Companies (Jersey) Law 1991: Recognised Auditors

Summary

This is JFSC guidance explaining Jersey's recognized auditor regime under Part 16 of the Companies (Jersey) Law 1991. It applies to auditors of market traded companies (MTCs), meaning companies whose transferable securities are admitted to trading on a regulated market, and sets out the criteria to become a recognized auditor, ongoing statutory duties, and the oversight structure involving the JFSC, the ICAEW and the FRC.

• Who needs a recognized auditor: A market traded company (MTC) must appoint an auditor that is a recognized auditor; certain issuers of large-denomination debt securities and open-ended investment companies are excluded from the MTC definition.
• Qualification criteria: To be entered on the Register of Recognized Auditors, a firm or individual must meet the Article 102 definition of auditor, be bound by rules governing audits of MTCs (the Crown Dependencies Audit Rules, CDAR), and make a successful application to the JFSC with the published fee.
• Application and registration: Applicants apply to the JFSC in the manner and form published, paying the application fee; the JFSC may refuse registration if not satisfied the auditor is competent, and may impose conditions or limitations on registration.
• Notification of material change: Under Article 111(16), a recognized auditor must notify the JFSC of any material change to information supplied, including changes to the list of MTCs audited, as soon as practicable and in any event within one month, or commit a criminal offence.
• Annual written confirmation: Under Article 4 of the Companies (Audit) (Jersey) Order 2010, a recognized auditor must provide the JFSC with written confirmation that its register entry remains correct, or commit a criminal offence.
• CDAR compliance: Recognized auditors must comply with the CDAR issued by the ICAEW, including notifying the ICAEW of changes to the list of MTCs audited (CDAR rule 2.09.1); breach of the CDAR can lead to disciplinary action and may ground suspension or revocation of registration under Article 111(5).
• Oversight bodies: The ICAEW acts as the monitoring unit for Jersey MTC audits, with the FRC providing independent oversight of the ICAEW and direct monitoring of major MTC audits through its Audit Quality Review team; this framework is set out in a June 2015 MoU.
• Discretionary authorisation: The JFSC may grant discretionary authorisation to audit firms auditing non-MTC Jersey companies, based on published assessment criteria, though these firms are not subject to the JFSC's oversight, monitoring or inspection regime.

The regime underpins Jersey's EU equivalence status for third-country auditor oversight, recognized by European Commission Decision (EU) 2016/1010. This guidance is informational and consolidates existing statutory requirements; it does not itself amend the underlying law.

Key obligations

• A market traded company must appoint an auditor that is a recognized auditor entered on the Register of Recognized Auditors.
• An auditor applying for recognition must agree to be bound by and comply with the Crown Dependencies Audit Rules (CDAR).
• A recognized auditor must notify the JFSC of any material change to information supplied (including changes to the list of MTCs audited) as soon as practicable and in any event within one month of the change, under Article 111(16), on pain of criminal offence.
• A recognized auditor must notify the ICAEW of any changes to the list of MTCs audited under CDAR rule 2.09.1.
• A recognized auditor must provide the JFSC with written confirmation that its register entry remains correct, as required by Article 4 of the Companies (Audit) (Jersey) Order 2010, on pain of criminal offence.
• A recognized auditor must pay the applicable application fee and annual registration fee to the JFSC, and an annual fee to the ICAEW covering inspection costs.

Applies to

recognized auditors, auditors of market traded companies (MTCs), market traded companies, audit firms seeking discretionary authorisation

Deadlines

• within one month of the material change: Recognized auditor must inform the JFSC of any material change to information supplied under Article 111(16), or commit a criminal offence.