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FRC and FAOA Mutual Recognition Arrangements for Statutory Auditors - FRC Guidance to Recognised Supervisory Bodies

The FRC does not accept any liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, whether in contract, tort or otherwise from any action or decision taken (or not taken) as a result of any person relying on or otherwise using this document or arising from any omission from it.

The Financial Reporting Council Limited 2025 The Financial Reporting Council Limited is a company limited by guarantee. Registered in England number 2486368. Registered Office: 8th Floor, 125 London Wall, London EC2Y 5AS

Contents

Introduction

1The Financial Reporting Council (FRC) has the power to make declarations under Section 1221 of the Companies Act 2006 that recognise audit qualifications from other countries as approved third country qualifications. The power to make such declarations is delegated to the FRC by the UK Government's Department for Business and Trade's Secretary of State. In addition, under the Professional Qualifications Act 2022, regulators are required to put in place arrangements to receive and process applications from individuals seeking recognition of their qualifications obtained in countries named in implementing regulations. Switzerland is a named country in accordance with the UK-Switzerland Recognition of Professional Qualifications Agreement.

2A statutory auditor1 registered in a third country holding a third country qualification approved by the FRC and/or within the scope of the Professional Qualifications Act may apply to have that qualification recognised in the UK subject to certain eligibility requirements.

3The FRC negotiates the basis for mutual recognition of statutory auditors and audit qualifications between the UK and other countries. This allows for practical arrangements for mutual recognition to be developed.

UK and Switzerland mutual recognition of statutory auditors

4The FRC made a declaration under Section 1221 of the Companies Act 2006 on 8 December 2023 that recognises Swiss Licensed Audit Experts holding the Swiss CPA qualification as holding an approved third country qualification. Therefore, Swiss Licensed Audit Experts holding the Swiss CPA qualification may apply to have their qualification recognised in the UK subject to certain eligibility requirements.

5To support the mutual recognition of statutory auditors under the declaration, the FRC and the Federal Audit Oversight Authority (the FAOA) of Switzerland have agreed the basis for the mutual recognition of statutory auditors. This basis is set out in letters of mutual understanding signed by the FRC and the FAOA on 8 December 2023.

6The basis of mutual recognition is that UK statutory auditors or Swiss Licensed Audit Experts who have both an audit qualification and the right to sign statutory audit reports can apply for recognition of their audit qualification in the other country, subject to meeting certain eligibility criteria.

Purpose of this guidance

7This document provides:

  1. Guidance for the UK Recognised Supervisory Bodies (RSBs) to apply when exercising their approval and registration function in relation to Swiss Licensed Audit Experts holding an approved Swiss qualification, so as to meet the requirements of the Companies Act 2006 and the 8 December 2023 Section 1221 declaration.
  2. Guidance that the RSBs may wish to provide to UK statutory auditors registered with them who wish to apply for Swiss Licensed Audit Expert status.

Status of this guidance

8This guidance is intended as general information and should not be relied upon as being definitive or all-inclusive. All RSBs2 should carefully evaluate how the requirements apply to their respective organisations and to any applications for the recognition of third country qualifications that they receive.

9Applicants seeking approval from and registration with an RSB must always comply with the regulations of that RSB. Such regulations take precedence over this guidance.

10This guidance is not intended to replace or override any legislative provisions. It should be read in conjunction with the Companies Act 2006, the mutual recognition arrangements agreed with the FAOA, the relevant Section 1221 declaration and any other requirements or guidance that the FRC may issue.

11Nothing in this guidance may be construed so as to constrain the FRC from acting, where it deems it to be appropriate, in respect of an RSB's performance of its approval and registration functions.

12RSBs and their members are advised to check the latest requirements themselves.

2. Applications for UK statutory auditor status from Swiss Licensed Audit Experts

RSB responsibilities

1It is the RSB's responsibility to ensure that:

  1. A Swiss Licensed Audit Expert applicant meets the eligibility requirements set out below.
  2. A Swiss Licensed Audit Expert applicant meets the requirements set out in the RSB's rules and regulations for the granting of Statutory Auditor status.
  3. Its website sets out clearly the specific steps an applicant needs to take in line with its own rules and regulations.

Applicant responsibilities

2It is the applicant's responsibility to provide evidence of eligibility as requested by the RSB.

Eligibility requirements for Swiss Licensed Audit Experts

3An applicant must meet the following eligibility criteria:

  1. Swiss Licensed Audit Expert status Applicants are required to hold Swiss Licensed Audit Expert status at the point of applying to an RSB. The RSB should obtain formal confirmation from the FAOA that the applicant holds Swiss Licensed Audit Expert status.
  2. Swiss CPA qualification route only Applicants must have obtained Swiss Licensed Audit Expert status by obtaining via examination, and not via any reciprocal pathway, the Swiss CPA qualification3 awarded by EXPERTSuisse and specified in the letters of mutual understanding between the FRC and the FAOA signed on 8 December 2023.
  3. Good standing The RSB should obtain formal confirmation from the FAOA that the applicant is a Swiss Licensed Audit Expert in good standing.

4The RSB should obtain formal confirmation from the FAOA that the applicant meets the eligibility criteria set out above by using the standard letter in appendix 1.

Application process

5An applicant must follow this application process:

  1. Register with a Recognised Qualifying Body (RQB)4 RQBs are authorised to award a UK Audit Qualification. An applicant is required to register with an RQB in line with the RQB's registration procedures as the first step towards obtaining a UK Audit Qualification.
  2. Pass an aptitude test The Section 1221 declaration signed in relation to Swiss Licensed Audit Experts recognises Swiss Licensed Audit Experts who have completed the Swiss CPA qualification as holding an approved third country qualification, provided they pass an aptitude test. The required aptitude test will be in English and will test applicants' knowledge of UK Tax and Law. Details of the aptitude tests provided by each RQB are set out in appendix 3. RQBs will provide information to applicants on fees payable for the aptitude test. The aptitude test must be attempted after the individual's application to the RQB and passed before approval of their third country qualification. Once an applicant has passed the aptitude test, they hold an approved third country qualification which is an appropriate qualification for the purpose of eligibility to become a UK statutory auditor.
  3. Apply for regulated non-member or affiliate status and registration as a statutory auditor with a Recognised Supervisory Body (RSB) An applicant can then apply for regulated non-member or affiliate status5 with an RSB. This will typically be with the same body whose aptitude test they completed. Regulated non-member or affiliate status means that the applicant agrees to be subject to the rules and regulations of the registering RSB but that they do not have the rights of members to vote in elections or hold office in an RSB. Whether regulated non-member or affiliate status is granted will depend on the rules of the RSB. ACCA requires applicants to apply for regulated non-member status and ICAI, ICAEW and ICAEW require applicants to apply for affiliate status. The applicant is now eligible to apply for registration as a UK Statutory Auditor. RSBs refer to a UK Statutory Auditor as a Responsible Individual (RI). Applicants who seek RI status will be required to evidence that the UK audit firm where they intend to work as an RI intends to allow the applicant to sign audit reports on its behalf. Applicants who seek RI status as regulated non-members or affiliates of an RSB will need to provide to the registration or admissions and licensing committee evidence of a similar level of recent audit experience and CPD as members seeking RI status. RSBs may require applicants to follow their standard process to obtain this status. This includes completing an application form and completing an audit experience form. The audit experience form demonstrates the audit work experience the applicant has undertaken in the preceding 24 months. An applicant may include overseas audit experience, and any UK audit experience gained since arrival in the UK, for example whilst studying for the aptitude test. The RSB will complete a qualitative assessment of the quantity and nature of the recent audit experience and CPD included on an applicant's audit experience form. There is not a minimum number of hours requirement, but the RSB may require that further UK audit experience is obtained if the experience is judged to be insufficient or very narrow in scope. The RSB's registration / admission committees review individual applications and determine whether the RSB's requirements to grant RI status or equivalent have been met. The RSB makes the final decision on whether an application meets its requirements. RSBs should provide further information on their websites, including details of any fees payable on application for regulated non-member or affiliate status and for RI status. RIs who wish to sign the audit reports of Public Interest Entities in a Public Interest Entity audit firm will need to make an additional registration application to the FRC.6

Local Audit (England) - Key Audit Partner

6To become a Key Audit Partner for local audits there are additional requirements that an applicant needs to meet. Further information on the requirements and process can be found on ICAEW's website at https://www.icaew.com/regulation/local-public-audit-in-england.

3. Applications for Swiss Licensed Audit Expert status from UK statutory auditors

1This section was prepared based on information provided by the FAOA in October 2024.

FAOA responsibilities

2It is the FAOA's responsibility to ensure that:

  1. An applicant meets the eligibility requirements set out below.
  2. An applicant meets the FAOA's requirements for granting Swiss Licensed Audit Expert status.
  3. Its website sets out clearly the specific steps an applicant needs to take in line with its own rules and regulations.

Applicant responsibilities

3It is the applicant's responsibility to obtain evidence that they meet the eligibility criteria and to provide that evidence in the format requested by the FAOA.

Eligibility requirements for UK statutory auditors

4An applicant must meet the following eligibility criteria:

  1. Hold a UK audit qualification An applicant must hold a UK audit qualification awarded by one of the following UK Recognised Qualifying Bodies: * Association of Chartered Certified Accountants (ACCA) * Association of International Accountants (AIA) * Institute of Chartered Accountants in England and Wales (ICAEW) * Institute of Chartered Accountants in Ireland (ICAI) * Institute of Chartered Accountants in Scotland (ICAS)
  2. Typical pathway only The applicant must have obtained their UK audit qualification by completing a typical pathway to membership of the relevant body. A typical pathway is a path to membership which is completed through the education and training required by that body and not through a reciprocal agreement.
  3. UK statutory auditor / RI status An applicant must hold (or have recently held) UK statutory auditor / RI status with a UK Recognised Supervisory Body. The following bodies are UK RSBs: * Association of Chartered Certified Accountants (ACCA). * Institute of Chartered Accountants in England and Wales (ICAEW). * Institute of Chartered Accountants in Ireland (ICAI). * Institute of Chartered Accountants in Scotland (ICAS). The FAOA can obtain formal confirmation from the relevant RSB of the applicant's current or recent UK statutory auditor / RI status using the standard letter in appendix 2.
  4. Member in good standing An applicant's membership body must confirm whether the applicant is a member in good standing upon request by the FAOA, using the standard letter in appendix 2.

Process

5An applicant must follow this application process:

  1. Complete the test "Swiss Law for Foreign Accountants" An applicant applying for Swiss Licensed Audit Expert status must demonstrate the necessary knowledge of Swiss law. The examination7 is conducted by EXPERTsuisse, in accordance with the examination regulations approved by the FAOA. An applicant must register directly for the examination via the EXPERTsuisse website. Applicants may choose to attend an optional preparatory course offered by EXPERTsuisse.
  2. Apply for Swiss Licensed Audit Expert status Applicants must register with the FAOA and complete the relevant parts of the application form on the FAOA's website8. Detailed information can be found in FAOA-Circular 1/20079 (in particular paragraph 7). Applicants must enclose the required evidence with the application. The required evidence consists of: * Confirmation that the applicant has passed the specified test in 'Swiss Law for Foreign Accountants.' * Evidence that the applicant holds a UK audit qualification issued by a UK Recognised Qualifying Body. * The applicant's certificate of registration as a statutory auditor.10 Applicants must make payment in order to complete the application. Completing the application grants the FAOA permission to send the standard letter in appendix 2 to the relevant RSB. The standard letter requests confirmation of the applicant's UK audit qualification, current or recent statutory auditor/RI status, and good standing status. Applicants must submit the application form to the FAOA by signing a release form. The release form can be either signed by hand and posted to the FAOA, or signed electronically with a qualified electronic signature in accordance with the Federal Act on Electronic Signatures of 18 March 2016 and sent to the FAOA by email. The applicant will receive confirmation of receipt once the release form has been received by the FAOA.

Appendix 1

Standard letter from UK Recognised Supervisory Body (RSB) to FAOA

Dear Sir / Dear Madam,

Under paragraph 6 of Schedule 10 to the Companies Act 2006, statutory auditors must hold an appropriate qualification. An appropriate qualification includes a third country qualification and aptitude test approved under Section 1221 of the Companies Act 2006. The qualification of a licensed audit expert in Switzerland who achieved their qualification through the Swiss Certified Public Accountant route is an approved third country qualification.

In this context, we have received an application from (Name / Surname) for recognition of their status as a licensed audit expert in Switzerland in order to obtain approval as a UK statutory auditor (responsible individual) subject to passing an aptitude test in subjects that are not covered by a Swiss licensed audit expert qualification (UK tax and law).

In support of their application, the applicant has provided us with evidence of their licensed audit expert status in Switzerland.

We hereby ask you to confirm that the applicant:

  1. Is a licensed audit expert (approved statutory auditor) in Switzerland; and
  2. Obtained Swiss Licensed Audit Expert status not via any reciprocal pathway, but through obtaining by examination the Swiss CPA qualification awarded by EXPERTSuisse and specified in the letters of mutual understanding between the FRC and the FAOA signed on 8 December 202311; and
  3. Is a person of good standing.

We thank you for your assistance.

Appendix 2

Standard letter from FAOA to UK Recognised Supervisory Body (RSB)

Dear Sir / Dear Madam,

The Federal Act on the Licensing and Oversight of Auditors (Auditor Oversight Act, AOA, SR 221.302) in combination with the Ordinance on the Licensing and Oversight of Auditors (Auditor Oversight Ordinance, AOO, SR 221.302.3), allows on a case-by-case basis, subject to reciprocity, approval of a third country auditor as a Licensed Audit Expert in Switzerland if that person has furnished proof that he or she complies with requirements equivalent to those laid down in Article 4 of the AOA and, in particular, Articles 1-7 and 34 of the AOO.

In this context, we have received an application from (Name / Surname) for recognition of their status as a UK statutory auditor in order to obtain approval as a licensed audit expert subject to passing an aptitude test in subjects that are not covered by a UK audit qualification (Swiss tax and law).

In support of their application, the applicant has provided us with evidence of their statutory auditor status.

We hereby ask you to confirm that: the applicant:

  1. Holds or recently held responsible individual (RI) status; and
  2. Holds a UK audit qualification; and
  3. Is a person of good standing.

We thank you for your assistance.

Appendix 3

Aptitude tests in UK law and tax

Swiss Licensed Audit Experts applying to the UK for statutory auditor status will need to sit and pass the aptitude tests provided by the RQB they have registered with:
ACCA* Taxation (UK Variant) Corporate and Business Law (UK Variant)
ICAEW* Principles of Tax Law
ICAI* CAP2 Taxation (UK Variant) CAP1 Law for Accountants (UK Variant)
ICAS** Business Law Taxation

*The examinations listed above are required under the RQB's 2023 syllabus and therefore it is essential each RQB provides the most up to date information should there be a syllabus change. **Papers listed are from ICAS's new CA2024 syllabus.

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  1. In this guidance, the term statutory auditor refers to an individual with the right to sign statutory audit reports on behalf of their firm. These individuals are also referred to as Responsible Individuals (RIs). ↩

  2. The RSBs are Association of Chartered Certified Accountants (ACCA), Institute of Chartered Accountants in England and Wales (ICAEW), Institute of Chartered Accountants in Ireland (ICAI), and Institute of Chartered Accountants of Scotland (ICAS). ↩

  3. Federal Act on Vocational and Professional Education and Training (VPETA), SR 412.10 and the EXPERTsuisse Examination Regulation for the higher professional examination as Certified Public Accountant (CPA) of 23 March 2009. ↩

  4. The UK RQBs for statutory audit qualifications are: Association of Chartered Certified Accountants (ACCA), The Association of International Accountants (AIA), Institute of Chartered Accountants in England and Wales (ICAEW), Institute of Chartered Accountants in Ireland (ICAI), and Institute of Chartered Accountants of Scotland (ICAS). ↩

  5. Regulated non-member is the term used by ACCA. Affiliate status for the purposes of this guidance note is a term used at ICAEW, ICAS and ICAI for regulated non-members. It does not include ACCA Affiliates who are individuals that have passed the ACCA examinations but have not yet applied for ACCA membership. ↩

  6. The FRC has made Public Interest Entity (PIE) Auditor Registration Regulations as a written instrument in exercise of the powers under Section 1239 of the Companies Act 2006 transferred to it under the Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc) Order 2012 and in accordance with Regulations 3(1) and 3(8) of the Statutory Auditors and Third Country Auditors Regulations 2016 and Schedule 10 paragraph 5A of the Companies Act 2006. ↩

  7. https://www.expertsuisse.ch/certificate-course-swiss-law-for-foreign-accountants ↩

  8. https://rab-asr.ch/#/login ↩

  9. https://rab-asr.ch/#/page/123 ↩

  10. Holders of UK audit qualifications seeking UK RI status for the purpose of applying for Swiss Licensed Audit Expert status should note that UK RSBs must ensure that RI applications are supported by the registered UK audit firm where the applicant has been designated as an RI, and that the firm has considered the adequacy of the applicant's experience for an application for RI status. The firm must also confirm the applicant's competence to do UK audit work. If UK RI status is granted, individuals and firms must continue to meet all of the RSB's audit regulations in full, including meeting CPD requirements even if the individual is not currently carrying out any audits of UK entities. The RSB will consider the substance and purpose of the application, including whether the sponsoring firm complies with the whole firm procedures set out in the Audit Regulations and may impose such conditions or restrictions as it considers appropriate. ↩

  11. Federal Act on Vocational and Professional Education and Training (VPETA), SR 412.10 and the EXPERTsuisse Examination Regulation for the higher professional examination as Certified Public Accountant (CPA) of 23 March 2009. ↩

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Name FRC and FAOA Mutual Recognition Arrangements for Statutory Auditors - FRC Guidance to Recognised Supervisory Bodies
Publication date 31 January 2025
Type Guidance
Format PDF, 297.9 KB
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