While UK companies operating solely within the UK would not see any changes in auditing rules, there would be additional requirements to the audits of UK companies operating overseas.
The documents said that a UK audit firm wishing to own or be part of the management body of an EU firm would no longer be recognised among the majority of EU qualified owners or managers.
Moreover, businesses with a branch in the EU will become third country businesses and will be required to comply with specific accounting and reporting requirements in the country where they operate. Companies listed on an EU market may also be required to provide additional assurance to the relevant listing authority.
The UK’s accountancy bodies responded together. ICAEW, along with ACCA, the Chartered Accountants Ireland and The Institute of Chartered Accountants of Scotland, stressed the “critical importance” of achieving a deal to “avoid the costly and disruptive contingency measures” the government had outlined.
They said it was required to finalise “as a matter of urgency” the withdrawal agreement and transitional arrangements until the end of 2020.
The bodies called on the government to pursue a similar type of UK-EU regulatory interaction for the financial services sector. UK-EU cooperation on audit regulation was one of the requests, in order to avoid the risk of business requiring more than one audit report.
They also called for it to enable the mobility of professionals, maintaining open access for the take up of accountancy training and qualifications.
Comparable professional recognition arrangements will also be essential to avoid costly and time consuming requalification, they warned, as well as the retention of joint UK-EU ownership of audit firms.
Moreover, they requested mutual recognition of appointments and judgments in insolvencies to avoid duplicative court processes and to address the level of cooperation between the UK and Ireland.