Article 45 of the EU Statutory Audit Directive (“Directive 2006/43/EC”) requires that statutory audit entities and auditors from third countries providing audit services to companies incorporated outside the EU/EEA whose transferable securities are admitted to trading on a regulated market in the EU/EEA should be entered on a public register, and subject to the systems of public oversight, quality assurance, investigation and penalties of a Member State.
Article 46 of Directive 2006/43/EC allows Member States to derogate from these requirements where the third country audit entity is subject to a system of public oversight, quality assurance, investigations and penalties which the European Commission has recognized as equivalent.
In view of further assessments regarding the systems of public oversight, quality assurance, investigations and penalties of third countries, the Commission Decision 2008/627/EC of 29 July 2008 exempts for a transitional period certain third country audit entities from the requirements of Article 45, on the condition that they provide relevant Members States with specific information.
The transitional period applies in respect of audits of annual accounts for financial years starting between 2 July 2010 and 31 July 2018, and is applicable to the third country audit entities whose "home country" is one of the following: Bermuda, Cayman Islands, Egypt and Russia.
This list of third country audit entities has been updated by the European Commission on 25 July 2016 (Implementing Decision 2016/1223/EU).
The third countries whose public oversight, quality assurance, investigation and penalty systems for auditors and audit entities have been considered according to European requirements and that have been granted equivalence status are:
o Australia, Canada, China, Croatia, Japan, Singapore, South Africa, South Korea and Switzerland (for audit activities concerning the annual and consolidated accounts for financial years starting from 2 July 2010; Decision 2011/30/EU)
o Abu Dhabi, Brazil, Dubai International Financial Center, Guernsey, Ile of Man, Indonesia, Jersey, Malaysia, Taiwan and Thailand (for audit activities concerning the annual and consolidated accounts for financial years starting from 1 August 2012; Implementing Decision 2013/288/EU)
o Mauritius, New Zealand and Turkey (for audit activities concerning the annual and consolidated accounts for financial years starting from 1 August 2016, Implementing Decision 2016/1223/EU)
o United States of America, until 31 July 2022 (Implementing Decision 2016/1155/EU)