APAK - AOC || Foreign Auditors

Introduction Registration

Registration of third country auditors

Background

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/EWR
should be entered on a public register, and subject to a level of regulation equivalent to the minimum required for EU/EEA auditors.

Article 45 of the Audit Directive sets out regulatory requirements for the registration of third country audit entities, for continuing oversight including the external monitoring of the quality of their audit work, and for investigations and sanctions.

Article 46 allows Member States to derogate from these requirements where the third country audit entity is subject to a system of public oversight, inspections and investigations which the European Commission has recognised as equivalent, or where the third country audit entity is within transitional arrangements adopted by the European Commission

Deciding on equivalence is a matter for the European Commission and Member States. There is a work programme in place to assess the equivalence of third countries’ regulatory systems. To date no third country regulatory system has been recognised as equivalent by the European Commission.

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 Member States with specific information. Member States may register such audit firms to this end. The transitional period applies in respect of audits of annual accounts for financial years starting between 29 June 2008 and 1 July 2010. The Commission Decision is applicable to third country audit entities whose “home country” is one of the following: Argentina, Australia, Bahamas, Bermudas, Brazil, Canada, Cayman Islands, Chile, China, Croatia, Guernsey, Jersey, Isle of Man, Hong Kong, India, Indonesia, Israel, Japan, Kazakhstan, Malaysia, Mauritius, Mexico, Morocco, New Zealand, Pakistan, Russia, Singapore, South Africa, South Korea, Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Arab Emirates and United States of America.

EU auditor oversight bodies, with the support of the European Commission, recognise the importance of putting in place practical arrangements for third country audit firms that are not over-burdensome and follow as far as possible a common approach across the EU. To this end, the members of the European Group of Auditors' Oversight Bodies (EGAOB) have worked together with the objective that third country audit entities will be able to use application forms and guidance material that is as similar as national regulatory systems permit.

The Auditor Oversight Commission is the competent authority for registration of third country auditors in German, also in accordance with the transitional decision. For this purpose, application forms and guidance material for registration have been developed that follow as closely as possible the common material agreed amongst Member states within the EGAOB. A third country audit entity that needs to register in more than one Member State will still have to apply separately for each registration but the form of application should in most respects be similar.

The further intention is that Member States:

will work closely together in considering applications for registration to minimise the chance that different decisions on registration will be taken in different Member States. However, registration remains necessary in each Member State where a non-EU company's securities are admitted to trading on a regulated market;
will, in the longer term, work closely together, and with third-country audit regulators, to minimise overlapping or duplicative regulatory requirements, for example on external inspections of third country audit entities.

Who must register as third country auditor in Germany?

An audit entity must register if it audits the annual or consolidated accounts of a company incorporated outside the European Union/European Economic Area whose transferable securities are admitted to trading on a regulated market in Germany. This refers to an “issuer” as defined in Article 2 (1) (d) of Directive 2004/109/EC, except when:

the company is an issuer exclusively of debt securities admitted to trading on a regulated market in Germany within the meaning of Article 2(1)(b) of Directive 2004/109/EC, the denomination per unit of which is at least EUR 50 000 or, in case of debt securities denominated in another currency, equivalent, at the date of issue, to at least EUR 50 000; or
the company is an issuer exclusively of units issued by collective investment undertakings other than closed-end type, or units acquired or deposited of in such collective investment undertakings within the meaning of Article 1 (2) of Directive 2004/109/EC.

How To Apply

A third country audit entity must decide whether to apply in accordance with the requirements of the Commission Decision on transitional arrangements (Form A) or – if it does not qualify for the transitional arrangements – in accordance with the full registration requirements of Article 45 or § 134 of the Wirtschaftsprüferordnung respectively (Form B). Please read the detailed guidance notes and forms to help you decide. A full guidance comes with each form.

To apply for registration, a third country audit entity must complete and submit the following forms, including all applicable annexes indicated in the forms:

Form A (DE) can only be used by a third country audit entity whose “home country” is one of the third countries to which the European Commission has granted a transitional period and who is able to meet the conditions laid down in the Commission Decision.

Form B (DE) must be used by any other applicants.

You can download the relevant forms from this website, complete them electronically, and send them to the Auditor Oversight Commission by e-mail and by post.

The Wirtschaftsprüferkammer will inform the applicant about the registration or rejection of the application. The necessary information about the registered entity will be published by the Wirtschaftsprüferkammer.

Registration fee

For registration under the transitional decision, a fee of 525 Euro is payable on submission of the application form. For detailed information on the payment please refer to the guidance for the relevant form (Frequently Asked Questions, “FAQs”).

Forms and guidance

Below you will find English versions of the application forms including further guidance. The German versions can be downloaded here. Please refer to the FAQs for further information on the language requirements for submitting documents.