C4C1C2C3C5Part 42Statutory Auditors
Pt. 42 modified (6.4.2008) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 43
Pt. 42: functions transferred in part (6.4.2008 in accordance with art. 1 of the amending S.I.) by The Statutory Auditors (Delegation of Functions etc) Order 2008 (S.I. 2008/496), art. 4 (which amending S.I. was revoked (2.7.2012) by S.I. 2012/1741, art. 6)
Pt. 42 applied (with modifications) (15.8.2008) by The Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008 (S.I. 2008/1950), reg. 6(5)
Pt. 42: functions transferred in part (2.7.2012) by The Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc) Order 2012 (S.I. 2012/1741), arts. 1(2), 7, 8, 9 (with art. 16)
Chapter 6Supplementary and general
F1Transfer of papers to third countries
Ss. 1253D-1253F and cross-heading inserted (6.4.2008) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 15(1) (with reg. 15(2) (as amended by S.I. 2008/499), reg. 2(4)))
F31253DRestriction on transfer of audit working papers to third countries
1
F11Audit working papers and investigation reports must not be transferred to a third country competent authority F18unless the third country competent authority is an approved third country competent authority and the transfers are made in accordance with—
a
section 1253DA (transfer by Secretary of State),
b
section 1253DB (transfer by statutory auditor with approval of Secretary of State), or
c
section 1253DC (transfer by statutory auditor for purposes of investigation of auditor).
F102
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Nothing in the sections referred to in subsection (1) authorises the making of a disclosure in contravention of F7the data protection legislation.
1253DAF2Transfer by Secretary of State
1
The Secretary of State may transfer F23audit working papers and investigation reports to an approved third country competent authority if the following conditions are met (but see also section 1253DD).
2
The first condition is that the authority has made a request to the Secretary of State for the transfer of the F23audit working papers and investigation reports.
3
The second condition is that the F23audit working papers and investigation reports relate to audits of companies that—
a
have issued securities in the third country in which the authority is established, or
b
form part of a group issuing statutory consolidated accounts in that third country.
4
The third condition is that the authority has entered into arrangements with the Secretary of State in accordance with section 1253E.
1253DBTransfer by statutory auditor with approval of Secretary of State
1
A statutory auditor may transfer F20audit working papers and investigation reports to an approved third country competent authority if the transfer is made—
a
with the prior approval of the Secretary of State, and
b
in accordance with rules of a recognised supervisory body meeting the requirements of paragraph 16AA of Schedule 10.
2
The Secretary of State must not approve a transfer of F20audit working papers and investigation reports to an approved third country competent authority for the purposes of this section unless the following conditions are met (see also section 1253DD).
3
The first condition is that the authority has made a request to the Secretary of State for the transfer of the F20audit working papers and investigation reports.
4
The second condition is that the F20audit working papers and investigation reports relate to audits of companies that—
a
have issued securities in the third country in which the authority is established, or
b
form part of a group issuing statutory consolidated accounts in that third country.
5
The third condition is that the authority has entered into arrangements with the Secretary of State in accordance with section 1253E.
1253DCTransfer by statutory auditor for purposes of investigation of auditor
A statutory auditor may transfer F22audit working papers and investigation reports to a third country competent authority if the transfer is made—
a
for the purposes of an investigation of an auditor or audit firm, and
b
in accordance with rules of a recognised supervisory body meeting the requirements of paragraph 16AB of Schedule 10.
1253DD Agreement of F15third country competent authority
1
This section applies where—
a
an approved third country competent authority makes a request to the Secretary of State for the transfer of F16audit working papers and investigation reports which relate to the audit of the consolidated accounts of a group, and
b
the F16audit working papers and investigation reports that are the subject of the request—
i
have been created by the auditor of a subsidiary that is located in F25an equivalent third country or transitional third country in relation to the audit of that subsidiary, and
ii
are in the possession of a statutory auditor.
2
In the case of a transfer by the Secretary of State under section 1253DA, the transfer must not take place unless the F17third country competent authority responsible for the auditor of the subsidiary has given its express agreement to the transfer.
3
In the case of a transfer by a statutory auditor under section 1253DB, the Secretary of State must not approve the transfer unless the F24third country competent authority responsible for the auditor of the subsidiary has given its express agreement to the transfer.
1253DETransfer by means of inspection
1
This section applies in the case of a transfer of F5audit working papers and investigation reports if—
a
it is a transfer to an approved third country competent authority F21...,
b
it is a transfer under section 1253DA or 1253DB, and
c
it is to take place by means of an inspection in the United Kingdom by the authority.
2
The Secretary of State must participate in the inspection.
3
The inspection must be under the leadership of the Secretary of State unless the Secretary of State otherwise permits.
F41253EWorking arrangements for transfer of papers
1
The Secretary of State may enter into arrangements with a third country competent authority relating to the transfer of F14audit working papers and investigation reports—
a
from the third country competent authority or a third country auditor regulated by that authority to the Secretary of State, and
b
from the Secretary of State or a statutory auditor to the third country competent authority.
2
The arrangements must provide that a request by the Secretary of State or the third country competent authority for a transfer mentioned in subsection (1) must be accompanied by a statement explaining the reasons for the request.
3
The arrangements must—
a
provide that the Secretary of State may not use F14audit working papers and investigation reports obtained from the third country competent authority or a third country auditor regulated by that authority except in connection with one or more of the functions mentioned in subsection (4), and
b
include comparable provision in relation to F14audit working papers and investigation reports obtained by the third country competent authority from the Secretary of State or a statutory auditor.
4
Those functions are—
a
quality assurance functions which meet requirements equivalent to those of F12regulation 9 of the Statutory Auditors and Third Country Auditors Regulations 2016;
b
investigation or disciplinary functions which meet requirements equivalent to those of F26regulations 5 to 8 and 10 of the Statutory Auditors and Third Country Auditors Regulations 2016;
c
public oversight functions which meet requirements equivalent to those of F9regulation 3 of the Statutory Auditors and Third Country Auditors Regulations 2016.
5
The arrangements must—
a
provide that the Secretary of State, a person exercising the functions of the Secretary of State and persons employed or formerly employed in discharging those functions must be subject to obligations of confidentiality as to personal data, professional secrets and sensitive commercial information contained in F14audit working papers and investigation reports transferred to the Secretary of State, F27...
b
c
ensure that the protection of the commercial interests of any audited person, including its industrial and intellectual property, is not undermined.
6
The arrangements must—
a
provide that the Secretary of State may refuse, or direct a statutory auditor to refuse, a request from the third country competent authority for a transfer of F14audit working papers and investigation reports in a case mentioned in subsection (7)(a) or (b), and
b
provide that the third country competent authority has comparable rights in relation to a request from the Secretary of State.
7
Those cases are—
a
where the transfer of the papers would adversely affect the sovereignty, security or public order F8...of the United Kingdom;
b
where legal proceedings have been brought in the United Kingdom (whether continuing or not) in relation to the persons and matters to which the request relates.
F137A
The arrangements must—
a
provide that the Secretary of State may only disclose confidential information received from the third country competent authority—
i
with the agreement of that authority or for purposes for which that authority has given its agreement,
ii
where disclosure is required by law, or
iii
where disclosure is necessary in connection with legal proceedings, and
b
provide that the third country competent authority may only disclose confidential information received from the Secretary of State—
i
with the Secretary of State’s agreement or for purposes for which the Secretary of State has given agreement,
ii
where disclosure is required by law, or
iii
where disclosure is necessary in connection with legal proceedings.
F198
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F199
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1253FPublication of working arrangements
If the Secretary of State enters into working arrangements in accordance with section 1253E, he must publish on a website without undue delay—
a
the name of the third country competent authority with which he has entered into such arrangements, and
b
the country or territory in which it is established.
Pt. 42 applied (with modifications) (4.4.2014 for specified purposes, 16.12.2014 in so far as not already in force) by Local Audit and Accountability Act 2014 (c. 2), s. 49(1), Sch. 5 paras. 1-27 (with Sch. 13 para. 11); S.I. 2014/900, art. 2(j); S.I. 2014/3319, art. 2(e) (as amended: (31.12.2020) by S.I. 2019/177, regs. 2, 57; 2020 c. 1, Sch. 5 para. 1(1) and S.I. 2019/504, regs. 1(2), 3-6; 2020 c. 1, Sch. 5 para. 1(1); and (1.7.2022) by 2022 c. 31, s. 186(6), Sch. 4 para. 216, Sch. 7 para. 28; S.I. 2022/734, reg. 2(a), Sch. (with regs. 13, 29, 30); and (1.1.2024) by The Retained EU Law (Revocation and Reform) Act 2023 (Consequential Amendment) Regulations 2023 (S.I. 2023/1424), reg. 1(2), Sch. para. 82)