Eligibility Criteria for Statutory Auditors
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Since the Eligibility Criteria were first issued in June 2016, the FRC has made three sets of changes to the criteria. Firstly, with effect from 31 December 2020, the criteria were amended to ensure consistency with legislative changes required as a result of UK’s exit from the EU. These are changes to the categories of person who may be eligible for appointment as UK statutory auditors, in particular by removing or time-limiting the eligibility of EEA auditors and EEA audit firms.
Secondly, with effect from 5 December 2022, the criteria were amended to add additional criteria for statutory auditors of PIEs in Part B whereby such individuals and firms must comply with the FRC’s Public Interest Entity (PIE) Auditor Registration Regulations. We also took the opportunity to clarify the meaning of “majority” where a firm’s constitution specifies a higher percentage than 50% for decision making. Please see footnotes to paragraphs 6 (b) and 6 (c) of the criteria. The FRC’s interpretation and application of paragraphs 6(b) and 6(c) is also explained more fully in a separate position statement issued in August 2024.
Thirdly, the criteria are amended for legislation that implements international agreements that recognise professional qualifications. These agreements are the 2021 Free Trade Agreement between the UK and the EEA EFTA states regarding the mutual recognition of professional qualifications and the UK-Switzerland Recognition of Professional Qualifications Agreement. The qualifications of auditors in Norway, Iceland, Liechtenstein (on and effective from 1 December 2023) and Switzerland (on and effective from 1 January 2025) are now appropriate qualifications for the purpose of eligibility to be a UK statutory auditor.