The Minister for Enterprise, Trade and Innovation has published the European Communities (Statutory Audits) (Directive 2006/46/EC) Regulations 2010 (the "Regulations") to give effect to Directive 2006/46/EC on statutory audits.
The Regulations provide for an approval process for statutory auditors.
They also provide for the establishment of a public register of auditors, contain detailed provisions with regard to public oversight of statutory auditors and set out provisions regarding the independence of auditors. Of particular interest are the provisions requiring public-interest entities to establish audit committees. The Regulations also contain provisions in respect of the removal of auditors, the independence of auditors and the disclosure of auditor's remuneration in company accounts. For the purposes of the Regulations "public-interest entities" are defined as:
companies whose transferable securities are admitted to trading on a regulated market of any Member State (in Ireland this means the Main Securities Market of the Irish Stock Exchange); credit institutions; and insurance undertakings. Audit Committees
The Regulations include for the first time a statutory requirement for public-interest entities to establish an audit committee. The committee must be established within six months of the date of the Regulations and must include no less than two non-executive directors who possess the requisite degree of independence so as to enable them to contribute effectively to the committees functions.
The Regulations specify that in order to have the requisite degree of independence, a nonexecutive director at no time during the three years preceding his/her appointment to the committee, should have had a material business relationship with the public-interest entity either directly, or as a partner, shareholder, director or senior employee of a body that has such a relationship with the company or held a position of employment in the public-interest entity. One of the independent non-executive directors must have a competence in accounting or auditing. The responsibilities of the audit committee include the monitoring of the financial reporting process, the effectiveness of the entities systems of internal control, internal audit and risk management, the statutory audit, and the independence of the statutory auditor or audit firm.
The Regulations provide that the statutory auditor or audit firm shall report to the audit committee of...