Schedule 12 | Arrangements in which registered third country auditors are required to participate

Arrangements for independent monitoring of audits of UK-traded third country companies^F1

(1)The arrangements referred to in section 1242(1)(a) are appropriate arrangements—

(a)for enabling the performance by the registered third country auditor of functions related to the audit of UK-traded third country companies to be monitored by means of inspections carried out under the arrangements, and^F2F3

(b)for ensuring that the carrying out of such monitoring and inspections is done independently of the registered third country auditor.

(2)Repealed^F4

Arrangements for independent investigations for disciplinary purposes

(1)The arrangements referred to in section 1242(1)(b) are appropriate arrangements—^F5

(a)for the carrying out of investigations into matters arising in connection with the performance of functions related to the audit of UK-traded third country companies by the registered third country auditor,^F5F6

(b)where it appears to be desirable following the conclusion of such investigations—^F5

(i)for the holding, subject to sub-paragraph (1A), of disciplinary hearings relating to the registered third country auditor,^F5

(ii)unless the interests of justice otherwise require, for any such hearings to be held in public, and^F5

(iii)for decisions to be made as to whether (and, if so, what) disciplinary action should be taken against the registered third country auditor, and^F5

(c)for ensuring that the carrying out of those investigations, the holding of those hearings and the making of those decisions are done independently of the registered third country auditor.^F5

(1A)The arrangements may provide that decisions to take disciplinary action, and decisions as to what that action should be, may be made in respect of a registered third country auditor without the holding of a disciplinary hearing relating to that registered third country auditor where the registered third country auditor agrees in writing that such a hearing need not be held.^F5

(2)In this paragraph—^F7

“disciplinary action” includes the imposition of a fine; and

Supplementary: arrangements to operate independently of third country auditor

(1)This paragraph applies for the purposes of—

(a)paragraph 1(1)(b), or

(b)paragraph 2(1)(c).^F8

(2)Arrangements are not to be regarded as appropriate for the purpose of ensuring that a thing is done independently of the registered third country auditor unless they are designed to ensure that the registered third country auditor—

(a)will have no involvement in the appointment or selection of any of the persons who are to be responsible for doing that thing, and

(b)will not otherwise be involved in the doing of that thing.

(3)Sub-paragraph (2) imposes a minimum requirement and does not preclude the possibility that additional criteria may need to be satisfied in order for the arrangements to be regarded as appropriate for the purpose in question.

Supplementary: funding of arrangements

(1)The registered third country auditor must pay any of the costs of maintaining any relevant arrangements which the arrangements provide are to be paid by it.

(2)For this purpose “relevant arrangements” are arrangements within paragraph 1 or 2 in which the registered third country auditor is obliged to participate.

Supplementary: scope of arrangements

(5)Arrangements may qualify as arrangements within either of paragraphs 1 and 2 even though the matters for which they provide are more extensive in any respect than those mentioned in the applicable paragraph.

Specification of particular arrangements by the Secretary of State

(1)If there exist two or more sets of arrangements within paragraph 1 or within paragraph 2, the obligation of a registered third country auditor under section 1242(1)(a) or (b), as the case may be, is to participate in such set of arrangements as the Secretary of State may by order specify.

(2)An order under sub-paragraph (1) is subject to negative resolution procedure.