Companies Act 2014
F874[Organisation of quality assurance system
1496. (1) A recognised accountancy body shall organise its quality assurance system in such a manner that—
(a) the system is independent of the reviewed statutory auditors and audit firms,
(b) the funding for the system is secure and free from any possible undue influence by statutory auditors or audit firms,
(c) the system has adequate resources,
(d) the persons who carry out quality assurance reviews have appropriate professional education and relevant experience in statutory audit and financial reporting combined with specific training on quality assurance reviews,
(e) the selection of reviewers for specific quality assurance reviews is effected in accordance with an objective procedure designed to ensure that there are no conflicts of interest between reviewers and the statutory auditor or audit firm under review,
(f) the scope of quality assurance reviews of audits, supported by adequate testing of selected audit files, includes, except where otherwise agreed with the Supervisory Authority, an assessment of—
(i) compliance with applicable auditing standards and independence requirements,
(ii) the quantity and quality of resources spent,
(iii) the audit fees charged, and
(iv) the internal quality control system of the audit firm,
(g) each quality assurance review is the subject of a report in writing which includes the main conclusions of the review,
(h) a quality assurance review of each statutory auditor or audit firm takes place on the basis of an analysis of risk, at least, subject to subsection (5) and section 1497, every 6 years,
(i) statutory auditors and audit firms take all reasonable steps to ensure that recommendations arising from quality assurance reviews of them are implemented within a reasonable period,
(j) there is published annually by it the overall results of quality assurance reviews carried out by it in the year concerned, and
(k) quality assurance reviews are appropriate and proportionate in view of the scale and complexity of the activity of the reviewed statutory auditor or audit firm.
(2) For the purpose of subsection (1)(e), at least the following criteria shall apply to the selection of reviewers:
(a) reviewers have appropriate professional education and relevant experience in statutory audit and financial reporting combined with specific training on quality assurance reviews;
(b) a person does not act as a reviewer in a quality assurance review of a statutory auditor or audit firm until at least 3 years have elapsed since that person ceased to be a partner or an employee of, or otherwise associated with, that statutory auditor or audit firm;
(c) reviewers shall declare (if such be the case) that there are no conflicts of interest between them and the statutory auditor and the audit firm to be reviewed.
(3) For the purpose of subsection (1)(k), a recognised accountancy body, when undertaking quality assurance reviews of the statutory audits of entity or group financial statements of medium or small companies, shall take account of the fact that auditing standards adopted in accordance with Article 26 of the Audit Directive are designed to be applied in a manner that is proportionate to the scale and complexity of the business of the audited undertaking.
(4) If a statutory auditor or audit firm fails to take all reasonable steps to ensure that recommendations arising from a quality assurance review of him or her are implemented within a reasonable period, the recognised accountancy body shall take appropriate action, including, where applicable, subjecting the statutory auditor or audit firm, as the case may be, to the system of disciplinary actions or penalties referred to in the relevant provisions.
(5) The period of at least 6 years referred to in subsection (1)(h) shall be a continuation of the system that was in place under the 2010 Audits Regulations when the first quality assurance reviews were required to be completed and as that system was continued by the 2016 Audits Regulations.]
Inserted (21.09.2018) by Companies (Statutory Audits) Act 2018 (22/2018), s. 51, S.I. No. 366 of 2018.