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Recognition of specified state auditors under the UK EEA EFTA Free Trade Agreement

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: 13th Floor, 1 Harbour Exchange Square, London, E14 9GE

Contents

Introduction

1The Professional Qualifications Act 2022 section 3 grants the UK government powers to implement those aspects of international trade agreements that relate to the recognition of professional qualifications.

2In July 2021 the UK and the EEA EFTA states signed a Free Trade Agreement (the Agreement). The parties to the Agreement are required to have arrangements in place for mutual recognition of professional qualifications.

3The Agreement's requirements for mutual recognition of professional qualifications were brought into UK law on 1 December 2023 by the Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) Regulations 2023 (the Regulations). The Regulations require UK regulators to make arrangements for recognition of professional qualifications of those states specified in the Regulations. The states specified in the Regulations are the EEA EFTA states, i.e., Norway, Iceland and Liechtenstein.1 The Regulations allow UK regulators to require compensating measures, including aptitude tests and adaptation periods.

4As a regulated profession, statutory audit is within the scope of the Regulations. The Regulations amended the Companies Act 2006 to recognise a specified state auditor as holding an appropriate qualification for the purpose of becoming a UK statutory auditor. A specified state auditor is defined as an individual who is eligible to conduct audits of the accounts of bodies corporate that are incorporated or formed under the law of a specified state in accordance with the law of that state. In this guidance note, specified state auditor means an individual eligible to conduct audit of the accounts of bodies corporate that are incorporated or formed under the law of the specified states of Norway, Iceland and Liechtenstein in accordance with the law of that state.

5The Financial Reporting Council (FRC) is the UK's competent authority for statutory audit. The FRC is responsible for:

  1. a)Updating the statutory auditor eligibility criteria to include statutory auditor qualifications of EEA EFTA states as appropriate qualifications for the purpose of becoming a UK statutory auditor2; and,
  2. b)Providing guidance for UK Recognised Supervisory Bodies (RSBs)3 to apply when making arrangements to process applications from specified state auditors under their approval and registration functions.

6The RSBs are responsible for establishing processes that comply with the Professional Qualifications Act 2022 for recognition of specified state auditors.

Purpose of this guidance

7This document provides guidance for RSBs to apply when exercising their approval and registration functions in relation to applications from specified state auditors.

Status of this guidance

8This guidance is intended as general information and should not be relied upon as being definitive or all-inclusive. All RSBs 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 a 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 Agreement, the Regulations, 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 a RSB's performance of its approval and registration functions.

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

Applications for UK statutory auditor status from specified state auditors

RSB responsibilities

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

  1. a)Applicants meet the eligibility requirements set out below.
  2. b)Applicants meet the requirements set out in the RSB's rules and regulations for granting statutory auditor status.
  3. c)Its website sets out clearly the specific steps an applicant needs to take in line with the Regulations and 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 specified state auditors

3An applicant must meet the following eligibility criteria.

  1. a)EEA – EFTA state statutory audit qualification Applicants are required to hold a statutory auditor qualification gained in a specified state at the point of applying to an RSB.
  2. b)Eligible to be a specified state statutory auditor Applicants are required to be eligible to be a statutory auditor in the relevant EEA – EFTA state at the point of applying to an RSB.
  3. c)In good standing Applicants are required to be in good standing.

4The RSB should obtain formal confirmation from the relevant competent authority that the applicant meets the eligibility criteria. Details of the EEA EFTA state competent authorities are in Appendix 1. The RSB may choose to use the standard letter template in appendix 2 to confirm that an applicant meets the eligibility criteria.

Application process

5An applicant must follow this application process:

  1. a)Register with a Recognised Qualifying Body (RQB)4 The first step for a specified state auditor is to register with an RQB by following its registration procedures. RQBs are authorised to recognise the specified state qualification as an appropriate qualification for the purpose of awarding UK statutory auditor status.
  2. b)Pass an aptitude test administered by a Recognised Qualifying Body (RQB) A specified state auditor applicant must then pass aptitude tests in UK law and tax in order for the RQB to recognise their qualification as an appropriate qualification. Details of each RQB's aptitude tests in UK tax and law are provided in Appendix 3.
  3. c)Apply for regulated non-member or affiliate5 status with a Recognised Supervisory Body (RSB) When an RQB has assessed the specified state auditor as holding an appropriate qualification, the specified state auditor is eligible to apply for regulated non-member or affiliate status 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 specified state auditor agrees to be subject to the rules and regulations of the RSB but does not have members' rights to vote in elections or to hold office in the RSB. Regulated non-member or affiliate status is awarded, rather than membership, because reciprocal membership agreements are not in place and specified state auditors will not necessarily meet the requirements for membership of an RSB.
  4. d)Apply for registration as a statutory auditor with a Recognised Supervisory Body (RSB) The specified state auditor is now eligible to apply to the RSB for registration as a UK statutory auditor. RSBs refer to a UK statutory auditor as a Responsible Individual (RI). RSBs may require applicants to follow their standard process to become an RI. This includes completing an application form and an audit experience form. The audit experience form demonstrates the audit work experience the applicant has gained in the preceding 24 months. An applicant may include third country 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 requirement for a minimum number of hours. However, RSBs may require that further UK audit experience is gained if the audit experience recorded in the audit experience form 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. 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 should provide further information on their websites, including details of any fees payable on application for RI status and regulated non-member or affiliate status. Rls 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 - Key Audit Partners (England Only)

6In England, Individuals who sign local audit reports within a registered local audit firm are called Key Audit Partners (KAPs). Detailed eligibility requirements for KAPs are set by the Local Audit and Accountability Act 2014 and the FRC's Guidance for Recognised Supervisory Bodies on the approval of Key Audit Partners. The eligibility requirements include a requirement to hold an appropriate qualification.

7The appropriate qualification that the specified state auditor obtains is also an appropriate qualification for the purposes of becoming a Key Audit Partner.

Applications for EEA – EFTA state statutory auditor status from UK statutory auditors

1This section has been prepared using information provided to the FRC by the EEA - EFTA competent authorities for statutory audit.

Norway

2The competent authority for statutory auditors in Norway is The Financial Supervisory Authority of Norway, known in Norway as Finanstilsynet.7

3UK statutory auditors who have the right to sign statutory audit reports on behalf of their firm are known as Responsible Individuals (RIs). Only RIs are eligible to apply for recognition of their UK statutory audit qualification by the Financial Supervisory Authority of Norway. An RI applying for registration as a statutory auditor in Norway is required to:

  1. a)Pass an aptitude test in Norwegian tax, law and jurisprudence.8
  2. b)Apply using The Financial Supervisory Authority of Norway's standard online form and provide evidence of: * UK statutory auditor (RI) status at the date of application. * UK statutory audit qualification. * Three years' practical audit training, including details of types of specific assignments and types of experience. * Membership of a UK RSB in good standing. * Successfully having passed an aptitude test in Norwegian tax, law and jurisprudence.

Iceland

4The competent authority for statutory auditors in Iceland is The Auditors Oversight Board, known in Iceland as Endurstodendarad.9

5UK statutory auditors who have the right to sign statutory audit reports on behalf of their firm are known as Responsible Individuals (RIs). Only RIs are eligible to apply for recognition of their UK statutory audit qualification by the Auditors Oversight Board. An RI seeking registration as a statutory auditor in Iceland should contact the Auditors Oversight Board.

Liechtenstein

6The competent authority for statutory auditors in Liechtenstein is The Financial Market Authority, known in Liechtenstein as Finanzmarktaufsicht.10

7UK statutory auditors who have the right to sign statutory audit reports on behalf of their firm are known as Responsible Individuals (RIs). Only RIs are eligible to apply for recognition of their UK statutory audit qualification by the Liechtenstein Financial Market Authority.

8Under the terms of the Agreement, Liechtenstein has a reservation such that the requirement to recognise UK RIs applies only to those UK RIs who are also Liechtenstein, EEA or Swiss nationals and are resident in Liechtenstein, EEA or Switzerland.

9An RI seeking registration as a statutory auditor in Liechtenstein should contact The Financial Market Authority.

Appendix 1

EEA EFTA state competent authorities

Norway

The Financial Supervisory Authority of Norway Revierstredet 3, 0151 Oslo PO Box 1187 Sentrum NO-0107 Oslo

E-mail: [email protected] Telephone: (+47) 22 93 98 00

Iceland

The Auditors Oversight Board Borgatuni 26 105 Reykjavik

E-mail: [email protected]

Liechtenstein

Financial Market Authority Liechtenstein Landstrasse 109, P.O. Box 279 9490 Vaduz, Liechtenstein

E-mail: [email protected] Telephone: (+423) 236 7373

Appendix 2

Standard letter from UK Recognised Supervisory Body (RSB) to EEA – EFTA competent authority

Dear Sir/Madam,

The EEA EFTA Free Trade Agreement (the Agreement) signed on 8 July 2021 between the UK and EEA EFTA states sets out in Chapter 12, Article 12.5 requirements for mutual recognition of professional qualifications.

The requirements of the Agreement for mutual recognition of professional qualifications were brought into UK law on 1 December 2023 by the Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) Regulations 2023 (the Regulations).

The Regulations require UK regulators to make arrangements for recognition of professional qualifications from the EEA EFTA states. In this context, we have received an application from (Name / Surname) for recognition of their (Norway / Iceland / Liechtenstein) qualification as an appropriate qualification for the purposes of awarding UK statutory auditor status, subject to them passing an aptitude test in subjects that are not covered by their home body statutory auditor qualification (UK tax and law) and meeting any further experience requirements of the RSB.

In support of their application, the applicant has provided us with evidence that they are eligible to be a statutory auditor in (Norway / Iceland / Liechtenstein).

We hereby ask you to confirm that the applicant:

  1. a)Holds a statutory audit qualification awarded by Norway / Iceland / Liechtenstein; and, * In the case of an applicant eligible to be a statutory auditor (Statsautoriset Revisor) in Norway, gained that qualification by passing the Auditors Test of Practical Ability and not by any other route; and * In the case of an applicant eligible to be a statutory auditor (Endurskoðendur) in Iceland, gained that qualification by passing the Icelandic Public Accountants Oversight Board's Accountants Examination for Certification in Auditing and not by any other route; and * In the case of an applicant eligible to be a statutory auditor (Wirtschaftprüfer) in Liechtenstein, gained that qualification by passing the Liechtenstein Auditor Examination.
  2. b)Is eligible to hold statutory auditor status in Norway / Iceland / Liechtenstein; and,
  3. c)Is of good standing.

We thank you for your assistance.

Yours sincerely,

Appendix 3

Aptitude tests in UK law and tax

EEA – EFTA statutory auditors 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. *Examinations listed are from ICAS's CA2024 syllabus.

Financial Reporting Council

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  1. The Government has also included Switzerland as a specified state to implement the UK-Switzerland Recognition of Professional Qualifications Agreement. There are separate arrangements for the recognition of Swiss qualifications which are not included in this note. Mutual recognition arrangements for statutory auditors were agreed between the FRC and the FAOA in December 2023 and are covered in a separate guidance note published by the FRC in January 2025. ↩

  2. The FRC's statutory auditor eligibility criteria were updated for this purpose in December 2023. ↩

  3. The UK 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). ↩

  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 is the term used by ICAEW, ICAI and ICAS. 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. Contact details for The Financial Supervisory Authority of Norway are in Appendix 1. ↩

  8. Aptitude tests in Norwegian tax, law and jurisprudence are offered by Norwegian universities. Further details are available on Finanstilsynet's website. Applicants are required to pay the fee and register for the aptitude test themselves. ↩

  9. Contact details for The Auditors Oversight Board / Endurstodendarad are in Appendix 1. ↩

  10. Contact details for the Financial Market Authority are in appendix 1. ↩

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Name Recognition of specified state auditors under the UK EEA EFTA Free Trade Agreement
Publication date 07 May 2025
Type Guidance
Format PDF, 281.2 KB
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