Who is Required to Register as a TCA?
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Who is Required to Register?
An auditor (whether an individual or firm) must register with the FRC in order to provide an audit report on the annual or consolidated accounts of a company incorporated outside the UK, whose transferable securities are admitted to trading on a UK regulated market.
Companies that issue only debt securities are exempt from this requirement if the denomination of each debt security meets the following thresholds:
- For securities admitted to trading on or before 31 December 2010: A denomination of GBP 35,000 per unit (or equivalent value in another currency at the date of issue).
- If admitted to trading after 31 December 2010: A denomination of GBP 70,000 per unit (or equivalent value in another currency at the date of issue).
Where the denomination of the debt securities is below GBP 35,000 (for earlier admissions) or below GBP 70,000 (for later admissions), the exemption does not apply, and the company is treated as a relevant audit client.
An audit report issued for a relevant issuer by an auditor who is not registered with the FRC as a third country auditor has no legal effect in the UK.
The registration requirements vary depending on the jurisdiction in which the auditor is located. Registration is not required if the auditor is a registered UK statutory auditor. For the purposes of the third country auditor regime, jurisdictions fall into three categories:
Equivalent jurisdictions
Certain jurisdictions have been assessed as operating an audit regulatory system that is equivalent to that of the UK.
When the UK was a member of the EU state, decisions on ‘equivalency’ were made by the European Commission. Going forward, decisions are made by the Secretary of State under s.1240A of the Companies Act 2006 and the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations (SI 2020/108).)
Auditors from equivalent jurisdictions must register with the FRC but they are not subject to the full range of requirements that apply to third country auditors. For example, they are not subject to the UK system of external quality assurance reviews. Further details about disapplied requirements are set out in the FRC’s Statutory Directions.
The FRC has issued amended statutory Directions under sections 1239(7) and 1242(4) of the Companies Act 2006 to reflect the UK’s departure from the EU.
| Name | TCA Directions |
|---|---|
| Publication date | 1 January 2021 |
| Type | Information sheet |
| Format | PDF, 134.8 KB. View HTML version |
Transitional jurisdictions
A jurisdiction may be granted transitional status where its system of audit regulation is considered sufficiently robust to be treated similarly to an equivalent jurisdiction. The transitional status can be for a period of up to seven years.
During this period, auditors from such jurisdictions are treated in the same way as auditors from equivalent jurisdictions.
There are currently no jurisdictions that hold transitional status.
Full Registration jurisdictions
Auditors from jurisdictions that are neither equivalent nor transitional must comply with the full requirements of the UK’s third country auditors regulatory regime.
This includes being subject to the UK’s system of external quality assurance, which involves inspections of relevant audits. The cost of the inspection is charged to the third country auditor.
FRC inspections of third country auditors began in the summer of 2013.