
TITLE I
Article 1 
This Regulation lays down requirements for the carrying out of the statutory audit of  accounts and consolidated accounts  of public-interest entities, rules on the  organisation of statutory auditors and selection of persons for appointment as  statutory auditors ... by public-interest entities to promote their independence and the avoidance of conflicts of interest and rules on the supervision of compliance by statutory auditors ... with those requirements.
Article 2 

1. This Regulation shall apply to the following:
(a) statutory auditors ... carrying out statutory audits of public-interest entities;
(b) public-interest entities.
2. This Regulation shall apply without prejudice to—
(a) Part 16 of the Companies Act 2006 and any corresponding provision in Part 6 of the Friendly Societies Act 1992 and Part 8 of the Building Societies Act 1986,
(b) Part 42 of the Companies Act 2006,
(c) any subordinate legislation made under legislation in subparagraphs (a) or (b), and
(d) the Statutory Auditors and Third Country Auditors Regulations 2016.
3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 3 

(1.) For the purposes of this Regulation, the definitions laid down in the following legislation apply—
(a) Part 16 of the Companies Act 2006 and any corresponding provision in Part 6 of the Friendly Societies Act 1992 and Part 8 of the Building Societies Act 1986,
(b) Part 42 of the Companies Act 2006,
(c) any subordinate legislation made under legislation in subparagraphs (a) or (b), and
(d) the Statutory Auditors and Third Country Auditors Regulations 2016.
(2.) The following definitions also apply—
 “the competent authority's tasks” means the competent authority's tasks under—
(a) this Regulation,
(b) the provisions for the appointment of statutory auditors of public interest entities,
(c) the public interest entity audit reporting requirements,
(d) Part 42 of the Companies Act 2006 and any subordinate legislation made under that Part, or
(e) the Statutory Auditors and Third Country Auditors Regulations 2016;
 “management body” means, in relation to a company, the board of directors, and in relation to any other kind of undertaking, the persons or body of persons responsible for the management of the undertaking concerned;
 “public interest entity audit reporting requirements” means the audit reporting requirements applicable to public interest entities, excluding the reference to Articles 10 and 11 of this Regulation;
 “provisions for the appointment of statutory auditors by public interest entities” means—
(a) for a company, sections 485A to 485C, 489A to 489C, and 494ZA of the Companies Act 2006;
(b) for a building society, paragraphs 3B to 3E of Schedule 11 to the Building Societies Act 1986;
(c) for a friendly society that is subject to special requirements, paragraphs 2 to 5 of Schedule 14A to the Friendly Societies Act 1992;
(d) for an insurance undertaking under the Insurance Accounts Directive (Miscellaneous Insurance Undertakings) Regulations 2008, sections 485A to 485C, and 494ZA of the Companies Act 2006 as applied by regulation 6(1A) of those Regulations;
(e) for a limited liability partnership, sections 485A to 485C, and 494ZA of the Companies Act 2006 as applied by regulation 36 and 38A of the Limited Liability Partnerships (Accounts and Audit) (Application of the Companies Act 2006) Regulations 2008.
TITLE II
Article 4 

1. ...... For the purposes of  paragraph 13 of Schedule 1 to the Statutory Auditor and Third Country Auditors Regulations 2016,  fees  “based on any form of contingency” means fees for audit engagements calculated on a predetermined basis relating to the outcome or result of a transaction or the result of the work performed. Fees shall not be regarded as  being based on any form of contingency  if a court or  the competent authority  has established them.
2. When the statutory auditor ... provides to the  audited person, its parent undertaking or its  subsidiary undertakings, for a period of three or more consecutive financial years, non-audit services other than those referred to in Article 5(1) of this Regulation, the total fees for such services shall be limited to no more than 70 % of the average of the fees paid in the last three consecutive financial years for the statutory audit(s) of the  audited person  and, where applicable, of its parent undertaking, of its  subsidiary undertakings  and of the consolidated  accounts  of that group of undertakings.For the purposes of the limits specified in the first subparagraph, non-audit services, other than those referred to in Article 5(1), required by  legislation of any part of the United Kingdom  shall be excluded....
3. When the total fees received from a public-interest entity in each of the last three consecutive financial years are more than 15 % of the total fees received by the statutory auditor ... in each of those financial years, such a statutory auditor ... shall disclose that fact to the audit committee and discuss with the audit committee the threats to  its independence  and the safeguards applied to mitigate those threats. The audit committee shall consider whether the audit ... should be subject to an engagement quality control review by another  person who is eligible for appointment as a statutory auditor  prior to the issuance of the audit report.Where the fees received from such a public-interest entity continue to exceed 15 % of the total fees received by such a statutory auditor ..., the audit committee shall decide on the basis of objective grounds whether the statutory auditor  of the public interest entity  may continue to carry out the statutory audit for an additional period which shall not, in any case, exceed two years.
4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 5 

1. A statutory auditor ... carrying out the statutory audit of a public-interest entity, or any member of the network to which the statutory auditor ... belongs, shall not directly or indirectly provide to the  audited person, to its parent undertaking  (incorporated or formed in any part of the United Kingdom) or to its  subsidiary undertakings... any prohibited non-audit services in:
(a) the period between the beginning of the  financial year of the accounts to be audited  and the issuing of the audit report; and
(b) the financial year immediately preceding  that period  in relation to the services listed in point (e) of the second subparagraph.For the purposes of this Article, prohibited non-audit services shall mean:
(a) tax services relating to:
((i)) preparation of tax forms;
((ii)) payroll tax;
((iii)) customs duties;
((iv)) identification of public subsidies and tax incentives unless support from the statutory auditor ... in respect of such services is required by law;
((v)) support regarding tax inspections by tax authorities unless support from the statutory auditor ... in respect of such inspections is required by law;
((vi)) calculation of direct and indirect tax and deferred tax;
((vii)) provision of tax advice;
(b) services that involve playing any part in the management or decision-making of the  audited person;
(c) bookkeeping and preparing accounting records and  accounts;
(d) payroll services;
(e) designing and implementing internal control or risk management procedures related to the preparation and/or control of financial information or designing and implementing financial information technology systems;
(f) valuation services, including valuations performed in connection with actuarial services or litigation support services;
(g) legal services, with respect to:
((i)) the provision of general counsel;
((ii)) negotiating on behalf of the  audited person; and
((iii)) acting in an advocacy role in the resolution of litigation;
(h) services related to the  audited person's  internal audit function;
(i) services linked to the financing, capital structure and allocation, and investment strategy of the  audited person, except providing assurance services in relation to the  accounts, such as the issuing of comfort letters in connection with prospectuses issued by the audited entity;
(j) promoting, dealing in, or underwriting shares in the  audited person;
(k) human resources services, with respect to:
((i)) management in a position to exert significant influence over the preparation of the accounting records or  the accounts  which are the subject of the statutory audit, where such services involve:

— searching for or seeking out candidates for such position; or
— undertaking reference checks of candidates for such positions;
((ii)) structuring the organisation design; and
((iii)) cost control.
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. A statutory auditor ... carrying out statutory audits of public-interest entities and, where the statutory auditor ... belongs to a network, any member of such network, may provide to the  audited person, to its parent undertaking  (incorporated or formed in any part of the United Kingdom) or to its  subsidiary undertakings  non-audit services other than the prohibited non-audit services referred to in paragraphs 1 and 2 subject to the approval of the audit committee after it has properly assessed threats to independence and the safeguards applied in accordance with  paragraph 8 of Schedule 1 to the Statutory Auditors and Third Country Auditors Regulations 2016. ......
5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 6 

1. Before  appointment as a statutory auditor for the  statutory audit of a public- interest entity,  a person who is eligible for appointment as a statutory auditor must  assess and document, in addition to  what is required by paragraph 8 of Schedule 1 to the Statutory Auditors and Third Country Auditors Regulations 2016, the following:
(a) whether  the person who is eligible for appointment as a statutory auditor  complies with the requirements of Articles 4 and 5 of this Regulation;
(b) whether the conditions of  the provisions for the appointment of statutory auditors by public interest entities and Article 17(7)  are complied with;
(c) without prejudice to  the relevant legislation, the integrity of the members of the  management body  of the public-interest entity.
(1A.) In point (c) of paragraph 1,  “relevant legislation” means—
(a) the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017;
(b) sections 330(6), 330(7A), 333A and 342 of the Proceeds of Crime Act 2002;
(c) sections 45 and 46 of the Criminal Finances Act 2017;
(d)) the Terrorism Act 2000.
(1B.) The reference to appointment as a statutory auditor for the statutory audit of a public interest entity in paragraph 1 means any appointment of the auditor by public interest entities and includes any deemed reappointment of the statutory auditor under section 487 of the Companies Act 2006.
2. A statutory auditor ... shall:
(a) confirm annually in writing to the audit committee that the statutory auditor, ...  and, where the statutory auditor is a firm, any associated persons, conducting the statutory audit are independent from the  audited person;
(b) discuss with the audit committee the threats to  the statutory auditor's independence  and the safeguards applied to mitigate those threats, as documented  by the statutory auditor  pursuant to paragraph 1.
(3.) In this Article,  “associated persons” means—
(a) partners if the firm is a partnership, general partners if the firm is a limited partnership, or members if the firm is a limited liability partnership;
(b) members of the management body of the firm; or
(c) individuals who are responsible for statutory audit work on behalf of the firm.
Article 7 
Without prejudice to  relevant legislation, when a statutory auditor ... carrying out the statutory audit of a public-interest entity suspects or has reasonable grounds to suspect that irregularities, including fraud with regard to the  accounts  of the  audited person, may occur or have occurred,  the statutory auditor  shall inform the audited entity and invite it to investigate the matter and take appropriate measures to deal with such irregularities and to prevent any recurrence of such irregularities in the future.
Where the  audited person  does not investigate the matter, the statutory auditor ... shall inform the authorities ... responsible for investigating such irregularities.
The disclosure in good faith to those authorities, by the statutory auditor ..., of any irregularities referred to in the first subparagraph shall not constitute a breach of any contractual or legal restriction on disclosure of information.
In this Article,  “relevant legislation” means—
(a) any rules made under section 340 of the Financial Services and Markets Act 2000;
(b) the Financial Services and Markets Act 2000 (Communications by Auditors) Regulations 2001;
(c) the Money Laundering, Terrorist Financing and Transfer of Funds (Information on Payer) Regulations 2017;
(d) sections 330(6), 330(7A), 333A and 342 of the Proceeds of Crime Act 2002;
(e) sections 45 and 46 of the Criminal Finances Act 2017;
(f)) the Terrorism Act 2000.
Article 8 

1. Before the reports referred to in Articles 10 and 11 are issued, an engagement quality control review (in this Article hereinafter referred to as: review) shall be performed to assess whether the statutory auditor or the key audit partner could reasonably have come to the opinion and conclusions expressed in the draft of these reports.
2. The review shall be performed by an engagement quality control reviewer (in this Article hereinafter referred to as: reviewer). The reviewer shall be  person who is eligible for appointment as a a statutory auditor who is not involved in the performance of the statutory audit to which the review relates.
3. By way of derogation from paragraph 2, where—
(a) the statutory auditor is a firm and all the individuals who were able to sign audit reports on behalf of the firm were involved in carrying out the statutory audit, or
(b) the statutory auditor is an individual,
the statutory auditor must arrange for another person who is eligible for appointment as a statutory auditor to perform a review. The disclosure of documents or information to the independent reviewer for the purposes of this Article does not constitute a breach of the statutory auditor's duty of confidentiality. Documents or information disclosed to the reviewer for the purposes of this Article must be subject to that duty.
4. When performing the review, the reviewer shall record at least the following:
(a) the oral and written information provided by the ... key audit partner to support the significant judgements as well as the main findings of the audit procedures carried out and the conclusions drawn from those findings, whether or not at the request of the reviewer;
(b) the opinions of the ... key audit partner, as expressed in the draft of the reports referred to in Articles 10 and 11;
5. The review shall at least assess the following elements:
(a) the independence of the statutory auditor ... from the  audited person;
(b) the significant risks which are relevant to the statutory audit and which the ... key audit partner has identified during the performance of the statutory audit and the measures that  the key audit partner  has taken to adequately manage those risks;
(c) the reasoning of the ... key audit partner, in particular with regard to the level of materiality and the significant risks referred to in point (b);
(d) any request for advice to external experts and the implementation of such advice;
(e) the nature and scope of the corrected and uncorrected misstatements in the  accounts  that were identified during the carrying out of the audit;
(f) the subjects discussed with the audit committee and , where applicable,  the  management body  of the  audited person;
(g) the subjects discussed with  regulatory authorities  and, where applicable, with other third parties;
(h) whether the documents and information selected from the file by the reviewer support the opinion of the ... key audit partner as expressed in the draft of the reports referred to in Articles 10 and 11.
6. The reviewer shall discuss the results of the review with the ... key audit partner.  Where the statutory auditor is a firm, it  shall establish procedures for determining the manner in which any disagreement between the key audit partner and the reviewer are to be resolved.
7. The statutory auditor ... and the reviewer shall keep a record of the results of the review, together with the considerations underlying those results.
Article 9 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 10 

1. The statutory  auditor  shall present the results of the statutory audit of the public-interest entity in an audit report.
2. The audit report shall be prepared in accordance with the public interest entity audit reporting requirements  and in addition shall at least:
(a) state by whom or by which body the statutory  auditor  was ... appointed;
(b) indicate the date of the appointment and the period of total uninterrupted  consecutive reappointments of the statutory auditor;
(c) provide, in support of the audit opinion, the following:
((i)) a description of the most significant assessed risks of material misstatement, including assessed risks of material misstatement due to fraud;
((ii)) a summary of the auditor's response to those risks; and
((iii)) where relevant, key observations arising with respect to those risks.Where relevant to the above information provided in the audit report concerning each significant assessed risk of material misstatement, the audit report shall include a clear reference to the relevant disclosures in the  accounts.
(d) explain to what extent the statutory audit was considered capable of detecting irregularities, including fraud;
(e) confirm that the audit opinion is consistent with the additional report to the audit committee referred to in Article 11;
(f) declare that the prohibited non-audit services referred to in Article 5(1) were not provided and that the statutory  auditor  remained independent of the  audited person  in conducting the audit;
(g) indicate any services, in addition to the statutory audit, which were provided by the statutory auditor ... to the  audited person  and its  subsidiary undertakings, and which have not been disclosed in the  accounts or the reports required to be prepared by the management body of the audited person to accompany the accounts....
3. Except as required by point (e) of paragraph 2 the audit report shall not contain any cross-references to the additional report to the audit committee referred to in Article 11. The audit report shall be in clear and unambiguous language.
4. The statutory auditor ... shall not use the name of  the competent authority  in a way that would indicate or suggest endorsement or approval by  the authority  of the audit report.
Article 11 

1. Statutory auditors ... carrying out statutory audits of public-interest entities shall submit an additional report to the audit committee of the  audited person  not later than the date of submission of the audit report referred to in Article 10. ...If the audited person does not have an audit committee, the additional report shall be submitted to  the management body of the audited person. ...
2. The additional report to the audit committee shall be in writing. It shall explain the results of the statutory audit carried out and shall at least:
(a) include the declaration of independence referred to in point (a) of Article 6(2);
(b) where the statutory audit was carried out by  a firm, the report shall identify each key audit partner involved in the audit;
(c) where the statutory auditor has made arrangements for audit activities to be conducted by another person who is eligible for appointment as a statutory auditor and who is not a member of the same network, by a third country auditor who is not a member of the same network, or by an external expert, the report must indicate this and confirm that the statutory auditor received confirmation from the other auditor or from the external expert of their independence;
(d) describe the nature, frequency and extent of communication with the audit committee  and  the management body ... of the  audited person, including the dates of meetings with those bodies;
(e) include a description of the scope and timing of the audit;
(f) where more than one statutory auditor  has  been appointed, describe the distribution of tasks among the statutory auditors ...;
(g) describe the methodology used, including which categories of the balance sheet have been directly verified and which categories have been verified based on system and compliance testing, including an explanation of any substantial variation in the weighting of system and compliance testing when compared to the previous year, even if the previous year's statutory audit was carried out by  another  statutory  auditor;
(h) disclose the quantitative level of materiality applied to perform the statutory audit for the  accounts  as a whole and where applicable the materiality level or levels for particular classes of transactions, account balances or disclosures, and disclose the qualitative factors which were considered when setting the level of materiality;
(i) report and explain judgements about events or conditions identified in the course of the audit that may cast significant doubt on the entity's ability to continue as a going concern and whether they constitute a material uncertainty, and provide a summary of all guarantees, comfort letters, undertakings of public intervention and other support measures that have been taken into account when making a going concern assessment;
(j) report on any significant deficiencies in the  audited person's  or, in the case of consolidated  accounts, the parent undertaking's internal financial control system,  or  in the accounting system. For each such significant deficiency, the additional report shall state whether or not the deficiency in question has been resolved by the management;
(k) report any significant matters involving actual or suspected non-compliance with laws and regulations or articles of association which were identified in the course of the audit, in so far as they are considered to be relevant in order to enable the audit committee to fulfil its tasks;
(l) report and assess the valuation methods applied to the various items in the annual or consolidated  accounts  including any impact of changes of such methods;
(m) in the case of a statutory audit of consolidated  accounts, explain the scope of consolidation and the exclusion criteria applied by the  audited person  to the non-consolidated  members of the group, if any, and whether those criteria applied are in accordance with the financial reporting framework;
(n) where applicable, identify any audit work performed by  third country auditors or statutory auditors  in relation to a statutory audit of consolidated  accounts  other than by members of the same network as  that to which the auditor of the consolidated  accounts  belongs;
(o) indicate whether all requested explanations and documents were provided by the  audited person;
(p) report:
((i)) any significant difficulties encountered in the course of the statutory audit;
((ii)) any significant matters arising from the statutory audit that were discussed or were the subject of correspondence with management; and
((iii)) any other matters arising from the statutory audit that in the  statutory auditor's professional judgement, are significant to the oversight of the financial reporting process....Upon request by a statutory auditor ... or the audit committee, the statutory  auditor  shall discuss key matters arising from the statutory audit, referred to in the additional report to the audit committee, and in particular in point (j) of the first subparagraph, with the audit committee, administrative body or, where applicable, supervisory body of the  audited person.
3. Where more than one statutory auditor  has been appointed and a  disagreement has arisen between them on auditing procedures, accounting rules or any other issue regarding the conduct of the statutory audit, the  nature of any  disagreement  and the reasons for it must  be explained in the additional report to the audit committee.
4. The additional report to the audit committee shall be signed and dated. Where  a firm  carries out the statutory audit, the additional report to the audit committee shall be signed by the statutory auditors carrying out the statutory audit on behalf of  that firm.
5. Upon request, and in accordance with  legislation of any part of the United Kingdom, the statutory auditors ... shall make available without delay the additional report to the  competent authority....
Article 12 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 13 

1. A statutory auditor ... that carries out  the statutory audit of a public interest entity  shall make public an annual transparency report at the latest four months after the end of each financial year. That transparency report shall be published on the website of the statutory auditor ... and shall remain available on that website for at least five years from the day of its publication on the website. ...A statutory auditor ... shall be allowed to update its published annual transparency report. In such a case, the statutory auditor ... shall indicate that it is an updated version of the report and the original version of the report shall continue to remain available on the website.Statutory auditors ... shall communicate to the competent authorities that the transparency report has been published on the website of the statutory auditor ... or, as appropriate, that it has been updated.
2. The annual transparency report shall include at least the following:
(a) a description of the legal structure and ownership of the  statutory auditor, if it is a firm;
(b) where the statutory auditor ... is a member of a network:
((i)) a description of the network and the legal and structural arrangements in the network;
((ii)) the name of each member of the network that is eligible for appointment as a statutory auditor, or is eligible for appointment as an auditor in an EEA State or in Gibraltar;
((iii)) for each of the members of the network identified under paragraph (ii), the countries in which they are eligible for appointment as auditors or in which they have a registered office, central administration or a principal place of business;
((iv)) the total turnover of the members of the network identified under paragraph (ii) resulting from statutory audit work or equivalent work in the EEA States or Gibraltar;
(c) a description of the governance structure of the  statutory auditor, if it is a firm;
(d) a description of the internal quality control system of the statutory auditor ... and a statement by the ... management body on the effectiveness of its functioning;
(e) an indication of when the last quality assurance review referred to in Article 26 was carried out;
(f) a list of public-interest entities for which the statutory auditor ... carried out statutory audits during the preceding financial year;
(g) a statement concerning the statutory auditor's ... independence practices which also confirms that an internal review of independence compliance has been conducted;
(h) a statement on the policy followed by the statutory auditor ... concerning the continuing education of statutory auditors referred to in  paragraph 11 of Schedule 10 to the Companies Act 2006;
(i) information concerning the basis for the ... remuneration  of members of the management body of the statutory auditor, where that statutory auditor is a firm;
(j) a description of the statutory auditor's ... policy concerning the rotation of key audit partners and staff in accordance with Article 17(7);
(k) where not disclosed in its  accounts, information about the total turnover of the statutory auditor ..., divided into the following categories:
((i)) revenues from the statutory audit of  accounts  of public-interest entities and  members of groups  of undertakings whose parent undertaking is a public-interest entity;
((ii)) revenues from the statutory audit of  accounts  of other entities;
((iii)) revenues from permitted non-audit services to entities that are audited by the statutory auditor ...; and
((iv)) revenues from non-audit services to other entities.The statutory auditor ... may, in exceptional circumstances, decide not to disclose the information required in point (f) of the first subparagraph to the extent necessary to mitigate an imminent and significant threat to the personal security of any person. The statutory auditor ... shall be able to demonstrate to the competent authority the existence of such threat.
3. The transparency report shall be signed by the statutory auditor ....
Article 14 
Statutory auditors ... shall provide annually to  the  competent authority a list of the audited public-interest entities by revenue generated from them, dividing those revenues into:

((a)) revenues from statutory audit;
((b)) revenues from non-audit services other than those referred to in Article 5(1) which are required by  legislation of any part of the United Kingdom; and,
((c)) revenues from non-audit services other than those referred to in Article 5(1) which are not required by  legislation of any part of the United Kingdom.
Article 15 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TITLE III
Article 16 

1. For the purposes of the application of  the provisions, for the appointment of statutory auditors ... by public-interest entities, the conditions set out in  paragraph 3  of this Article shall apply, ....Where  the provisions for the appointment of statutory auditors by public interest entities do not apply, the public-interest entity shall inform the competent authority of the use of  applicable alternative systems  or modalities .... In that event,  paragraph 3  of this Article shall not apply.
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. The  recommendation of the audit committee ... shall be prepared following a selection procedure organised by the audited entity respecting the following criteria:
(a) the audited person is free to invite any persons who are eligible for appointment as statutory auditors to submit proposals for the provision of the statutory audit on the condition that—
(i) the maximum engagement periods in the provisions for the appointment of statutory auditors by public interest entities and the restrictions on appointments in those provisions are respected; and
(ii) that the organisation of the tender process does not in any way preclude the participation in the selection procedure of firms which received less than 15 % of the total audit fees from public-interest entities concerned in the previous calendar year;
(b) the  audited person  shall prepare tender documents for the attention of the  invited persons. Those tender documents shall allow them to understand the business of the  audited person  and the type of statutory audit that is to be carried out. The tender documents shall contain transparent and non-discriminatory selection criteria that shall be used by the  audited person  to evaluate the proposals made by statutory auditors ...;
(c) the  audited person  shall be free to determine the selection procedure and may conduct direct negotiations with  applicants  in the course of the procedure;
(d) where, in accordance with  legislation of any part of the United Kingdom, the  competent authorityrequires statutory auditors  to comply with certain quality standards, those standards shall be included in the tender documents;
(e) the  audited person  shall evaluate the proposals made by the  applicants  in accordance with the selection criteria predefined in the tender documents. The  audited person  shall prepare a report on the conclusions of the selection procedure, which shall be validated by the audit committee. The  audited person  and the audit committee shall take into consideration any findings or conclusions of any inspection report on the applicant ... referred to in Article 26(8) and published by the competent authority pursuant to point (d) of Article 28;
(f) the  audited person  shall be able to demonstrate, upon request, to the competent authority ... that the selection procedure was conducted in a fair manner.The audit committee shall be responsible for the selection procedure referred to in the first subparagraph.For the purposes of point (a) of the first subparagraph, the competent authority ... shall make public a list of the  persons  concerned  who are eligible for appointment as statutory auditors which shall be updated on an annual basis. The competent authority shall use the information provided by statutory auditors ... pursuant to Article 14 to make the relevant calculations.
4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Any clause of a contract entered into between a public-interest entity and a third party restricting the choice by the ... members of that entity, ... to certain categories or lists of  persons who are eligible for appointment as statutory auditor, as regards the appointment of a particular statutory auditor ... to carry out the statutory audit of that entity shall be  of no effect.The public-interest entity shall inform the  competent authority  directly and without delay of any attempt by a third party to impose such a contractual clause or to otherwise improperly influence the decision of the ... members  of the public interest entity on the selection of a statutory auditor ....
7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 17 

1. ...Neither the initial engagement of a particular statutory auditor or audit firm, nor this in combination with any renewed engagements therewith shall exceed a maximum duration of 10 years.
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. The key audit partners responsible for carrying out a statutory audit shall cease their participation in the statutory audit of the  audited person  not later than seven years from the date of their appointment. They shall not participate again in the statutory audit of the  audited person  before three years have elapsed following that cessation....The statutory auditor ... shall establish an appropriate gradual rotation mechanism with regard to the most senior personnel involved in the statutory audit, including at least the  individuals who are eligible for appointment  as statutory auditors. The gradual rotation mechanism shall be applied in phases on the basis of individuals rather than of the entire engagement team. It shall be proportionate in view of the scale and the complexity of the activity of the statutory auditor ....The statutory auditor ... shall be able to demonstrate to the competent authority that such mechanism is effectively applied and adapted to the scale and the complexity of the activity of the statutory auditor ....
8. For the purposes of  the provisions for the appointment of statutory auditors by public interest entities, the duration of the audit engagement shall be calculated as from the first financial year covered in the audit engagement letter in which the statutory auditor ... has been appointed for the first time for the carrying-out of consecutive statutory audits for the same public-interest entity.For the purposes of this Article,  the statutory auditor is a firm it must  include  any other statutory auditor that is also a firm and has been acquired by or has merged with the first statutory auditor. If there is uncertainty as to the date on which the statutory auditor ... began carrying out consecutive statutory audits for the public-interest entity, for example due to firm mergers, acquisitions, or changes in ownership structure, the statutory auditor ... shall immediately report such uncertainties to the competent authority, which shall ultimately determine the relevant date for the purposes of the first subparagraph.
Article 18 
...
Subject to  paragraph 16 of Schedule 1 to the Statutory Auditors and Third Country Auditors Regulations 2016,  an outgoing  statutory auditor ... shall ...  grant an  incoming statutory auditor ... access to the additional reports referred to in Article 11 in respect of previous years and to any information transmitted to competent authorities pursuant to  Article 13, any rules made under section 340 of the Financial Services and Markets Act 2000, and the Financial Services and Markets Act 2000 (Communications by Auditors) Regulations 2001.
The former statutory auditor ... shall be able to demonstrate to the competent authority that such information has been provided to the incoming statutory auditor ....
Article 19 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TITLE IV
CHAPTER I
Article 20 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 21 
The  competent authority  shall be independent of statutory auditors ....
The  competent authority  may consult experts, as referred to in point (c) of Article 26(1), for the purpose of carrying out specific tasks and may also be assisted by experts when this is essential for the proper fulfilment of their tasks. In such instances, the experts shall not be involved in any decision-making.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The funding of the competent authority shall be secure and free from undue influence by statutory auditors ....
Article 22 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 23 

1. Without prejudice to Article 26, in carrying out the competent authority's tasks, neither the competent authority nor any other regulatory authority or body  of any part of the United Kingdom  may interfere with the content of audit reports.
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 24 

1. Where the competent authority delegates any of the competent authority's tasks to a recognised supervisory body under regulation 3 of the Statutory Auditors and Third Country Auditors Regulations 2016, this must not include tasks related to—
(a) the quality assurance system referred to in Article 26;
(b) investigations carried out under powers in the Statutory Auditors and Third Country Auditors Regulations 2016 arising from that quality assurance system or from a referral by another authority; and
(c) the imposition of sanctions and the taking of measures under regulations 5 to 8 of the Statutory Auditors and Third Country Auditors Regulations 2016 related to the quality assurance reviews or investigation of statutory audits of public interest entities.
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 25 
The competent authority  and, where appropriate,  any body  to whom  the  competent authority has delegated tasks shall cooperate ... with:

((a)) the body designated by the Secretary of State under section 1252 of the Companies Act 2006;
((b)) the Financial Conduct Authority;
((c)) the body appointed to exercise the functions mentioned at section 14(2) of the Companies (Audit, Investigations and Community Enterprise) Act 2004;
((d)) the person authorised for the purposes of section 456 of the Companies Act 2006; or
((e)) the National Crime Agency and the supervisory authorities referred to in regulation 7 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
For the purposes of such cooperation, the  restrictions on disclosure  under  section 1224A of the Companies Act 2006  shall apply.
CHAPTER II
Article 26 

1. For the purposes of this Article:
(a) ‘inspections’ means quality assurance reviews of statutory auditors ..., which are led by an inspector and which do not constitute an investigation within the meaning of  regulation 3(1)(l) of the Statutory Auditors and Third Country Auditors Regulations 2016;
(b) ‘inspector’ means  an individual  who meets the requirements set out in point (a) of the first subparagraph of paragraph 5 of this Article and who is employed or otherwise contracted by a competent authority;
(c) ‘expert’ means an individual  who has specific expertise in financial markets,  accounting, auditing or other fields relevant for inspections, including practising statutory auditors.
2. The  competent authority  shall establish an effective system of audit quality assurance.They shall carry out quality assurance reviews of  individuals and firms  that carry out statutory audits of public-interest entities on the basis of an analysis of the risk and:
(a) in the case of statutory auditors carrying out audits of public interest entities,  other than those which,  but for being public interest entities, would qualify (or would if they were companies) as small or medium-sized under sections 382 and 383 or sections 465 and 467 of the Companies Act 2006, at least every three years; and
(b) in cases other than those referred to in point (a), at least every six years.
3. The competent authority shall have the following responsibilities:
(a) approval and amendment of the inspection methodologies, including inspection and follow-up manuals, reporting methodologies and periodic inspection programmes;
(b) approval and amendment of inspection reports and follow-up reports;
(c) approval and assignment of inspectors for each inspection.The competent authority shall allocate adequate resources to the quality assurance system.
4. The competent authority shall organise the quality assurance system in a manner that is independent of the ... statutory auditors  that are the subject of the inspection.The competent authority shall ensure that appropriate policies and procedures related to the independence and objectivity of the staff, including inspectors, and the management of the quality assurance system are put in place.
5. The competent authority shall comply with the following criteria when appointing inspectors:
(a) inspectors shall have appropriate professional education and relevant experience in statutory audit and  accounting  combined with specific training on quality assurance reviews;
(b) a person who is a practising statutory auditor or is employed by or otherwise associated with a statutory auditor ... shall not be allowed to act as an inspector;
(c) a person shall not be allowed to act as an inspector in an inspection of a statutory auditor ... until at least three years have elapsed since that person ceased to be a partner or employee of that statutory auditor ... or to be otherwise associated with that statutory auditor ...;
(d) inspectors shall declare that there are no conflicts of interest between them and the statutory auditor ... to be inspected.By way of derogation from point (b) of paragraph 1,  the competent authority  may contract experts for carrying out specific inspections when the number of inspectors within the authority is insufficient. The competent authority may also be assisted by experts when this is essential for the proper conduct of an inspection. In such instances,  the competent authority  and the experts shall comply with the requirements of this paragraph. Experts shall not be involved in the governance of, or employed or otherwise contracted by professional associations and bodies but may be members of such associations or bodies.
(5A.) In point (a) of the first subparagraph of paragraph (5),  “relevant experience” means having experience of—
(a) statutory audit work;
(b) equivalent work, for the purposes of an appointment of a person to conduct inspections made prior to  IP completion day, on the audit of accounts under the law of an EEA State, or part of an EEA State, or Gibraltar; or
(c) equivalent work, for the purposes of an appointment of a person to conduct inspections, on the audit of accounts under the law of—
(i) an equivalent third country, or part of an equivalent third country; or
(ii) a transitional third country, or part of a transitional third country.
6. The scope of inspections shall at least cover:
(a) an assessment of the design of the internal quality control system of the statutory auditor ...;
(b) adequate compliance testing of procedures and a review of audit files of public-interest entities in order to verify the effectiveness of the internal quality control system;
(c) in the light of the findings of the inspection under points (a) and (b) of this paragraph, an assessment of the contents of the most recent annual transparency report published by a statutory auditor ... in accordance with Article 13.
7. At least the following internal quality control policies and procedures of the statutory auditor ... shall be reviewed:
(a) compliance by the statutory auditor ... with applicable auditing and quality control standards, and ethical and independence requirements, including  the relevant standards listed in regulation 4(2) of the Statutory Auditors and Third Country Auditors Regulations 2016  and Articles 4 and 5 of this Regulation ...;
(b) the quantity and quality of resources used, including compliance with continuing education requirements as set out in  paragraph 11 of Schedule 10 to the Companies Act 2006;
(c) compliance with the requirements set out in Article 4 of this Regulation on the audit fees charged.For the purposes of testing compliance, audit files shall be selected on the basis of an analysis of the risk of a failure to carry out a statutory audit adequately.The competent authority  shall also periodically review the methodologies used by statutory auditors ... to carry out statutory audits.In addition to the inspection covered by the first subparagraph,  the competent authority  shall have the power to perform other inspections.
8. The findings and conclusions of inspections on which recommendations are based, including the findings and conclusions related to a transparency report, shall be communicated to and discussed with the inspected statutory auditor ... before an inspection report is finalised.Recommendations of inspections shall be implemented by the inspected statutory auditor ... within a reasonable period set by the competent authority. Such period shall not exceed 12 months in the case of recommendations on the internal quality control system of the statutory auditor ....
9. The inspection shall be the subject of a report which shall contain the main conclusions and recommendations of the quality assurance review.
Article 27 

1. The  competent authority  shall regularly monitor the developments in the market for providing statutory audit services to public-interest entities and shall in particular assess the following:
(a) the risks arising from high incidence of quality deficiencies of a statutory auditor ..., including systematic deficiencies within  a network, which may lead to the demise of  any firm in the network, the disruption in the provision of statutory audit services whether in a specific sector or across sectors, the further accumulation of risk of audit deficiencies and the impact on the overall stability of the financial sector;
(b) the market concentration levels, including in specific sectors;
(c) the performance of audit committees;
(d) the need to adopt measures to mitigate the risks referred to in point (a).
2. By  17 June 2019, and at least every three years thereafter,  the competent authority... shall draw up a report on developments in the market for providing statutory audit services to public-interest entities and submit it to the  Secretary of State....
Article 28 
The competent authority  shall be transparent and shall at least publish:

((a)) annual activity reports regarding  the competent authority's tasks;
((b)) annual work programmes regarding  the competent authority's tasks;
((c)) a report on the overall results of the quality assurance system on an annual basis. This report shall include information on recommendations issued, follow-up on the recommendations, supervisory measures taken and sanctions imposed. It shall also include quantitative information and other key performance information on financial resources and staffing, and the efficiency and effectiveness of the quality assurance system;
((d)) the aggregated information on the findings and conclusions of inspections referred to in the first subparagraph of Article 26(8). ...
CHAPTER III
Article 29 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 30 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 31 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 32 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 33 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 34 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 35 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER IV
Article 36 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 37 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 38 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 39 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 40 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 41 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 42 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 43 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 44 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...