Article 26
Quality assurance
1. For the purposes of this Article:
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(a) |
‘inspections’ means quality assurance reviews of statutory auditors and audit firms, which are led by an inspector and which do not constitute an investigation within the meaning of Article 32(5) of Directive 2006/43/EC; |
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(b) |
‘inspector’ means a reviewer 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; |
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(c) |
‘expert’ means a natural person who has specific expertise in financial markets, financial reporting, auditing or other fields relevant for inspections, including practising statutory auditors. |
2. The competent authorities designated under Article 20(1) shall establish an effective system of audit quality assurance.
They shall carry out quality assurance reviews of statutory auditors and audit firms that carry out statutory audits of public-interest entities on the basis of an analysis of the risk and:
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(a) |
in the case of statutory auditors and audit firms carrying out statutory audits of public-interest entities other than those defined in points (17) and (18) of Article 2 of Directive 2006/43/EC at least every three years; and, |
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(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:
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(a) |
approval and amendment of the inspection methodologies, including inspection and follow-up manuals, reporting methodologies and periodic inspection programmes; |
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(b) |
approval and amendment of inspection reports and follow-up reports; |
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(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 reviewed statutory auditors and audit firms.
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:
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(a) |
inspectors shall have appropriate professional education and relevant experience in statutory audit and financial reporting combined with specific training on quality assurance reviews; |
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(b) |
a person who is a practising statutory auditor or is employed by or otherwise associated with a statutory auditor or an audit firm shall not be allowed to act as an inspector; |
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(c) |
a person shall not be allowed to act as an inspector in an inspection of a statutory auditor or an audit firm until at least three years have elapsed since that person ceased to be a partner or employee of that statutory auditor or of that audit firm or to be otherwise associated with that statutory auditor or audit firm; |
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(d) |
inspectors shall declare that there are no conflicts of interest between them and the statutory auditor and the audit firm to be inspected. |
By way of derogation from point (b) of paragraph 1, a 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 authorities 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.
6. The scope of inspections shall at least cover:
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(a) |
an assessment of the design of the internal quality control system of the statutory auditor or of the audit firm; |
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(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; |
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(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 or an audit firm in accordance with Article 13. |
7. At least the following internal quality control policies and procedures of the statutory auditor or the audit firm shall be reviewed:
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(a) |
compliance by the statutory auditor or the audit firm with applicable auditing and quality control standards, and ethical and independence requirements, including those set out in Chapter IV of Directive 2006/43/EC and Articles 4 and 5 of this Regulation, as well as relevant laws, regulations and administrative provisions of the Member State concerned; |
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(b) |
the quantity and quality of resources used, including compliance with continuing education requirements as set out in Article 13 of Directive 2006/43/EC; |
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(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.
Competent authorities shall also periodically review the methodologies used by statutory auditors and audit firms to carry out statutory audits.
In addition to the inspection covered by the first subparagraph, competent authorities 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 or audit firm before an inspection report is finalised.
Recommendations of inspections shall be implemented by the inspected statutory auditor or audit firm 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 or of the audit firm.
9. The inspection shall be the subject of a report which shall contain the main conclusions and recommendations of the quality assurance review.