Companies Act 2014 section 1537

Prohibited relationships - mergers and acquisitions

Section 1537 deals with the obligations of a statutory auditor or audit firm to assess and address any threats to their independence when an audited undertaking is involved in a merger or acquisition during the period covered by the financial statements.

• When a merger or acquisition occurs during the financial statement period, the auditor must identify and evaluate any interests, relationships or non-audit services that could compromise independence
• The assessment must consider available safeguards and whether the auditor can continue the audit after the effective date of the merger or acquisition
• Within three months of the merger or acquisition, the auditor must take all necessary steps to terminate any interests or relationships that would compromise independence
• Where possible, the auditor must adopt safeguards to minimise threats to independence arising from both prior and current interests and relationships