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11.—(1) Regulations 4 to 9 and Schedule 2 apply in relation to—
(a)the performance of third country audit functions by persons who are eligible for appointment as statutory auditors,
(b)the monitoring by the competent authority of the performance of third country audit functions by persons who are eligible for appointment as statutory auditors, and
(c)the imposition of sanctions by the competent authority in relation to the performance of third country audit functions by persons who are eligible for appointment as statutory auditors,
as they apply to the conduct of statutory audit work, the monitoring of that work and the imposition of sanctions in relation to that work, subject to the modifications set out in paragraphs (3) to (6).
(2) Paragraph (1) does not apply in respect of monitoring of the performance of third country audit functions—
(a)for an audited entity which—
(i)is incorporated in a third country that has been determined by the European Commission as having an equivalent system of audit inspections, investigations and sanctions to that in the European Union under Article 46 of the Audit Directive, or
(ii)is incorporated in a third country that is the subject of transitional arrangements by the European Commission in respect of its system of audit inspections, investigations and sanctions under Article 46 of the Audit Directive; or
(b)by a statutory auditor—
(i)who is also an EEA auditor, and
(ii)whose performance of third country audit functions is subject to the systems of public oversight, quality assurance and investigations and sanctions of the EEA competent authority that approved the EEA auditor in accordance with the Audit Directive.
(3) Regulations 4 to 9 and Schedule 2 apply but as if—
(a)for any cross-references to provisions within those regulations, there were substituted references to those provisions as they apply by virtue of this regulation; and
(b)for references to—
(i)“conduct of statutory audit work” or “conduct of a statutory audit” there were substituted references to “performance of third country audit functions”, except in regulation 5(1)(c),
(ii)“statutory auditors”, except in regulation 5(1)(e), or “persons appointed to conduct a statutory audit” there were substituted references to “a person who is eligible for appointment as a statutory auditor and who is appointed to perform third country audit functions”,
and related expressions are to be construed accordingly.
(4) Regulation 4 applies but as if for paragraphs to (2) to (4) there were substituted—
“(2) The relevant standards are—
(a)the international auditing standards adopted by the European Commission in accordance with Article 26(3) of the Audit Directive, or standards which are equivalent,
(b)any auditing standards, procedures or requirements imposed by the competent authority in relation to the conduct of statutory audit which do not cover the same subject-matter as the standards referred to in paragraph (a) or standards, procedures or requirements which are equivalent, and
(c)the requirements set out in Articles 22, 22b and 25 of the Audit Directive (independence, objectivity and audit fees), or requirements which are equivalent.
(3) The person who is eligible for appointment as a statutory auditor who is appointed to perform third country audit functions must, if not already required to do so by reason of carrying out statutory audits of public interest entities, publish on a website an annual transparency report equivalent to that required for auditors of public interest entities by Article 13 of the Audit Regulation (transparency report).”.
(5) Regulation 5 applies but as if—
(a)paragraph (9) were omitted;
(b)for the definition of a “relevant requirement” in paragraph (11) were substituted—
“a “relevant requirement” means a requirement with which A must comply under—
these Regulations (including the requirement under regulation 4(1)), or
the Audit Regulation;”; and
(c)the definition of “subordinate legislation” in paragraph (11) were omitted.
(6) Regulation 9 applies but as if—
(a)for paragraph (1) were substituted—
“(1) The competent authority must monitor the performance of third country audit functions by persons eligible for appointment as statutory auditors, and may do so by means of a system of inspections.”;
(b)in paragraph (2)—
(i)the words “which does not relate to public interest entities” were omitted, and
(ii)for “(4) to (12)” were substituted “ (4) to (11) ”;
(c)paragraph (3) were omitted;
(d)in paragraph (6), sub-paragraph (b) were omitted;
(e)in paragraph (10)—
(i)after “statutory auditor” were inserted “ in respect of their performance of third country audit functions ”; and
(ii)sub-paragraph (b) were omitted;
(f)paragraph (12) were omitted.
(7) Schedule 2 applies but as if—
(a)in paragraph 1, sub-paragraphs (3) and (4) were omitted; and
(b)paragraph 4 were omitted.
(8) In this regulation, “third country audit function” means any function related to the audit of a UK-traded non-EEA company or of an equivalent body corporate whose transferable securities are admitted to trading on a regulated market situated or operating in another EEA state.