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Audit Directive

Directive 2006/43/EC on Statutory Audits of Annual and Consolidated Accounts

The  Audit Directive updates provisions of the earlier 8th Company Law Directive and introduces new provisions on public oversight, third country auditors and various other matters. The Directive was published on 9 June 2006 and came into force on 29 June 2006.
A copy of the DTI consultation document on the negotiation of the proposal, including a copy of the Commission proposals, the summary of consultees’ responses and the Government response (URN 05/1005 & 04/1382) can be viewed or obtained by clicking on the REPORTS and PUBLICATIONS link at the top right hand corner of this page. Further information about the Directive is available on the Commission's website on EU company law and Corporate Governance (please see the link on the right of this page).

The Department has held two public consultations on the implementation of the Audit Directive on 5 March 2007 and 19 July 2007. We have now published a summary of the comments on the Draft Audit Directive Regulations in the second consultation and the Government's conclusions.

The EU Audit Directive is implemented in relation to companies through Parts 16 and 42 of the Companies Act 2006, as amended by the Statutory Auditors and Third Country Auditors Regulations 2007 (SI 2008 / 3494) and other related regulations. Links to these Regulations are available at Regulations and Commencement Orders - made or laid in draft. This amended regulatory framework is applicable to company reporting periods beginning on or after 6 April.

Other regulations implementing the Audit Directive are due to be made by other Government and regulatory bodies:

- Her Majesty's Treasury has completed its consultation on implementation of the Audit Directive for Building Societies and Friendly Societies. The consultation also covers the implementation of Directive 2006/46/EC which amends the 4th and 7th Company Law (Accounting) Directives. Regulations will be made to commence for reporting periods beginning on or after 29 June.

- The Financial Services Authority's consultation on the implementation of certain requirements on listed companies, through the listing rules, has been completed. The amended rules are due to commence for reporting periods beginning on or after 29 June.

- The Professional Oversight Board of the Financial Reporting Council has made regulations for commencement on 6 April as part of the implementation of the Companies Act. These regulations on transparency reports, the register of auditors and examination requirements also implement parts of the Audit Directive.

Third country auditors
Discussions are ongoing on the decision due to be taken by the European Commission, in agreement with Member States, in relation to the regulation of third country auditors. The Commission's draft decision  is now available on its website. Following the adoption of a decision, BERR, the Professional Oversight Board and the FSA will finalise plans for the regulation of third country auditors operating in the UK.

BERR lead: Jim Bellingham- tel: 020 7215 3858

mailto:jim.bellingham@berr.gsi.gov.uk

Alternative contact: Paul Smith- tel: 020 7215 4164

pauld.smith@berr.gsi.gov.uk