Auditors Professional Oversight Oversight of Audit Memorandum of Understanding on Reciprocal Arrangements with IAASA

Memorandum of Understanding on Reciprocal Arrangements with IAASA

Since the UK left the EU, the UK and the Republic of Ireland (ROI) are third countries to each other. After 31 December 2020 UK auditors who wish to audit entities incorporated in the ROI will need to be separately registered under a different process as set out in ROI law for the first time. Recognising this, the FRC has agreed a Memorandum of Understanding on Reciprocal Arrangements (“MOURA”) with IAASA, the ROI competent authority. This MOURA will facilitate the ROI’s ability to register UK statutory auditors as ROI statutory auditors by meeting the requirement in Irish law that a third country auditor cannot be approved as a ROI statutory auditor unless reciprocal arrangements with that third country are in place.
The Companies Act 2014 in the ROI requires that a third county auditor may be approved as a statutory auditor if:
  1. He or she passes an aptitude test on subjects relevant to statutory audit in the ROI, or can demonstrate sufficient knowledge of the same;
  2. He or she holds an appropriate qualification;
  3. He or she is of good repute; and
  4. Reciprocal arrangements with the third country are in place which enable an Irish statutory auditor to carry out audits in that third country on fulfilment of requirements that are no more onerous than the requirements for the approval of third country auditors in Ireland.
It should be noted that UK statutory auditors who are included on the ROI Audit Register remain able for the time being to audit entities in the ROI without re-registration as ROI statutory auditors. Nevertheless, the MOURA provides confidence to individuals and firms that they will be able to seek registration in both jurisdictions whenever it is required and that there will be minimal disruption to their ability to provide audit services. Additionally, the MOURA will enable individuals holding an audit qualification from CPA Ireland and after passing a UK aptitude test, to have that qualification recognised for the purpose of becoming a UK statutory auditor after 31 December 2020. Without the reciprocal arrangements in the MOURA, there would be no requirement for the UK to recognise a CPA Ireland qualification unless it decided to do so on a unilateral basis. A link to the FRC Board Declaration approving the CPA Ireland qualification as an approved third country qualification is here.