FREQUENTLY ASKED QUESTIONS

What is the Authority’s relationship with the State?

While the Authority operates through a company limited by guarantee, it is a State body by virtue of having been established by an Act of the Oireachtas (parliament) (the Companies (Auditing and Accounting) Act, 2003 (‘the Act’)). The Authority’s independence in the discharge of its functions is protected by its founding legislation. For further information on the Authority’s founding legislation, click here.

How is the Authority funded?

As provided for by the Act, 40% of the Authority’s funding is provided by the Exchequer (via the Department of Jobs, Enterprise & Innovation). The remaining 60% is provided jointly by the prescribed accountancy bodies, by way of a mandatory annual levy on those bodies. The prescribed accountancy bodies’ individual contributions to the Authority’s funding are determined by reference to an apportionment model agreed by the bodies and approved by the Board of the Authority and the Minister for Jobs, Enterprise & Innovation respectively.

The Authority is required to maintain a Reserve Fund for the purposes of funding certain investigative and/or enforcement actions should the need arise. The Reserve Fund is currently funded by the Exchequer and by levies on the prescribed accountancy bodies in the foregoing proportions.

Under the Transparency (Directive 2004/109/EC) Regulations, IAASA has been designated as the competent authority for the purposes of Article 24(4)(h) of the EU Transparency Directive. Accordingly, IAASA is responsible for monitoring the periodic financial reporting of certain entitles whose securities are listed on a regulated market in the EU and for taking appropriate enforcement action in cases of infringement. This function is fully Exchequer funded (via the Department of Jobs, Enterprise & Innovation).

What is the role of the Authority?

The principal objectives of the Authority, which are set out in section 8 of the Act (as amended), are:

  • supervise how the prescribed accountancy bodies regulate and monitor their members;
  • promote adherence to high professional standards in the auditing and accountancy profession;
  • monitor whether the accounts of certain classes of companies and other undertakings comply with the Companies Acts and, where applicable, Article 4 of the IAS Regulation; and
  • act as a specialist source of advice to the Minister on auditing and accounting matters..

Further detail on the Authority’s role, functions and powers can be obtained here

What is the difference between a ‘Prescribed’ accountancy body and a ‘Recognised’ accountancy body?

(i) Prescribed Accountancy Body

A Prescribed Accountancy Body is any accountancy body that comes within the supervisory remit of the Authority. There are currently nine prescribed bodies. These are:

  • ACCA - Association of Chartered Certified Accountants;
  • AIA - Association of International Accountants;
  • CIMA - Chartered Institute of Management Accountants;
  • CIPFA - Chartered Institute of Public Finance & Accountancy;
  • ICAEW - Institute of Chartered Accountants in England & Wales;
  • ICAI - Institute of Chartered Accountants in Ireland;
  • ICAS - Institute of Chartered Accountants of Scotland;
  • ICPAI - Institute of Certified Public Accountants in Ireland; and
  • IIPA - Institute of Incorporated Public Accountants

Links to the prescribed accountancy bodies’ websites can be found here.

(ii) Recognised Accountancy Body

A Recognised Accountancy Body is an accountancy body that has been granted recognition under section 191 of the Companies Act 1990. By virtue of that recognition, a recognised accountancy body is permitted to authorise its members and/or member firms to perform audits under the Companies Acts, provided that those members and/or member firms satisfy certain additional conditions. There are currently six recognised bodies. They are:

  • ACCA - Association of Chartered Certified Accountants;
  • ICAEW - Institute of Chartered Accountants in England & Wales;
  • ICAI - Institute of Chartered Accountants in Ireland;
  • ICAS - Institute of Chartered Accountants of Scotland;
  • ICPAI - Institute of Certified Public Accountants in Ireland; and
  • IIPA- Institute of Incorporated Public Accountants

How can I satisfy myself that a person and/or firm is properly qualified to provide auditing services to the public?

In order to legitimately act as an auditor under the Companies Acts (i.e. to audit the financial statements of a company), a person/firm must be a Registered Auditor. In summary, in order to become a registered auditor, a person/firm must:

  • be a member of a recognised accountancy body; and
  • have been authorised by that body to act as an auditor i.e. hold a valid practising/audit certificate.

The Companies Registration Office (CRO) maintains a register of all persons entitled to act as auditors and enquiries can be directed to that Office.

Alternatively, enquiries as to whether an individual/firm is qualified to act as an auditor can be directed to the recognised body in question, which will be happy to be of assistance. Certain of the accountancy bodies also provide information as to those of their members that are registered auditors on their websites. Contact details for each recognised accountancy body can be obtained here.

In addition to the foregoing, a small number of individuals are individually authorised to act as auditors on foot of individual Ministerial authorisations granted prior to 3 February, 1983, and having been registered under the provisions of section 199(3) of the Companies Act, 1990.

The introduction of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 (“SI 220 of 2010”) brought important changes and requirements for these individuals. Regulation 25(3) provides that these individual’s deemed approval to act as an auditor shall cease to have effect unless they become either a member, or subject to the regulation, of a Recognised Accountancy Body.

A list of those persons who are eligible to act as auditors by virtue of Ministerial authorisation, subject to compliance with Regulation 25 (3) of SI 220 of 2010, can be accessed here.

Acting as an auditor while not qualified to do so is a serious criminal offence. In the event that a member of the public has reason to believe that a person/firm is acting, or has acted, as an auditor without being properly qualified to do so, the matter should be brought to the attention of:

Which entities come within the Authority’s financial statement review remit?

The Authority’s financial statement review remit derives from the EU Transparency Directive, as transposed into Irish Law.

(i) EU Transparency Directive

What is the Transparency Directive?

The Transparency Directive ((EC) 2004/109) is concerned with the harmonisation of information requirements applying to companies whose securities have been admitted to trading on a regulated market situated, or operating, within the EU (‘issuers’). Accordingly, the Directive applies to issuers of shares, debt securities, derivative securities and closed-ended investment funds admitted to listing and trading on the regulated market of the Irish Stock Exchange. The Directive sets out, inter alia, requirements regarding the disclosure of periodic and ongoing information, including issuers’ obligations relating to publication, content and timing of issuers’ financial reports.

The Directive has been implemented in Ireland through a combination of primary legislation (The Investment Funds, Companies and Miscellaneous Provisions Act, 2006) and secondary legislation (SI 277 of 2007 - Transparency (Directive 2004/109/EC) Regulations 2007).

What is IAASA’s role under the Transparency Directive?

Recital No. 28 of the Directive states that ‘A single competent authority should be designated in each Member State to assume final responsibility for supervising compliance with the provisions adopted pursuant to this Directive…Member States may, however, designate another competent authority for examining that information referred to in this Directive is drawn up in accordance with the relevant reporting framework and taking appropriate measures in case of discovered infringements;’.

In the context of the foregoing, while the Central Bank of Ireland is the central administrative authority for the purposes of the Transparency Directive, IAASA has been designated a separate competent authority for the purposes of the financial reporting monitoring and enforcement role described above (i.e. Article 24(4)(h) of the Directive). Thus, IAASA – through its Financial Reporting Supervision Unit – is responsible for examining affected issuers’ compliance with the financial reporting framework requirements set out in the Directive as transposed into Irish law and taking appropriate action where non-compliance is identified.

(ii) Section 26, Companies (Auditing and Accounting) Act, 2003

At this time section 26 has not been commenced and, accordingly, the Authority does not currently have a statutory remit in this area.

What is the purpose of the EU Transparency Directive?

The EU Transparency Directive (Directive 2004/109/EC) (the Directive) is one of the elements of the European Commission’s Financial Services Action Plan, with others including the Market Abuse, Prospectus and Markets in Financial Instruments (MiFID) Directives. As such, the Directive is concerned with the harmonisation of information requirements applying to entities whose securities have been admitted to trading on a regulated market situated, or operating, in the EU. Specifically, the Directive seeks to enhance transparency in EU capital markets through a common framework which requires:

• the production of periodic financial reports;

• shareholders to disclose major shareholdings;

• the dissemination of regulated information; and

• the provision of central mechanisms for sharing regulated information.

How has the EU Transparency Directive been transposed into Irish law?

Following its adoption by the European Parliament and Council on 15 December 2004, the Directive came into effect in Ireland from 13 June, 2007. The Directive has been transposed into national law through a combination of:

• primary legislation, namely, the Investment Funds, Companies and Miscellaneous Provisions Act, 2006; and

• secondary legislation, namely, the Transparency (Directive 2004/109/EC) Regulations, 2007 (‘the Regulations’).

What is IAASA’s role under the EU Transparency Directive

While the central competent administrative authority for Directive purposes in Ireland is the Central Bank of Ireland, the Directive provides that Member States may designate a competent authority other than their central competent administrative authority for the purposes of Article 24(4)(h), i.e. for examining information prepared pursuant to the Directive’s requirements. In that context, and having regard to the Authority’s objects (section 8 of the Act), functions (section 9 of the Act) and powers (section 10 of the Act), culminating in one of the Authority’s principal goals being the support and enhancement of public confidence in financial reporting through the exercise of effective, independent supervision and, where appropriate, enforcement action, the Minister designated the Authority as an independent competent authority for the purposes of Article 24(4)(h) of the Directive. The Minister’s decision in this regard was given effect to by Regulation 36(2) of the Regulations.

Regulation 42(2) provides that ‘IAASA shall examine information drawn up pursuant to Regulations 4 to 8 by issuers whose home Member State is the State for the purpose of considering whether such information is in accordance with the relevant reporting framework’.

What is the scope of the Directive?

The Directive applies to issuers whose securities have been admitted to trading on a regulated market situated, or operating, within the EU. Securities in this context, includes shares, bonds and other forms of securitised debt, derivative securities and units issued by closed-end investment funds. However, pursuant to Regulation 2, the scope of the Regulations does not extend to open-ended investment funds. Similarly, securities listed on the Irish Enterprise Exchange (‘IEX’) are exempt from the requirements of the Directive as the IEX is not authorised as a regulated market under Part 6 of the MiFID Regulations.

Contact Information

Irish Auditing & Accounting
Supervisory Authority
Willow House
Millennium Park
Naas
Co Kildare
Ireland

Phone: +353 (0) 45 983 600
Fax: +353 (0) 45 983 601
Email: info@iaasa.ie