Company Law Reform Bill [HL]

Paragraph 9 of Schedule 11 is a restatement of paragraph 8 of Schedule 12 to the 1989 Act and implements the eigth company law directive on audit. It requires persons who wish to qualify as a statutory auditor to carry out at least three years’ practical training given by persons approved by the body offering the qualification. The training must be given by persons who have given undertakings as to the adequacy of the training and who are subject to supervision by the body offering the qualification or another body. The undertakings are required whether it is training provided in the UK or that provided in another country and recognised by the Secretary of State. This meets the directive’s requirement that persons must provide adequate guarantees regarding their ability to provide practical training. These undertakings are an essential element in maintaining a high quality of UK audit qualifications. Recognised supervisory bodies do receive undertakings from their approved training organisations. I turn to the question of how the practical training requirements work. Under the requirements of the Bill, a person is eligible for appointment as a statutory auditor in the UK only if he or she holds an appropriate qualification and is subject to appropriate supervision in the UK. There are currently five UK bodies, called recognised qualifying bodies, whose audit qualifications have been recognised by the Secretary of State. I am sure that the noble Baroness knows them well: the Institute of Chartered Accountants in England and Wales; its Scottish and Irish counterparts; the Association of Chartered Certified Accountants and the Association of International Accountants. In order to be recognised to offer an audit qualification, an RQB must demonstrate how its rules restrict qualification to persons who have completed three years or more practical training and state how much of that training is required to be spent in company audit work as defined in paragraph 9(1) of Schedule 11. In addition, any rules or requirements which permit the training in company audit work to be spent in the auditing of companies under the law of a country or territory outside the UK, the country or territory in question must be specified and reasons given for regarding their law and practice with respect to the audit of company accounts as similar to that in the UK.