Audit Directive
The Audit Directive updates provisions of the earlier 8th Company Law Directive and introduces new provisions on public oversight, third country auditors and various other matters. The Directive was published on 9 June 2006 and came into force on 29 June 2006.
Directive 2006/43/EC on Statutory Audits of Annual and Consolidated Accounts
The previous Government held two public consultations on the implementation of the Audit Directive on 5 March 2007 and 19 July 2007 (including draft regulations). On 17 December 2007 it published a summary of the comments on the Draft Regulations and the Government's conclusions. Please see the links to these documents at the right of this page.
The EU Audit Directive is implemented in relation to companies through Parts 16 and 42 of the Companies Act 2006, as amended by the Statutory Auditors and Third Country Auditors Regulations (SATCAR) and other related regulations. Most aspects of this amended regulatory framework are applicable to company reporting periods beginning on or after 6 April 2008.
Other regulations implementing the Audit Directive have been made by other Government and regulatory bodies:
- Her Majesty's Treasury has implemented parts of the Audit Directive for Building Societies, Friendly Societies and Lloyds syndicates. The Regulations have commenced for reporting periods beginning on or after 29 June 2008.
- The Financial Services Authority has implemented certain requirements on listed companies, through the listing rules. The amended rules have commenced for reporting periods beginning on or after 29 June 2008. (see related links)
- The Professional Oversight Board of the Financial Reporting Council (POB) has made regulations, which commenced on 6 April 2008 as part of the implementation of the Companies Act. These regulations on transparency reports, the register of auditors and examination requirements also implement parts of the Audit Directive.
Further information about the Directive is available on the European Commission's website.
Information on the implementation of Articles 45, 46 and 47 of the Audit Directive is available on the Relations with Third Countries page. This includes information on recent Commission Decisions issued under Articles 46 and 47 of the Audit Directive, and on publication of draft regulations for comment by the Department for Business, Innnovation and Skills.
Disclosure of non-audit services provided to large companies by their auditors
The Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulations 2008 require companies to disclose services (both audit and non-audit services) provided by their auditor, and the fees paid for those services, in notes to the company's annual published accounts. The regulations implement Article 49 of the Audit Directive.
The Department for Business, Innovation and Skills is now proposing to replace Schedule 2 to the 2008 regulations to provide a new classification of non-audit services to large companies, intended to improve insight into the potential questions around the auditor's independence and link more clearly to the classification of non-audit services under the Audit Directive. The changes are in line with recent changes to the Auditing Practices Board's (APB's) Ethical Standards, which set out the principles to be followed by auditors in order to maintain their independence. The APB completed a review of the Ethical Standards on 17 December 2010.
The draft regulations below are being published for comment for a period beginning on Thursday 7 April 2011 and ending on Thursday 30 June 2011.
Explanatory Text - Draft Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) (Amendment) Regulations 2011 (PDF, 81 Kb)
Draft Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) (Amendment) Regulations 2011 (PDF, 54 Kb)
