HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"L 15/12
EN
Official Journal of the European Union
20.1.2011
DECISIONS
COMMISSION DECISION
of 19 January 2011
on the equivalence of certain third country public oversight, quality assurance, investigation and
penalty systems for auditors and audit entities and a transitional period for audit activities of
certain third country auditors and audit entities in the European Union
(notified under document C(2011) 117)
(Text with EEA relevance)
(2011/30/EU)
THE EUROPEAN COMMISSION,
relation to audit reports concerning the annual or
consolidated accounts for financial years starting during
the period from 29 June 2008 to 1 July 2010.
Having regard to the Treaty on the Functioning of the European
Union,
(3) The
Commission
has
carried
out
assessments
of
the
Having regard to Directive 2006/43/EC of the European
public oversight, quality assurance, investigation and
Parliament and of the Council of 17 May 2006 on statutory
penalty systems for auditors and audit entities of the
audits of annual accounts and consolidated accounts, amending
third countries and territories listed in the Annex to
Council Directives 78/660/EEC and 83/349/EEC and repealing
Decision 2008/627/EC. The assessments were carried
Council Directive 84/253/EEC ( 1 ), and in particular Article 46(2)
out with the assistance of the European Group of
thereof,
Auditors’ Oversight Bodies. The principles governing
the public oversight, quality assurance, investigation and
penalty systems for auditors and audit entities of those
third countries and territories were assessed in the light
of the criteria set out in Articles 29, 30 and 32 of
Whereas:
Directive 2006/43/EC which govern the public oversight,
quality assurance, investigation and penalty systems for
auditors and audit firms of the Member States. The
ultimate objective of cooperation between Member
States and third country systems of public oversight,
(1) Under
Article
45(1)
of
Directive
2006/43/EC
the
quality assurance, investigation and penalty for auditors
competent authorities of the Member States are
and audit entities should be to reach mutual reliance on
required to register all auditors and audit entities that
each other’s oversight systems based on the equivalence
provide audit reports concerning the annual or
of the systems.
consolidated accounts of certain companies incorporated
outwith the Community whose transferable securities are
admitted to trading on a regulated market within the
Community. Article 45(3) of Directive 2006/43/EC
requires Member States to subject such auditors and
audit entities to their systems of public oversight,
quality assurance, investigations and penalties.
(4) Following
such
assessments,
it
appears
that
Australia,
Canada, China, Croatia, Japan, Singapore, South Africa,
South Korea and Switzerland have public oversight,
quality assurance, investigation and penalty systems for
(2) Commission
Decision
2008/627/EC
of
29
July
2008
auditors and audit entities that operate under similar
concerning a transitional period for audit activities of
rules to those set out in Articles 29, 30 and 32 of
certain third country auditors and audit entities ( 2 )
Directive 2006/43/EC. Therefore, it is appropriate to
allowed the auditors and audit entities from the third
consider the public oversight, quality assurance, investi
countries listed in the Annex to that Decision to
gation and penalty systems for auditors and audit entities
continue their activities in the European Union in
of those third countries as equivalent to the public
oversight, quality assurance, investigation and penalty
( 1 ) OJ L 157, 9.6.2006, p. 87.
systems for auditors and audit firms of the Member
( 2 ) OJ L 202, 31.7.2008, p. 70.
States.

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EN
20.1.2011 Official
Journal
of
the
European
Union L
15/13
(5) With
regard
to
South
Africa,
its
legislation
requires
the (8) Abu
Dhabi,
Brazil,
the
Dubai
International
Financial
prior consent of the auditor or audit firm for the transfer
Centre, Guernsey, Hong Kong, India, Indonesia, Isle of
of information from the competent authorities in South
Man, Jersey, Malaysia, Mauritius, Russia, Taiwan,
Africa to the competent authorities in Member States.
Thailand, and Turkey have established or are in the
That requirement for prior consent may present
process of establishing public oversight, quality
difficulties in the effective implementation of
assurance, investigation and penalty systems for
Article 46(1) of Directive 2006/43/EC. Therefore, until
auditors and audit entities. However, information about
the necessary changes are made in South Africa’s legis
the functioning and the rules governing such systems is
lation, the competent authorities of Member States
not sufficient. In order to carry out a further assessment
should require that auditors and audit entities waive
for the purpose of taking a final equivalence decision in
their right to prior consent when registering auditors
respect of such systems, there is a need to obtain add-
and audit entities that provide audit reports of
itional information from those third countries and terri
companies incorporated in South Africa.
tories. Therefore, it is appropriate to extend the transi
tional period granted by Decision 2008/627/EC in
respect of the auditors and audit entities that provide
audit reports concerning the annual or consolidated
accounts of companies incorporated in those third
countries and territories.
(6)
The United States of America have a public oversight,
quality assurance, investigation and penalty system for
auditors and audit entities that operates under similar
rules to those set out in Articles 29, 30 and 32 of
Directive 2006/43/EC. However, the competent
authorities in the United States of America do not
consider that the ultimate objective of cooperation with
(9) Although
Egypt
was
not
included
in
Decision
Member States is to reach mutual reliance with the
2008/627/EC, since then it has established a system of
competent authorities for public oversight, quality
public oversight, quality assurance, investigation and
assurance, investigation and penalty systems for
penalties for auditors and audit entities. In order to
auditors and audit firms of the Member States. As long
carry out a further assessment for the purpose of
as there is no mutual reliance, the provisions of
taking a final equivalence decision in respect of Egypt,
Article 46(1) cannot be fully applied on a permanent
there is a need to obtain additional information from
basis by Member States for the auditors and audit
that third country. Therefore, it is appropriate to
entities that provide audit reports concerning the
include in the transitional period the auditors and audit
annual or consolidated accounts of companies in-
firms that provide audit reports concerning the annual or
corporated in the United States of America. Therefore,
consolidated accounts of companies incorporated in
the public oversight, quality assurance, investigation and
Egypt.
penalty system for auditors and audit entities of the
United States of America should be reviewed for the
purpose of assessing the progress made towards
reaching mutual reliance. For those reasons, this
Decision should be limited in time and cease to apply
on 31 July 2013 in respect of the public oversight,
quality assurance, investigation and penalty systems for
auditors and audit entities of the United States of
(10) Bermuda,
Cayman
Islands,
Israel
and
New
Zealand
do
America.
not have a public oversight, quality assurance, investi
gation and penalty system for auditors and audit
entities in place yet. However, those third countries and
territories made a clear public commitment to the
Commission with a concrete action plan to establish a
public oversight, quality assurance, investigation and
penalty system for auditors and audit entities under
(7) Once
the
Commission
has
taken
a
decision
recognising
equivalent rules to those set out in Articles 29, 30 and
that the public oversight, quality assurance, investigation
32 of Directive 2006/43/EC. Therefore, it is appropriate
and penalty system for auditors and audit entities of a
to extend the transitional period granted by Decision
third country or territory is equivalent for the purpose of
2008/627/EC in respect of the auditors and audit
Article 46(1) of Directive 2006/43/EC, Member States
entities that provide audit reports concerning the
may disapply or modify on the basis of reciprocity the
annual or consolidated accounts of companies incor
requirements of Article 45(1) and (3) in relation to the
porated in those third countries and territories. Never
auditors and audit entities of that third country or
theless, the Commission should review the progress
territory. The conditions under which the requirements
made in 2011 by those countries and territories in
of Article 45(1) and (3) will be disapplied or modified
enacting legislation to establish a public oversight,
must be set in a cooperative arrangement as referred to
quality assurance, investigation and penalty system for
in Article 46(3) of the Directive 2006/43/EC between the
auditors and audit entities and assess the need to
Member State and the relevant third country or territory
shorten the transitional period as regards those third
and communicated to the Commission.
countries and territories.

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L 15/14
EN
Official Journal of the European Union
20.1.2011
(11) The
auditors
and
audit
entities
that
provide
audit
reports
which is not admitted to trading in the third country or
concerning the annual or consolidated accounts of
territory where it is incorporated, Member States should
companies incorporated in Argentina, Bahamas, Chile,
cooperate with the third country or territory concerned
Kazakhstan, Morocco, Mexico, Pakistan and Ukraine
to ensure that all the audit engagements related to the
benefited from the transitional period granted by
financial statements of such a company are covered by a
Decision 2008/627/EC. Since then, they did not
public oversight, quality assurance, investigations and
provide information regarding their audit regulatory
penalties system. In a case where such audit engagements
and oversight systems. Under these circumstances, it
are undertaken by an auditor or audit entity of another
appears that those third countries are not willing to
Member State, Member States should cooperate to ensure
continue towards having their audit regulation recognised
that the audit engagement is included in the scope of one
by the Commission as equivalent to the public oversight,
of their public oversight, quality assurance, investigations
quality assurance, investigation and penalty systems for
and penalty systems.
auditors and audit entities of the Member States.
Therefore, the transitional period granted to them by
Decision 2008/627/EC should not be extended in
respect of the auditors and audit entities that provide
(15) During the transitional period, equivalence decisions
audit reports concerning the annual or consolidated
should not be taken by Member States at national
accounts of companies incorporated in those third
level. The fact that auditors and audit entities that
countries.
provide audit reports concerning the annual or
consolidated accounts of companies incorporated in the
third countries and territories listed in the Annex to this
Decision may, under this Decision, continue their audit
(12) In order to protect investors, auditors and audit entities
activities with regard to companies referred to in
that provide audit reports concerning the annual or
Article 45 of Directive 2006/43/EC, should not prevent
consolidated accounts of companies incorporated in the
Member States from establishing cooperative
third countries listed in the Annex to this Decision
arrangements on individual quality assurance reviews
should be able to continue their audit activities during
between the competent authorities of a Member State
the transitional period in the European Union without
and the competent authorities of a third country or
being registered under Article 45 of Directive
territory.
2006/43/EC only if they provide the required
information. Provided they give the information, those
auditors and audit entities should be able to continue
their activities in relation to audit reports concerning
(16) The
Commission
should
monitor
the
operation
of
the
annual or consolidated accounts for financial years
transitional arrangements and examine the progress
starting during the period from 2 July 2010 to 31 July
made by the third countries and territories to which a
2012. This Decision should not affect Member States’
transitional period was granted or extended. At the end
rights to apply their investigation and penalty systems
of the transitional period, the Commission may decide
in respect of such auditors and audit entities.
on the equivalence of the public oversight, quality
assurance, investigations and penalties systems for
auditors and audit entities of the third countries and
territories concerned. The Commission should review
(13) Where
a
company
incorporated
in
one
of
the
third
whether the Member States encountered difficulties in
countries or territories listed in Article 1 of this
obtaining recognition as equivalent by the third
Decision whose transferable securities are admitted to
countries and territories concerned by this Decision in
trading on a regulated market of a Member State, but
relation to the public oversight, quality assurance and
which is not admitted to trading in the third country or
investigation and penalty systems for auditors and audit
territory where it is incorporated, Member States should
firms of the Member States.
ensure that all the audit engagements related to the
financial statements of such a company are covered by
the cooperative arrangements concluded with the third
country or territory concerned to determine which public
(17) The measures provided for in this Decision are
oversight, quality assurance, investigations and penalties
in accordance with the opinion of the Committee
system will apply to the auditors of such companies. In a
established by Article 48(1) of Directive 2006/43/EC,
case where such audit engagements are undertaken by an
auditor or audit entity of another Member State, Member
States should cooperate to ensure that the audit
engagement is included in the scope of one of their
HAS ADOPTED THIS DECISION:
public oversight, quality assurance, investigations and
penalty systems.
Article 1
(14) Where
a
company
incorporated
in
one
of
the
third
For the purpose of Article 46(1) of Directive 2006/43/EC, the
countries or territories listed in the Annex to this
public oversight, quality assurance, investigation and penalty
Decision whose transferable securities are admitted to
systems for auditors and audit entities of the following third
trading on a regulated market of a Member State, but
countries shall be considered equivalent to the public oversight,

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EN
20.1.2011 Official
Journal
of
the
European
Union L
15/15
quality assurance, investigation and penalty systems for auditors
2. Member States shall ensure that the public is informed
and audit firms of the Member States in relation to audit
about the name and address of auditors and audit entities
activities concerning the annual or consolidated accounts for
that provide audit reports concerning the annual or
financial years starting from 2 July 2010:
consolidated accounts of companies incorporated in the third
countries and territories listed in the Annex to this Decision and
1. Australia
about the fact that the public oversight, quality assurance, inves
tigation and penalty systems of those countries and territories
are not yet recognised as equivalent under Article 46(2) of
2. Canada
Directive 2006/43/EC. For these purposes, the competent
authorities of Member States referred to in Article 45 of
3. China
Directive 2006/43/EC may also register the auditors and audit
entities that carry out audits of the annual or consolidated
accounts of companies incorporated in the third countries
4. Croatia
and territories listed in the Annex to this Decision.
5. Japan
3. Notwithstanding
paragraph
1,
Member
States
may
apply
their investigation and penalty systems to the auditors and audit
6. Singapore
entities that carry out audits of the annual or consolidated
accounts of companies incorporated in third countries and
territories listed in the Annex.
7. South Africa
8. South Korea
4. Paragraph
1
shall
be
without
prejudice
to
cooperative
arrangements on quality assurance reviews between the
competent authorities of a Member State and the competent
9. Switzerland
authorities of a third country or territory listed in the Annex
provided that such an arrangement meets all the following
10. The United States of America.
criteria:
Article 2
(a) it includes carrying out quality assurance reviews on the
1. Member
States
shall
not
apply
Article
45
of
Directive
basis of equality of treatment;
2006/43/EC in relation to auditors and audit entities that
provide audit reports concerning the annual or consolidated
accounts of companies incorporated in the third countries
(b) it has been communicated in advance to the Commission;
and territories listed in the Annex to this Decision, as referred
to in Article 45(1) of that Directive, for financial years starting
(c) it does not pre-empt any Commission decision under
during the period from 2 July 2010 to 31 July 2012, in cases
Article 47 of Directive 2006/43/EC.
where the auditor or audit entity concerned provides the
competent authorities of the Member State with all of the
following:
Article 3
The Commission shall monitor the situation of the third
(a) the name and address of the auditor or audit entity
countries and territories listed in the Annex. In particular, the
concerned and information about its legal structure;
Commission shall monitor whether the competent adminis
trative authorities of those third countries and territories listed
(b) where the auditor or the audit entity belongs to a network,
in the Annex that made a public commitment to the
a description of the network;
Commission to establish public oversight, quality assurance,
investigation and penalty systems for auditors and audit
entities have established such systems, on the basis of the
(c) the auditing standards and independence requirements
following principles:
which have been applied to the audit concerned;
(d) a description of the internal quality control system of the
(a) the systems are independent from the audit profession;
audit entity;
(b) they ensure adequate oversight for audits of listed
(e) an indication of whether and when the last quality
companies;
assurance review of the auditor or audit entity was carried
out and, unless this information is being provided by the
third country competent authority, the necessary
(c) their operation is transparent and ensures that the outcome
information about the outcome of the review. Where the
of quality assurance reviews is reliable;
necessary information about the outcome of the last quality
assurance review is not public, the competent authorities of
Member States shall treat such information on a confidential
(d) they are supported by investigations and penalties in an
basis.
effective way.

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L 15/16
EN
Official Journal of the European Union
20.1.2011
With regard to Bermuda, Cayman Islands, Israel and New
Article 5
Zealand, the Commission shall, in particular, review the
progress made in enacting legislation to establish a public
This Decision is addressed to the Member States.
oversight, quality assurance, investigation and penalty system
for auditors and audit entities in 2011. Where necessary, the
Commission shall amend the Annex to this Decision
Done at Brussels, 19 January 2011.
accordingly.
For the Commission
Article 4
Michel BARNIER
Point 10 of Article 1 shall cease to apply on 31 July 2013.
Member of the Commission
ANNEX
LIST OF THIRD COUNTRIES AND TERRITORIES
Abu Dhabi
Bermuda
Brazil
Cayman Islands
The Dubai International Financial Centre
Egypt
Guernsey
Hong Kong
India
Indonesia
Isle of Man
Israel
Jersey
Malaysia
Mauritius
New Zealand
Russia
Taiwan
Thailand
Turkey

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