The EU Statutory Audit Directive (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016 sets the minimum regulatory requirements for statutory audits across the European Union/European Economic Area (“EU/EEA”). The interrelation of capital markets underlines the need to ensure that auditors/audit entities from third countries carry out high quality audit work in relation to capital markets within the EU/EEA. Directive 2006/43/EC, therefore, requires that the relevant statutory audit entities and auditors from third countries should be entered on a public register, and subject to a level of regulation equivalent to the minimum required for EU/EEA auditors. In addition the European Commission has made transitional measures to facilitate the introduction of these new requirements.
Registration is required according to Article 45 of Directive 2006/43/EC if a third-country auditor or audit entity provides an audit report concerning the annual or consolidated accounts of a relevant audit client (see FAQ no. 3.). According to Article 2 (4) of Directive 2006/43/EC a ‘third-country audit entity’ means an entity, regardless of its legal form, which carries out audits of the annual or consolidated accounts of a company incorporated in a third-country.
Should the third country auditor or audit entity fail to comply with the registration requirement, the issued auditor’s opinion will not be legally valid in the EU.