Consultation Paper No.7 2018 - Crown Dependencies' Audit Rules and Guidance

Summary

This is a joint consultation paper issued by the JFSC, Guernsey Registry and the Isle of Man Financial Services Authority proposing amendments to the Crown Dependencies' Audit Rules and Guidance, which govern audits of Market Traded Companies (MTCs) incorporated in the Crown Dependencies. The paper explains the proposed changes, invites stakeholder feedback, and sets out a proposed effective date. It is a draft consultation, not yet binding.

• Main proposal: Amend the definition of Ethical Standards so that all MTCs are treated as Public Interest Entities (PIEs) under the Rules, rather than only those meeting the Directive 2006/43/EC definition of a PIE.
• Purpose: The change is intended to preserve the European Commission's equivalence decision for oversight of Recognised Auditors auditing Crown Dependencies MTCs, particularly given Brexit-related uncertainty.
• Effective date: The Proposed Rules would apply to audits of financial periods commencing on or after 6 April 2019, with early adoption permitted but not compulsory.
• Other minor changes: Various terminology updates, gender-neutral drafting, cross-referencing to UK standards, widened definition of working papers, and making annual returns and inspection visits a regulatory requirement (summarised in Appendix A).
• Who is affected: All Recognised Auditors that audit MTCs incorporated in the Crown Dependencies.

The Competent Authorities invited written comments on the proposals, including two specific consultation questions on the Ethical Standards definition change and the proposed effective date, with responses due by 14 December 2018. Feedback and the final Rules were expected to be published in Q1 2019.

Key obligations

• Interested parties wishing to comment must submit written responses to the JFSC or Jersey Finance Limited by 14 December 2018
• Respondents that are industry bodies or associations must provide a summary of the individuals or institutions they represent when commenting
• Once the Proposed Rules take effect, Recognised Auditors would need to apply PIE-level Ethical Standards to all audits of Market Traded Companies incorporated in the Crown Dependencies

Applies to

Recognised Auditors, Market Traded Companies (MTCs)

Deadlines

• 14 December 2018: Deadline for interested parties to submit written comments on the consultation proposals to the JFSC or Jersey Finance Limited
• financial periods commencing on or after 6 April 2019: Proposed effective date for the updated Crown Dependencies' Audit Rules and Guidance (Proposed Rules), including the revised Ethical Standards definition
• Quarter 1 of 2019: Expected publication of consultation feedback and the final version of the Rules