ICAEW received an indication from the Irish audit authorities that they interpret the Audit Directive to mean that non-Irish resident accountancy firms currently on the Irish Audit register are unlikely to retain automatic audit rights in Ireland after 29 March 2019 in the event of a no-deal Brexit.
ICAEW and the other recognised accountancy bodies (RABs) as well as BEIS and the FRC are seeking further discussions with the Irish Authorities on certain aspects of this and seeking some transitional arrangements, but for scenario planning purposes firms should assume that these may not be forthcoming.
Most of the current licensing for audit in Ireland is based on membership of or registration by a RAB which is also a recognised supervisory body (RSB) in the UK. Consequently, individuals and firms receive audit rights for both the UK and the ROI simultaneously. However from 29 March 2019 our expectation is that UK audit firms will require to seek separate approval from IAASA as a statutory auditor in Ireland. This may include a requirement for RIs to undertake an aptitude test for the differences between UK and Irish law. In addition those UK firms that audit an undertaking that is listed on the Irish Stock Exchange will need to be registered by IAASA as third country auditors.
The process for applying to be a third country auditor is currently undefined and would not be agreed or take effect till after 29 March. This makes a roll-over of existing registrations extremely difficult to plan and it could be some months before it is in place.
As a consequence, and in the absence of some transitional arrangements it has to be assumed for no deal Brexit purposes that UK firms will have to cease audit services to existing Irish clients after 29 March 2019. In such circumstances firms need to consider the following approaches in their scenario planning.
Firms must identify immediately all their audits of Irish (ROI) entities that could be affected by this Irish ruling and the timing of their audit opinions.
All RIs signing Irish audit opinions need to be separately identified and analysed according to whether their residential address is in the UK or in the ROI.
All audits where the Irish records are retained in the UK need to be identified.
On behalf of this topic, the article contains also detailed information about management of audits and management of registration.
© ICAEW - Institute of Chartered Accountants in England and Wales
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