Companies (Jersey) Law 1991: Discretionary Authorisation of Auditors of Companies that are not Market Traded Companies

Summary

This JFSC policy statement explains how the Commission exercises its discretion under Article 113D(6) of the Companies (Jersey) Law 1991 to authorise an auditor to audit a Jersey company that is not a market traded company, where that auditor does not meet the standard qualification criteria in Article 102. It sets out the circumstances in which authorisation is ordinarily expected to be granted, how to apply, and the conditions the JFSC typically attaches.

• Ordinary grounds for authorisation: The JFSC will normally authorise an auditor approved by an EEA competent authority under the EU Statutory Audit Directive, registered with a competent authority of a G7 country or an EU Equivalent Jurisdiction, or a member of one of the Big Four firms.
• Responsible Individual competence: The JFSC must also be satisfied that the Responsible Individual signing the audit report is conversant with the relevant GAAP, GAAS, and Jersey statutory and regulatory requirements applicable to auditors.
• Public interest override: Authorisation may be refused even where the above criteria are met if it would likely harm public protection from auditor misconduct, Jersey's reputation, Jersey's economic interests, or the fight against financial crime.
• Application process: Applications must use the JFSC's published application form and, where relying on EEA/G7/equivalent-jurisdiction status, must include evidence of the auditor's approval or registration.
• Jersey guidance requirement: Before signing an audit report, the Responsible Individual is ordinarily expected to seek guidance from a Jersey-based qualified auditor on applicable Jersey requirements and to have due regard to that guidance.
• Conditions on firms: Where the auditor is a firm, authorisation is typically conditioned to name the specific individual permitted to sign audit reports and to require written confirmation to the JFSC, in confidence, that the Responsible Individual had due regard to the Jersey-based auditor's guidance, as soon as practicable after signing.
• Appeal rights: A refusal to authorise, or the imposition of conditions or limitations, may be appealed to Jersey's Royal Court under Article 113D(16), but only on the ground that the JFSC's action was unreasonable in the circumstances.

Key obligations

• An auditor relying on EEA approval, G7/EU Equivalent Jurisdiction registration, or Big Four membership must apply to the JFSC for discretionary authorisation using the published application form before auditing a non market traded Jersey company if it does not meet standard qualification criteria
• Applications relying on EEA approval or G7/EU Equivalent Jurisdiction registration must be accompanied by evidence of that approval or registration
• The Responsible Individual should, prior to signing an audit report, request guidance from a Jersey based qualified auditor on relevant Jersey statutory and regulatory requirements and have due regard to that guidance
• Where an authorised audit firm is subject to a condition requiring confirmation of guidance sought, the firm must provide written confirmation to the JFSC, in confidence, as soon as practicable after signing the audit report, that the Responsible Individual had due regard to the Jersey based auditor's guidance
• Audit firms authorised under Article 113D(6) must ensure that audit reports are signed only by the named individual approved by the JFSC as conversant with the relevant GAAP, GAAS and Jersey legislative and regulatory environment

Applies to

auditors of Jersey companies, audit firms, companies that are not market traded companies