2008/627/EC: Commission Decision of 29 July 2008 concerning a transitional period for audit activities of certain third country auditors and audit entities (notified under document number C(2008) 3942) (Text with EEA relevance)
Date: 2008-07-29
Institutions: European Commission
Subjects: audit, auditing, consolidated account, financial control, management audit, supervisory power, third country

L 202/70

EN

Official Journal of the European Union

31.7.2008

COMMISSION DECISION

of 29 July 2008

concerning a transitional period for audit activities of certain third country auditors and audit
entities

(notified under document number C(2008) 3942)

(Text with EEA relevance)

(2008/627/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,

establishing the European

Having regard to Directive 2006/43/EC of
the European
Parliament and of the Council of 17 May 2006 on statutory
audits of annual accounts and consolidated accounts amending
Council Directives 78/660/EEC and 83/349/EEC and repealing
Council Directive 84/253/EEC (1), and in particular Article 46(2)
thereof,

Whereas:

(1)

(2)

(3)

States

conduct

the Member

authorities of

Under Article 45(1) of Directive 2006/43/EC the
competent
are
third-country auditors and audit
required to register
a statutory audit on certain
that
entities
companies incorporated outwith the Community whose
transferable securities are admitted to trading on a
market regulated within the Community. Article 45(3)
of Directive 2006/43/EC requires Member States
to
subject such registered third-country auditors and audit
entities to their systems of oversight, quality assurance
systems and systems of investigations and penalties.

systems

The Commission is required under Article 46(2) of
Directive 2006/43/EC to assess the equivalence of third
country oversight, quality assurance and investigation
in cooperation with Member
and penalties
States and make a determination. If those systems are
recognised as equivalent, Member States may exempt
third
from
requirements of Article 45 of the Directive on the basis
of reciprocity.

auditors

country

entities

audit

and

preliminary
The Commission
assessment of
third
countries with the assistance of the European Group of

out
regulation in relevant

carried

audit

has

a

(1) OJ L 157, 9.6.2006, p. 87. Directive as amended by Directive

2008/30/EC (OJ L 81, 20.3.2008, p. 53).

(4)

(5)

(6)

not

have

allowed

(EGAOB). However,
final

Auditors’ Oversight Bodies
the
assessments
equivalence
decisions to be taken but have provided an initial view
of the state of audit regulation in the third countries
concerned. Some third countries have a system of
public oversight in place, although for the time being
the information about the systems is not sufficient for
final equivalence decisions to be taken. Others do not
have such systems of public oversight yet but have in
place
a
perspective of moving towards such system.

framework

regulatory

an audit

offering

the need for further assessments for the
In view of
purpose of taking final equivalence decisions regarding
the audit regulation in place in third countries,
is
appropriate to take a decision providing for a transitional
period in respect of auditors and audit entities from the
such
third countries concerned in order
assessments
to be carried out. During this period,
equivalence decisions should therefore not be taken by
Member States at national level.

to permit

it

activities without

Since it is necessary to protect investors, during the tran­
sitional period auditors and audit entities from the third
countries concerned should be able to continue their
under
audit
they
Article 45 of Directive 2006/43/EC only if
provide
the auditing
standards and independence requirements applied to
when carrying out
the
outcome of
individual quality assurance reviews will
also be useful for this purpose.

Information about

information about

themselves,

registered

audits.

being

Under those conditions, auditors and audit entities from
the third countries concerned should be able to continue
their activities in relation to audit reports concerning
annual or consolidated accounts
financial years
starting during the period from 29 June 2008 to
transitional
1 July 2010. Accordingly, during that
period,
to in
Article 45 of the Directive 2006/43/EC should be able
to register those auditors and audit entities. Nevertheless,
this Decision should not affect Member States’ rights to
apply their investigations and penalties systems.

competent

authorities

referred

the

for

(7)

(8)

31.7.2008

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Official Journal of the European Union

L 202/71

The fact that third country auditors and audit entities
may, under this Decision, continue their audit activities
with regard to companies referred to in Article 45 of the
Directive 2006/43/EC should not prevent Member States
from establishing co-operative arrangements on indi­
vidual quality assurance reviews between the competent
authorities of a Member State and the competent auth­
orities of a third country.

(b) where the auditor or the audit entity belongs to a network,

a description of the network;

(c)

the auditing standards and independence requirements
which have been applied to the audit concerned;

The Commission should review the operation of
the
transitional arrangements in due time. If third countries
concerned do not then have a system of public oversight
in place, it should be ascertained whether the competent
such countries have made a public
authorities of
commitment
to the Commission to comply with
equivalence criteria based on Articles 29, 30 and 32 of
the Directive 2006/43/EC and whether an additional
transitional period is necessary. At the end of the tran­
sitional period, the Commission may take decisions on
the third
the equivalence of
the Commission
countries
should review whether
the competent authorities of
Member States encountered difficulties to be recognised
by such third countries. Thereafter, it is up to Member
States to decide in accordance with Article 46 of the
reciprocity
Directive 2006/43/EC on the basis of
whether
to disapply or modify the requirements in
Article 45(1) and (3) of the Directive to auditors and
audit
recognised as
from third countries
equivalent.

the audit regulation of

In addition,

concerned.

entities

(9)

in this Decision are in
The measures provided for
accordance with the opinion of the Audit Regulatory
Committee,

HAS ADOPTED THIS DECISION:

Article 1

or

accounts,

consolidated

that Directive,

1. Member States shall not apply Article 45 of Directive
2006/43/EC in relation to audit reports concerning annual
accounts
in
referred
Article 45(1) of
financial years starting
during the period from 29 June 2008 to 1 July 2010, which
are issued by auditors or audit entities from the third countries
referred to in the Annex to this Decision, in cases where the
third-country auditor or audit entity concerned provides the
competent authorities of
the
following:

the Member State with all of

for

to

as

(d) a description of the internal quality control system of the

audit entity;

(e) an indication of whether and when the last quality
assurance review of the auditor or audit entity was carried
out and necessary information about the outcome of the
review. Where information about the outcome of the last
quality assurance review is not public and such information
cannot directly be provided by the competent authorities of
the concerned third country, the competent authorities of
Member States shall treat such information on a confidential
basis.

2. Member States shall ensure that the public is informed
about
the name and address of auditors and audit entities
concerned from the third countries referred to in the Annex
to this Decision and about the fact that those third countries are
not yet recognised as equivalent for the purposes of Directive
2006/43/EC. For these purposes, the competent authorities of
Member States referred to in Article 45 of the Directive may
also register the auditors and audit entities from the third
countries referred to in the Annex.

3.
Notwithstanding paragraph 1, Member States may apply
their investigations and penalties systems to the auditors and
audit entities from the third countries referred to in the Annex.

4.
Paragraph 1 shall be without prejudice to cooperative
reviews between the
arrangements on quality
assurance
competent authorities of a Member State and the competent
authorities of a third country referred to in the Annex
provided that such an arrangement meets all
the following
criteria:

(a)

it includes carrying out quality assurance reviews on the
basis of equality of treatment;

(b) it has been communicated in advance to the Commission;

(a)

the name and address of
concerned and information about its legal structure;

the auditor or audit entity

(c)

it does not pre-empt any Commission decision under
Article 47 of Directive 2006/43/EC.

L 202/72

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Official Journal of the European Union

31.7.2008

Article 2

The Commission shall, at the latest within two years, review the
situation of the third countries referred to in the Annex. In
particular, the Commission shall verify whether the competent
administrative authorities of those third countries referred to in
the Annex for which no equivalence decisions have been made
by the Commission yet have made a public commitment to the
Commission to set up public oversight and quality assurance
systems on the basis of the following principles:

(c)

their operation is transparent and ensures that the outcome
of quality assurance reviews is reliable;

(d) they are supported by investigations and penalties in an

effective way.

Article 3

This Decision is addressed to the Member States.

(a)

the systems are independent from the audit profession;

Done at Brussels, 29 July 2008.

(b) they

ensure

adequate oversight

for

audits of

listed

companies;

For the Commission

Charlie McCREEVY
Member of the Commission

31.7.2008

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Official Journal of the European Union

L 202/73

ANNEX

LIST OF THIRD COUNTRIES

Argentina

Australia

Bahamas

Bermudas

Brazil

Canada

Cayman Islands

Chile

China

Croatia

Guernsey, Jersey, Isle of Man

Hong Kong

India

Indonesia

Israel

Japan

Kazakhstan

Malaysia

Mauritius

Mexico

Morocco

New Zealand

Pakistan

Russia

Singapore

South Africa

South Korea

Switzerland

Taiwan

Thailand

Turkey

Ukraine

United Arab Emirates

United States of America