The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008

PART 12 U.K. FUNCTIONS OF AUDITOR

Auditor's report U.K.

39.  Section 495 applies to LLPs, modified so that it reads as follows—

“Auditor's report on LLP's annual accounts

495.— (1) An LLP's auditor must make a report to the LLP's members on all annual accounts of the LLP of which copies are, during his tenure of office to be sent out to members under section 423.

(2) The auditor's report must include—

(a) an introduction identifying the annual accounts that are the subject of the audit and the financial reporting framework that has been applied in their preparation, and

(b) a description of the scope of the audit identifying the auditing standards in accordance with which the audit was conducted.

(3) The report must state clearly whether, in the auditor's opinion, the annual accounts—

(a) give a true and fair view—

(i) in the case of an individual balance sheet, of the state of affairs of the LLP as at the end of the financial year,

(ii) in the case of an individual profit and loss account, of the profit or loss of the LLP for the financial year,

(iii) in the case of group accounts, of the state of affairs as at the end of the financial year and of the profit or loss for the financial year of the undertakings included in the consolidation as a whole, so far as concerns members of the LLP;

(b) have been properly prepared in accordance with the relevant financial reporting framework; and

(c) have been prepared in accordance with the requirements of this Act.

Expressions used in this subsection [F1 or subsection (3A)] that are defined for the purposes of Part 15 (see [F2 sections 464, 471 and 474]) have the same meaning as in that Part.

[F3 (3A) Subsection (3B) applies to the auditors of an LLP which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B) in their consideration of whether the non-IAS individual accounts of the LLP for that year give a true and fair view as mentioned in subsection (3)(a).

(3B) Where the accounts contain an item of information additional to the micro-entity minimum accounting items, the auditors must have regard to any provision of an accounting standard which relates to that item.]

(4) The auditor's report—

(a) must be either unqualified or qualified, and

(b) must include a reference to any matters to which the auditor wishes to draw attention by way of emphasis without qualifying the report.”

Textual Amendments

F1 Words in reg. 39 inserted (with effect in accordance with reg. 2(2)-(5) of the amending S.I.) by The Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 (S.I. 2016/575), regs. 2(1), 24(2)(a)(i)

F2 Words in reg. 39 substituted (with effect in accordance with reg. 2(2)-(5) of the amending S.I.) by The Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 (S.I. 2016/575), regs. 2(1), 24(2)(a)(ii)

F3 Words in reg. 39 inserted (with effect in accordance with reg. 2(2)-(5) of the amending S.I.) by The Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016 (S.I. 2016/575), regs. 2(1), 24(2)(b)

Duties and rights of auditors U.K.

40.  Sections 498 to 502 M1 apply to LLPs, modified so that they read as follows—

“Duties of auditor

498.— (1) An LLP's auditor, in preparing his report, must carry out such investigations as will enable him to form an opinion as to—

(a) whether adequate accounting records have been kept by the LLP and returns adequate for their audit have been received from branches not visited by him, and

(b) whether the LLP's individual accounts are in agreement with the accounting records and returns.

(2) If the auditor is of the opinion—

(a) that adequate accounting records have not been kept, or that returns adequate for their audit have not been received from branches not visited by him, or

(b) that the LLP's individual accounts are not in agreement with the accounting records and returns,

the auditor shall state that fact in his report.

(3) If the auditor fails to obtain all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of his audit, he shall state that fact in his report.

(4) If the members of the LLP have prepared accounts in accordance with the small LLPs regime and in the auditor's opinion they were not entitled so to do, the auditor shall state that fact in his report.

[F4 (5) Where more than one person is appointed as auditor, the report must include a statement as to whether all the persons appointed agree on the statements given under subsections (2) to (5) and, if they cannot agree on those statements, the report must include the opinions of each person appointed and give reasons for the disagreement.]

Auditor's general right to information

499.— (1) An auditor of an LLP—

(a) has a right of access at all times to the LLP's books, accounts and vouchers (in whatever form they are held), and

(b) may require any of the following persons to provide him with such information or explanations as he thinks necessary for the performance of his duties as auditor.

(2) Those persons are—

(a) any member or employee of the LLP;

(b) any person holding or accountable for any of the LLP's books, accounts or vouchers;

(c) any subsidiary undertaking of the LLP which is a body corporate incorporated in the United Kingdom;

(d) any officer, employee or auditor of any such subsidiary undertaking or any person holding or accountable for any books, accounts or vouchers of any such subsidiary undertaking;

(e) any person who fell within any of paragraphs (a) to (d) at a time to which the information or explanations required by the auditor relates or relate.

(3) A statement made by a person in response to a requirement under this section may not be used in evidence against him in criminal proceedings except proceedings for an offence under section 501.

(4) Nothing in this section compels a person to disclose information in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.

Auditor's right to information from overseas subsidiaries

500.— (1) Where a parent LLP has a subsidiary undertaking that is not a body corporate incorporated in the United Kingdom, the auditor of the parent LLP may require it to obtain from any of the following persons such information or explanations as he may reasonably require for the purposes of his duties as auditor.

(2) Those persons are—

(a) the undertaking;

(b) any officer, employee or auditor of the undertaking;

(c) any person holding or accountable for any of the undertaking's books, accounts or vouchers;

(d) any person who fell within paragraph (b) or (c) at a time to which the information or explanations relates or relate.

(3) If so required, the parent LLP must take all such steps as are reasonably open to it to obtain the information or explanations from the person concerned.

(4) A statement made by a person in response to a requirement under this section may not be used in evidence against him in criminal proceedings except proceedings for an offence under section 501.

(5) Nothing in this section compels a person to disclose information in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.

Auditor's right to information: offences

501.— (1) A person commits an offence who knowingly or recklessly makes to an auditor of an LLP a statement (oral or written) that—

(a) conveys or purports to convey any information or explanations which the auditor requires, or is entitled to require, under section 499, and

(b) is misleading, false or deceptive in a material particular.

(2) A person guilty of an offence under subsection (1) 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 England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);

(ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum (or both).

(3) A person who fails to comply with a requirement under section 499 without delay commits an offence unless it was not reasonably practicable for him to provide the required information or explanations.

(4) If a parent LLP fails to comply with section 500, an offence is committed by—

(a) the LLP, and

(b) every member of the LLP who is in default.

(5) A person guilty of an offence under subsection (3) or (4) is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(6) Nothing in this section affects any right of an auditor to apply for an injunction (in Scotland, an interdict or an order for specific performance) to enforce any of his rights under section 499 or 500.

Auditor's rights in relation to meetings

502.— (1) An LLP's auditor is entitled—

(a) to receive all notices of, and other communications relating to, any meeting which a member of the LLP is entitled to receive, where any part of the business of the meeting concerns them as auditors,

(b) to attend any meeting of the LLP where any part of the business of the meeting concerns them as auditors, and

(c) to be heard at any meeting which he attends on any part of the business of the meeting which concerns him as auditor.

(2) Where the auditor is a firm, the right to attend or be heard at a meeting is exercisable by an individual authorised by the firm in writing to act as its representative at the meeting.”

Textual Amendments

F4 Words in reg. 40 inserted (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 14 (with reg. 2(6)(7))

Marginal Citations

M1 Section 498 was amended by regulation 6(10) of S.I. 2008/393 in manner not relevant to these Regulations.

Signature of auditor's report U.K.

41.  Sections 503 to 506 apply to LLPs, modified so that they read as follows—

“503.    Signature of auditor's report

(1) The auditor's report must state the name of the auditor and be signed and dated.

(2) Where the auditor is an individual, the report must be signed by him.

(3) Where the auditor is a firm, the report must be signed by the senior statutory auditor in his own name, for and on behalf of the auditor.

[F5 (4) Where more than one person is appointed as auditor, the report must be signed by all those appointed.]

504.    Senior statutory auditor

(1) The senior statutory auditor means the individual identified by the firm as senior statutory auditor in relation to the audit in accordance with—

F6 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) F7 ... any relevant guidance issued by—

(i) the Secretary of State, or

[F8 (ii) the Financial Reporting Council Limited.]

(2) The person identified as senior statutory auditor must be eligible for appointment as auditor of the LLP in question (see Chapter 2 of Part 42 of this Act).

(3) The senior statutory auditor is not, by reason of being named or identified as senior statutory auditor or by reason of his having signed the auditor's report, subject to any civil liability to which he would not otherwise be subject.

(4) An order appointing a body for the purpose of subsection (1)(b)(ii) is subject to negative resolution procedure.

505.    Names to be stated in published copies of auditor's report

(1) Every copy of the auditor's report that is published by or on behalf of the LLP must—

(a) state the name of the auditor and (where the auditor is a firm) the name of the person who signed it as senior statutory auditor, or

(b) if the conditions in section 506 (circumstances in which names may be omitted) are met, state that a determination has been made and notified to the Secretary of State in accordance with that section.

[F9 (1A) If more than one person is appointed as auditor, the reference in subsection (1)(a) to the name of the auditor is to be read as a reference to the names of all the auditors.]

(2) For the purposes of this section an LLP is regarded as publishing the report if it publishes, issues or circulates it or otherwise makes it available for public inspection in a manner calculated to invite members of the public generally, or any class of members of the public, to read it.

(3) If a copy of the auditor's report is published without the statement required by this section, an offence is committed by—

(a) the LLP, and

(b) every designated member of the LLP who is in default.

(4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

506.    Circumstances in which names may be omitted

(1) [F10 An auditor’s] name and, where the auditor is a firm, the name of the person who signed the report as senior statutory auditor, may be omitted from—

(a) published copies of the report, and

(b) the copy of the report delivered to the registrar under Chapter 10 of Part 15 (filing of accounts and reports),

if the following conditions are met.

(2) The conditions are that the LLP—

(a) considering on reasonable grounds that statement of the name would create or be likely to create a serious risk that the auditor or senior statutory auditor, or any other person, would be subject to violence or intimidation, has determined that the name should not be stated, and

(b) has given notice of the determination to the Secretary of State, stating—

(i) the name and registered number of the LLP,

(ii) the financial year of the LLP to which the report relates, and

(iii) the name of the auditor and (where the auditor is a firm) the name of the person who signed the report as senior statutory auditor.”

Textual Amendments

F5 Words in reg. 41 inserted (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 15(a) (with reg. 2(6)(7))

F6 Words in reg. 41 omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 52(a); 2020 c. 1, Sch. 5 para. 1(1)

F7 Words in reg. 41 omitted (31.12.2020) by virtue of The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/177), regs. 2, 52(b); 2020 c. 1, Sch. 5 para. 1(1)

F8 Words in reg. 41 substituted (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 15(b) (with reg. 2(6)(7))

F9 Words in reg. 41 inserted (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 15(c) (with reg. 2(6)(7))

F10 Words in reg. 41 substituted (with effect in accordance with reg. 2(5)(a) of the amending S.I.) by The Statutory Auditors Regulations 2017 (S.I. 2017/1164), reg. 1(2)(3), Sch. 3 para. 15(d) (with reg. 2(6)(7))

Offences in connection with auditor's report U.K.

42.  Sections 507 to 509 apply to LLPs, modified so that they read as follows—

“Offences in connection with auditor's report

507.— (1) A person to whom this section applies commits an offence if he knowingly or recklessly causes a report under section 495 (auditor's report on LLP's annual accounts) to include any matter that is misleading, false or deceptive in a material particular.

(2) A person to whom this section applies commits an offence if he knowingly or recklessly causes such a report to omit a statement required by—

(a) section 498(2)(b) (statement that LLP's accounts do not agree with accounting records and returns),

(b) section 498(3) (statement that necessary information and explanations not obtained), or

(c) section 498(4) (statement that members wrongly prepared accounts in accordance with the small LLPs regime).

(3) This section applies to—

(a) where the auditor is an individual, that individual and any employee or agent of his who is eligible for appointment as auditor of the LLP;

(b) where the auditor is a firm, any director, member, employee or agent of the firm who is eligible for appointment as auditor of the LLP.

(4) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

Guidance for regulatory and prosecuting authorities: England, Wales and Northern Ireland

508.— (1) The Secretary of State may issue guidance for the purpose of helping relevant regulatory and prosecuting authorities to determine how they should carry out their functions in cases where behaviour occurs that—

(a) appears to involve the commission of an offence under section 507 (offences in connection with auditor's report), and

(b) has been, is being or may be investigated pursuant to arrangements—

(i) under paragraph 15 of Schedule 10 (investigation of complaints against auditors and supervisory bodies), or

(ii) of a kind mentioned in paragraph 24 of that Schedule (independent investigation for disciplinary purposes of public interest cases).

(2) The Secretary of State must obtain the consent of the Attorney General before issuing any such guidance.

(3) In this section “relevant regulatory and prosecuting authorities” means—

(a) supervisory bodies within the meaning of Part 42 of this Act,

(b) bodies to which the Secretary of State may make grants under section 16(1) of the Companies (Audit, Investigations and Community Enterprise) Act 2004 (c.27) (bodies concerned with accounting standards etc),

(c) the Director of the Serious Fraud Office,

(d) the Director of Public Prosecutions or the Director of Public Prosecutions for Northern Ireland, and

(e) the Secretary of State.

(4) This section does not apply to Scotland.

Guidance for regulatory authorities: Scotland

509.— (1) The Lord Advocate may issue guidance for the purpose of helping relevant regulatory authorities to determine how they should carry out their functions in cases where behaviour occurs that—

(a) appears to involve the commission of an offence under section 507 (offences in connection with auditor's report), and

(b) has been, is being or may be investigated pursuant to arrangements—

(i) under paragraph 15 of Schedule 10 (investigation of complaints against auditors and supervisory bodies), or

(ii) of a kind mentioned in paragraph 24 of that Schedule (independent investigation for disciplinary purposes of public interest cases).

(2) The Lord Advocate must consult the Secretary of State before issuing any such guidance.

(3) In this section “relevant regulatory authorities” means—

(a) supervisory bodies within the meaning of Part 42 of this Act,

(b) bodies to which the Secretary of State may make grants under section 16(1) of the Companies (Audit, Investigations and Community Enterprise) Act 2004 (c.27) (bodies concerned with accounting standards etc), and

(c) the Secretary of State.

(4) This section applies only to Scotland.”