The Statutory Audit Directive (Directive 2006/43/EC on statutory audit of accounts and consolidated accounts, also known as the Eighth Company Law Directive) ("the Directive") is a step closer to being implemented in Ireland following publication of a set of draft Regulations by the Department of Enterprise, Trade and Employment ("the DETE") last week. The DETE are inviting comments on the draft Regulations by Friday 4 September 2009.

The Statutory Audit Directive aims to ensure that investors and other stakeholders can rely fully on the accuracy of a company's audited accounts. The Directive amends the Fourth (Directive 78/660/EEC) and Seventh (Directive 83/349/EEC) Company Law Directives on accounting. It also repeals Directive 84/253/EEC on the approval of persons responsible for carrying out statutory audits.

In brief, the Directive:

  • provides for the independence of auditors and sets out basic ethical standards they must adhere to;
  • provides for the approval and continuing education of auditors;
  • provides for a system of registration of statutory auditors or audit firms, which will be made available to the public electronically;
  • provides that statutory auditors and audit firms must be subject to a system of quality assurance and subject to public oversight;
  • provides that statutory auditors and audit firms who carry out the statutory audit of one or more public interest entities must prepare and publish an annual transparency report, giving an insight into the audit firm itself; and provides for public oversight of third country auditors and provides a basis for international cooperation between regulators in the EU and with regulators on third countries.  

We are currently reviewing the draft Regulations and will circulate further details on what is proposed.