Companies Act 2006

Holding of appropriate qualificationU.K.

6(1)The body must have rules to the effect that a person is not eligible for appointment as a statutory auditor unless—U.K.

(a)in the case of an individual[F1 other than an EEA auditor], he holds an appropriate qualification,

[F2(aa) in the case of an individual who is an EEA auditor—

(i)he holds an appropriate qualification,

(ii) he has been authorised on or before 5 April 2008 to practise the profession of company auditor pursuant to the European Communities (Recognition of Professional Qualifications) (First General System) Regulations 2005 ( S.I. 2005/18) and has fulfilled any requirements imposed pursuant to regulation 6 of those Regulations, or

[F3(iii)he meets the requirements of sub-paragraph (1A).]]

(b)in the case of a firm [F4which is not an EEA auditor]—

(i)each individual responsible for statutory audit work on behalf of the firm is eligible for appointment as a statutory auditor, and

(ii)the firm is controlled by qualified persons (see paragraph 7 below).

[F5(c) in the case of a firm which is an EEA auditor—

(i)each individual responsible for statutory audit work on behalf of the firm is eligible for appointment as a statutory auditor,

(ii) the firm would be eligible for appointment as a statutory auditor if it were not an EEA auditor or is eligible for a corresponding appointment as an auditor under the law of an EEA State or part of an EEA State, other than the United Kingdom, and

(iii) if the firm is eligible for a corresponding appointment as an auditor under the law of an EEA State or part of an EEA State other than the United Kingdom, the firm provides proof of its eligibility in the form of a certificate, dated not more than three months before it is provided by the firm, from the competent authority of the EEA State concerned. ]

[F6(1A)The requirements of this sub-paragraph are that the individual—

(a)already holds a professional qualification which covers all the subjects which are covered by a recognised professional qualification and which are subjects of which knowledge is essential for the pursuit of the profession of statutory auditor, or

(b)holds a professional qualification which does not cover all those subjects and has met whichever of the requirements of sub-paragraph (1B) is specified in the body’s rules.

(1B)The body’s rules must specify that the condition in sub-paragraph (1A)(b) is satisfied in one of the following ways—

(a)only by passing an aptitude test in accordance with sub-paragraph (2),

(b)only by completing an adaptation period in accordance with sub-paragraphs (2B) and (2C), or

(c)either by passing an aptitude test in accordance with sub-paragraph (2) or by completing an adaptation period in accordance with sub-paragraphs (2B) and (2C), according to the choice of the individual.]

[F7(2)The aptitude test—

(a)must test the person's knowledge of subjects—

(i)that are covered by a recognised professional qualification,

(ii)that are not covered by the professional qualification already held by the person, and

(iii)the knowledge of which is essential for the pursuit of the profession of statutory auditor;

(b)may test the person's knowledge of rules of professional conduct;

(c)must not test the person's knowledge of any other matters.

F8( 2A ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F9(2B)An adaptation period is a period, not exceeding three years, in which the individual (“the applicant”) pursues the profession of statutory auditor under the supervision of an individual who holds an appropriate qualification, subject to an assessment (“the ability assessment”) of the applicant’s ability to pursue the profession of statutory auditor in the United Kingdom.

(2C)Where the body’s rules specify that the condition in sub-paragraph [F10(1A)(b)] can be satisfied by completing an adaptation period—

(a) the body must have rules governing the adaptation period and the ability assessment, having regard to the circumstances of each applicant and, in particular, to the fact that each applicant is a qualified professional in another EEA State,

(b)the applicant may be required to undergo further training during the adaptation period,

(c)the applicant’s performance during the adaptation period must be assessed by the body, and

(d)the body must determine the applicant’s professional status during the adaptation period.]

(3)A firm which has ceased to comply with the conditions mentioned in sub-paragraph (1)(b) may be permitted to remain eligible for appointment as a statutory auditor for a period of not more than three months.]

Textual Amendments

F7Sch. 10 para. 6(2)(2A) substituted (6.4.2008) for Sch. 10 para. 6(2) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 17(4)

7(1)This paragraph explains what is meant in paragraph 6(1)(b) by a firm being “controlled by qualified persons”.U.K.

(2)In this paragraph references to a person being qualified are—

(a)in relation to an individual, to his holding—

(i)an appropriate qualification, or

(ii)a corresponding qualification to audit accounts under the law of [F11an EEA State] , or part of [F11an EEA State] , other than the United Kingdom;

(b)in relation to a firm, to its—

(i)being eligible for appointment as a statutory auditor, or

(ii)being eligible for a corresponding appointment as an auditor under the law of [F11an EEA State] , or part of [F11an EEA State] , other than the United Kingdom.

(3)A firm is to be treated as controlled by qualified persons if, and only 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, a majority of that body are qualified persons or, if the body consists of two persons only, at least one of them is a qualified person.

(4)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.

(5)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.

(6)Paragraphs 5 to 11 of Schedule 7 to this Act (rights to be taken into account and attribution of rights) apply for the purposes of this paragraph.

Textual Amendments

F11Words in Sch. 10 para. 7(2)(a)(ii)(b)(ii) substituted (6.4.2008) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 18(2)

[F127A.(1)The body must have rules and practices governing the adaptation period and the ability assessment referred to in section 1221 (approval of third country qualifications), and the following provisions of this paragraph apply in any case within that section.U.K.

(2)The body must have regard to the circumstances of each applicant in relation to the adaptation period, and the ability assessment, to be required of the applicant.

(3)The applicant may be required to undergo further training during the adaptation period.

(4)The applicant’s performance during the adaptation period must be assessed by the body.

(5)The body must determine the applicant’s professional status during the adaptation period.]

Textual Amendments