Companies Act 2014

F591 [ Selection procedures for statutory auditors or audit firms by public-interest entities

1513

1513. (1) Subject to subsection (2) , the following selection procedures apply, for financial years commencing on or after 17 June 2016, to the appointment of a statutory auditor or audit firm to a public-interest entity:

(a) the audit committee shall prepare a recommendation for the directors of the entity by carrying out the selection procedure specified in Article 16(3) of Regulation (EU) No 537/2014;

(b) the audit committee shall submit a recommendation to the directors of the entity for the appointment of statutory auditors or audit firms;

(c) the recommendation

(i) shall be justified and contain at least 2 choices for the audit engagement and shall express a duly justified preference for one of them, and

(ii) shall state (if such be the case) that the recommendation is free from influence by a third party and that, on and from 17 June 2017, no clause of the kind referred to in section 380(6) has been imposed upon it;

(d) the proposal by the directors to the general meeting of shareholders or members of the entity for the appointment of statutory auditors or audit firms

(i) shall include the recommendation referred to in paragraph (b) and the preference referred to in paragraph (c)(i) ,

(ii) if it departs from the preference of the audit committee, shall justify the reasons for not following the recommendation of the audit committee, and

(iii) shall state if the statutory auditor or audit firm recommended by the directors participated in the selection procedure referred to in subsection (2)(a) .

(2) Subsection (1) shall not apply if

(a) a selection procedure in accordance with Article 16(3) of Regulation (EU) No 537/2014 has been carried out in respect of the appointment of the statutory auditor or audit firm in relation to one or more of the preceding 9 financial years, and

(b) the statutory auditor or audit firm appointed by the public-interest entity was appointed for the previous financial year.

(3) Where the public-interest entity is exempt from the requirement for an audit committee under section 1551 , this section applies to the directors of the public-interest entity.

(4) Where a public-interest entity relies on the provisions of section 382 , 384 or 385 , the public-interest entity shall, as soon as is practicable, inform the Supervisory Authority of that fact.

(5) The appointment of an auditor or audit firm shall be invalid if the appointment contravenes a provision of this section.

(6) (a) Subject to paragraph (b) , a public-interest entity shall keep records demonstrating that the selection procedures referred to in subsection (1) have been carried out.

(b) The public-interest entity shall keep those records for at least 6 years from the date on which the selection procedures were completed.

(7) A person who contravenes subsection (6)(a) or (b) shall be guilty of a category 4 offence. ]

Annotations

Amendments:

F591

Inserted (21.09.2018) by Companies (Statutory Audits) Act 2018 (22/2018), s. 51, S.I. No. 366 of 2018.