Companies Act 2014 section 1567

Mutual recognition of regulatory arrangements between Member States

Section 1567 establishes the principle that EU Member States must mutually recognise each other's regulatory frameworks for statutory auditors and audit firms, ensuring that home-country oversight is respected and that no Member State imposes additional regulatory burdens on auditors already approved elsewhere.

• The home Member State where a statutory auditor or audit firm is approved and where the audited company is registered has primary responsibility for regulation and oversight, though host Member States retain oversight of any audits actually carried out on their territory.
• Member States are prohibited from imposing additional requirements on statutory auditors or audit firms regarding registration, quality assurance, auditing standards, professional ethics or independence when auditing consolidated financial statements of subsidiaries established in another Member State.
• The same prohibition on additional requirements applies where an undertaking's securities are traded on a regulated market in a Member State different from the one in which the undertaking has its registered office.
• Where a statutory auditor or audit firm is registered in a Member State and provides audit reports on accounts (including those of third-country auditors registered under the relevant provisions), the oversight, quality assurance, investigation and sanctions systems of the Member State of registration will apply.