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Assignment of functions between IAASA and the ODCE

Designation of competent authorities under the Audit Directive and Regulation between IAASA and the Director of Corporate Enforcement

Section 930A of the Companies Act 2014 designates competent authorities under the Audit Directive and Regulation between IAASA and the Director of Corporate Enforcement as follows:

IAASA is designated as the competent authority for:

  • the oversight of statutory auditors (including audit firms), and   
  • public oversight, quality assurance, investigations and penalties of third-country auditors and audit entities.

Among the tasks ascribed to IAASA are:

  • to  prepare and publish annually a list of statutory auditors that earn less than 15% of total audit fees income from public interest entity ('PIE') clients, based on the information supplied to IAASA by Audit Firms; and
  • to consider applications from statutory auditors for determinations regarding the commencement of successive audit engagements.

Where required, IAASA has additional powers to enforce the requirement for auditors not to take up an engagement with a PIE for at least 4 years after its last engagement with that same entity.

Where required, IAASA has additional powers to examine:

  • the mechanism audit firms have in place with respect to the rotation of key audit partners; and
  • the requirements around granting access to all relevant information concerning the audited entity to the incoming auditor, where a statutory audit or audit firm is replaced by another statutory auditor or audit firm.

The Director of Corporate Enforcement is designated as the competent authority with power to take administrative measures or impose sanctions on directors of PIEs.

IAASA is required to perform these functions in relation to obligations on PIEs:

  • Requirement to inform IAASA if the incoming auditor has been appointed otherwise than by the general meeting of shareholders or members of the public interest entity (section 1513 of the Companies Act 2014); and
  • Requirement to inform IAASA of any attempt to impose a clause restricting the choice of auditor. IAASA will have the power to share this information with other regulators (section 1512 of the Companies Act 2014).

Where engagements with auditors or audit firms extend beyond a duration of 10 years, PIEs, on an exceptional basis, may request that IAASA grant an extension to reappoint the statutory auditor or audit firm for a further engagement, not to exceed two years (section 1548 of the Companies Act 2014).

The Director of Corporate Enforcement is the competent authority for all remaining obligations on PIEs under the Companies Act 2014.