will no longer be subject to the Disclosure and Transparency Rules issued by the Financial Conduct Authority (FCA) from 1 January 2021.

All other UK public interest entities will still be subject to the Disclosure and Transparency Rules issued by the FCA and relevant rules issued by the Prudential Regulation Authority (PRA).

Exemptions for subsidiaries

The exemptions in these rules will continue to apply to subsidiaries as long as the parent company is incorporated in the UK.

For subsidiaries that issue securities on UK regulated markets, the parent company can be subject to either the FCA or the PRA rules.

Banks or insurers that qualify for PRA exemptions only, must have a parent company that is subject to the PRA rules.

Ownership of UK audit firms

You can continue to include EEA auditors in your UK firm’s required majorities of qualified owners and managers from 1 January 2021.

You can no longer include EEA audit firms, unless they’re both:

Ownership of EEA audit firms

As a UK auditor or UK audit firm you may not be allowed to continue in an EEA firm’s required majorities of qualified owners and managers from 1 January 2021.

Published 24 May 2019