SCHEDULES
SCHEDULE 10Recognised supervisory bodies
Part 3Arrangements in which recognised supervisory bodies are required to participate
Arrangements for setting standards relating to professional integrity and independence
21
The arrangements referred to in paragraph 9(2) are appropriate arrangements—
a
for the determining of standards for the purposes of the rules and practices mentioned in paragraph 9(1), and
b
for ensuring that the determination of those standards is done independently of the body.
Arrangements for setting technical standards
22
The arrangements referred to in F1paragraphs 10(2) and 10A(2) are appropriate arrangements—
a
for the determining of standards for the purposes of the rules and practices mentioned in F2paragraphs 10(1) and 10A(1) respectively , and
b
for ensuring that the determination of those standards is done independently of the body.
F4Arrangements for setting standards relating to public interest entity reporting requirements
22A
The arrangements referred to in paragraph 10B(3) are appropriate arrangements—
a
for the determining of standards for the purposes of the rules and practices mentioned in paragraph 10B(1), and
b
for ensuring that the determination of those standards is done independently of the body.
Arrangements for setting standards relating to public interest entity independence requirements
22B
The arrangements referred to in paragraph 10C(2) are appropriate arrangements—
a
for the determining of standards for the purposes of the rules and practices mentioned in paragraph 10C(1), and
b
for ensuring that the determination of those standards is done independently of the body.
Arrangements for independent monitoring of audits of listed companies and other major bodies
23
1
The arrangements referred to in F6paragraph 13(1)(b) are appropriate arrangements—
a
for enabling the performance by members of the body of statutory audit functions in respect of major audits to be monitored by means of inspections carried out under the arrangements, and
b
for ensuring that the carrying out of such monitoring and inspections is done independently of the body.
F31A
Subject to sub-paragraph (1C), the arrangements referred to in sub-paragraph (1) must include provision for an inspection conducted in relation to each person eligible for appointment as a statutory auditor at least once every three years.
1B
Sub-paragraphs (4) to (9) of paragraph 13 apply in relation to inspections under sub-paragraph (1A) as they apply in relation to inspections under that paragraph.
1C
The arrangements referred to in sub-paragraph (1) may provide that the body performing the inspections may decide that all or part of the inspection referred to in sub-paragraph (1A) is not required in the case of a member of a supervisory body who performs statutory audit functions in respect of ten or fewer major audits per year.
1D
If—
a
the arrangements make the provision referred to in sub-paragraph (1C), and
b
the body performing the inspections decides that all of an inspection is not required in relation to a member,
the supervisory body must ensure that the arrangements referred to in paragraph 13(1)(a) apply in relation to that member, subject to the modification specified in sub-paragraph (1F).
1E
If—
a
the arrangements make the provision referred to in sub-paragraph (1C), and
b
the body performing the inspections decides that part of an inspection is not required in relation to a member,
the supervisory body must ensure that the arrangements referred to in paragraph 13(1)(a) apply in relation to that part of the inspection of that member, subject to the modification specified in sub-paragraph (1F).
1F
For the purposes of sub-paragraphs (1D) and (1E), paragraph 13(3) applies with the substitution of three years for “six years”.
2
In this paragraph “major audit” and “statutory audit function” have the same meaning as in paragraph 13.
F5Arrangements for independent monitoring of third country audits
Sch. 10 para. 23A inserted (1.10.2011 with application in accordance with reg. 1(6)) by The Statutory Auditors and Third Country Auditors (Amendment) Regulations 2011 (S.I. 2011/1856), reg. 5(4)
23A
1
The arrangements referred to in paragraph 13(1)(ba) are appropriate arrangements—
a
for enabling the performance by members of the body of third country audit functions to be monitored by means of inspections carried out under the arrangements, and
b
for ensuring that the carrying out of such monitoring and inspections is done independently of the body.
2
Those arrangements must provide that the body performing the inspections—
a
may decide that an inspection referred to in sub-paragraph (1) is not required, or that part of an inspection is not required, in relation to a member, and
b
may direct that the arrangements referred to in sub-paragraph (3) apply in relation to the member or apply to such extent as may be specified in the direction.
3
The supervisory body must have adequate arrangements for enabling the performance by its members of third country audit functions to be monitored by means of inspections for cases where a direction is given under sub-paragraph (2)(b).
4
In this paragraph “third country audit function” means any function related to the audit of a UK-traded non-EEA company.
Arrangements for independent investigation for disciplinary purposes of public interest cases
24
1
The arrangements referred to in paragraph 16(1) are appropriate arrangements—
a
for the carrying out of investigations into public interest cases arising in connection with the performance of statutory audit functions by members of the body,
b
for the holding of disciplinary hearings relating to members of the body which appear to be desirable following the conclusion of such investigations,
c
for requiring such hearings to be held in public except where the interests of justice otherwise require,
d
for the persons before whom such hearings have taken place to decide whether (and, if so, what) disciplinary action should be taken against the members to whom the hearings related, and
e
for ensuring that the carrying out of those investigations, the holding of those hearings and the taking of those decisions are done independently of the body.
2
In this paragraph—
“public interest cases” means matters which raise or appear to raise important issues affecting the public interest;
“statutory audit function” means any function performed as a statutory auditor.
Supplementary: arrangements to operate independently of body
25
1
This paragraph applies for the purposes of—
a
paragraph 21(b),
b
paragraph 22(b),
c
paragraph 23(1)(b), or
d
paragraph 24(1)(e).
2
Arrangements are not to be regarded as appropriate for the purpose of ensuring that a thing is done independently of the body unless they are designed to ensure that the body—
a
will have no involvement in the appointment or selection of any of the persons who are to be responsible for doing that thing, and
b
will not otherwise be involved in the doing of that thing.
3
Sub-paragraph (2) imposes a minimum requirement and does not preclude the possibility that additional criteria may need to be satisfied in order for the arrangements to be regarded as appropriate for the purpose in question.
Supplementary: funding of arrangements
26
The body must pay any of the costs of maintaining any arrangements within paragraph 21, 22, 23 or 24 which the arrangements provide are to be paid by it.
Supplementary: scope of arrangement
27
Arrangements may qualify as arrangements within any of paragraphs 21, 22, 23 and 24 even though the matters for which they provide are more extensive in any respect than those mentioned in the applicable paragraph.
Sch. 10 paras. 22A, 22B and respective preceding cross-headings inserted (6.4.2008) by The Statutory Auditors and Third Country Auditors Regulations 2007 (S.I. 2007/3494), reg. 27