Regulation of third-country auditors and audit entities
The Statutory Audit Directive 2006/43/EC1 (the "Audit Directive”), adopted by the European Union on 17 May 2006 for implementation into national law of Member States by 29 June 2008, introduces new regulatory requirements for statutory auditors and audit entities2 providing an audit report of companies incorporated outside the European Union and the European Economic Area3 (hereafter “EU/EEA”) whose transferable securities are admitted to trading on European regulated markets.
In Luxembourg, the Commission de Surveillance du Secteur Financier (the "CSSF") is the competent public oversight authority for statutory auditors and audit firms, including third-country audit entities. The missions and powers conferred to the CSSF are set out in the law of 18 December 2009 concerning the audit profession4 (“Loi relative à la profession de l’audit”) (the "Audit Law”).
REGISTRATION REQUIREMENTS OF THIRD-COUNTRY AUDIT ENTITIES
The registration requirements under Article 45 of the Audit Directive have been transposed into Articles 79 and 80 of the Audit Law. Pursuant to Article 79(1), third-country audit entities which provide audit services to companies incorporated outside the Community whose transferable securities are admitted to trading on the Luxembourg regulated market are required to apply for registration with the Commission de Surveillance du Secteur Financier – Department “Public oversight of the audit profession".
However, in accordance with Article 81 of the Audit Law, the CSSF may, if reciprocity is ensured, modify or disapply the registration requirements of Article 79(1) of the Audit Law with regard to audit entities originating from a third country which has been declared as equivalent in accordance with Article 46 of the Audit Directive.
Registered third-country audit entities are entered in a public register administrated by the CSSF.
A third-country audit entity has to apply for a "light registration" (Form A (LU)) if it originates from a third country which has been declared as equivalent by the European Commission or if it qualifies with the requirements of the Commission Decision on transitional arrangements5.
A "full registration" (Form B (LU)) in accordance with Articles 79 and 80 of the Audit Law is requried for third-country audit entities in neither of the above category.
Further information on both registration regimes, including their relevant application forms and frequently asked questions (FAQs) are available here.
REGISTRATION OF THIRD-COUNTRY AUDIT ENTITIES IN OTHER EU/EEA MEMBER STATES
1 Articles 45 and 46 of the Audit Directive set the framework for the regulation in Europe of third-country auditors and audit entities.
2 The term “third-country audit entity” refers to both single practitioners and audit firms originating from a third country.
3 European Member States, plus Norway, Iceland and Lichtenstein.
4 Chapter XI of this law is dedicated to the international aspects.
5 Commission Decision 2013/288/EU amending Decision 2011/30/EU on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the European Union.