CHAPTER I — Competent authorities
Designation of competent authorities
1. Competent authorities responsible for carrying out the tasks provided for in this Regulation and for ensuring that the provisions of this Regulation are applied shall be designated from amongst the following:
(a)
the competent authority referred to in Article 24(1) of Directive 2004/109/EC;
(b)
the competent authority referred to in point (h) of Article 24(4) of Directive 2004/109/EC;
(c)
the competent authority referred to in Article 32 of Directive 2006/43/EC.
2. By way of derogation from paragraph 1, Member States may decide that the responsibility for ensuring that all or part of the provisions of Title III of this Regulation are applied is to be entrusted to, as appropriate, the competent authorities referred to in:
(a)
Article 48 of Directive 2004/39/EC;
(b)
Article 24(1) of Directive 2004/109/EC;
(c)
point (h) of Article 24(4) of Directive 2004/109/EC;
(d)
Article 20 of Directive 2007/64/EC;
(e)
Article 30 of Directive 2009/138/EC;
(f)
Article 4(1) of Directive 2013/36/EU;
or to other authorities designated by national law.
3. Where more than one competent authority has been designated pursuant to paragraphs 1 and 2, those authorities shall be organised in such a manner that their tasks are clearly allocated.
4. Paragraphs 1, 2 and 3 shall be without prejudice to the right of a Member State to make separate legal and administrative arrangements for overseas countries and territories with which that Member State has special relations.
5. The Member States shall inform the Commission of the designation of competent authorities for the purposes of this Regulation.
The Commission shall consolidate this information and make it public.
Conditions of independence
The competent authorities shall be independent of statutory auditors and audit firms.
The competent authorities may consult experts, as referred to in point (c) of Article 26(1), for the purpose of carrying out specific tasks and may also be assisted by experts when this is essential for the proper fulfilment of their tasks. In such instances, the experts shall not be involved in any decision-making.
A person shall not be a member of the governing body, or responsible for the decision–making, of those authorities if during his or her involvement or in the course of the three previous years that person:
(a)
has carried out statutory audits;
(b)
held voting rights in an audit firm;
(c)
was member of the administrative, management or supervisory body of an audit firm;
(d)
was a partner, employee of, or otherwise contracted by, an audit firm.
The funding of those authorities shall be secure and free from undue influence by statutory auditors and audit firms.
Professional secrecy in relation to competent authorities
The obligation of professional secrecy shall apply to all persons who are or have been employed or independently contracted by, or involved in the governance of, competent authorities or by any authority or body to which tasks have been delegated under Article 24 of this Regulation. Information covered by professional secrecy may not be disclosed to any other person or authority except by virtue of the obligations laid down in this Regulation or the laws, regulations or administrative procedures of a Member State.
Powers of competent authorities
1. Without prejudice to Article 26, in carrying out their tasks under this Regulation, the competent authorities or any other public authorities of a Member State may not interfere with the content of audit reports.
2. Member States shall ensure that the competent authorities have all the supervisory and investigatory powers that are necessary for the exercise of their functions under this Regulation in accordance with the provisions of Chapter VII of Directive 2006/43/EC.
3. The powers referred to in paragraph 2 of this Article shall include, at least, the power to:
(a)
access data related to the statutory audit or other documents held by statutory auditors or audit firms in any form relevant to the carrying out of their tasks and to receive or take a copy thereof;
(b)
obtain information related to the statutory audit from any person;
(c)
carry out on-site inspections of statutory auditors or audit firms;
(d)
refer matters for criminal prosecution;
(e)
request experts to carry out verifications or investigations;
(f)
take the administrative measures, and impose the sanctions referred to in Article 30a of Directive 2006/43/EC.
The competent authorities may use the powers referred to in the first subparagraph only in relation to:
(a)
statutory auditors and audit firms carrying out statutory audit of public-interest entities;
(b)
persons involved in the activities of statutory auditors and audit firms carrying out statutory audit of public-interest entities;
(c)
audited public-interest entities, their affiliates and related third parties;
(d)
third parties to whom the statutory auditors and the audit firms carrying out statutory audit of public-interest entities have outsourced certain functions or activities; and
(e)
persons otherwise related or connected to statutory auditors and audit firms carrying out statutory audit of public-interest entities.
4. Member States shall ensure that the competent authorities are allowed to exercise their supervisory and investigatory powers in any of the following ways:
(a)
directly;
(b)
in collaboration with other authorities;
(c)
by application to the competent judicial authorities.
5. The supervisory and investigatory powers of competent authorities shall be exercised in full compliance with national law, and in particular, with the principles of respect for private life and the right of defence.
6. The processing of personal data processed in the exercise of the supervisory and investigatory powers pursuant to this Article shall be carried out in accordance with Directive 95/46/EC.
Delegation of tasks
1. Member States may delegate or allow the competent authorities referred to in Article 20(1) to delegate any of the tasks required to be undertaken pursuant to this Regulation to other authorities or bodies designated or otherwise authorised by law to carry out such tasks, except for tasks related to:
(a)
the quality assurance system referred to in Article 26;
(b)
investigations referred to in Article 23 of this Regulation and Article 32 of Directive 2006/43/EC arising from that quality assurance system or from a referral by another authority; and
(c)
sanctions and measures as referred to in Chapter VII of Directive 2006/43/EC related to the quality assurance reviews or investigation of statutory audits of public-interest entities.
2. Any execution of tasks by other authorities or bodies shall be the subject of an express delegation by the competent authority. The delegation shall specify the delegated tasks and the conditions under which they are to be carried out.
Where the competent authority delegates tasks to other authorities or bodies, it shall be able to reclaim these competences on a case-by-case basis.
3. The authorities or bodies shall be organised in such a manner that there are no conflicts of interest. The ultimate responsibility for supervising compliance with this Regulation and with the implementing measures adopted pursuant thereto shall lie with the delegating competent authority.
The competent authority shall inform the Commission and the competent authorities of Member States of any arrangement entered into with regard to the delegation of tasks, including the precise conditions governing such delegation.
4. By way of derogation from paragraph 1, Member States may decide to delegate the tasks referred to in point (c) of paragraph 1 to other authorities or bodies designated or otherwise authorised by law to carry out such tasks, when the majority of the persons involved in the governance of the authority or body concerned is independent from the audit profession.
Cooperation with other competent authorities at national level
Competent authorities designated pursuant to Article 20(1) and, where appropriate, any authority to whom such a competent authority has delegated tasks shall cooperate at national level with:
(a)
the competent authorities referred to in Article 32(4) of Directive 2006/43/EC;
(b)
the authorities referred to in Article 20(2), whether or not they have been designated competent authorities for the purposes of this Regulation;
(c)
the financial intelligence units and the competent authorities referred to in Articles 21 and 37 of Directive 2005/60/EC.
For the purposes of such cooperation, the obligation of professional secrecy under Article 22 of this Regulation shall apply.
CHAPTER II — Quality assurance, market monitoring, and transparency of competent authorities
Quality assurance
1. For the purposes of this Article:
(a)
‘inspections’ means quality assurance reviews of statutory auditors and audit firms, which are led by an inspector and which do not constitute an investigation within the meaning of Article 32(5) of Directive 2006/43/EC;
(b)
‘inspector’ means a reviewer who meets the requirements set out in point (a) of the first subparagraph of paragraph 5 of this Article and who is employed or otherwise contracted by a competent authority;
(c)
‘expert’ means a natural person who has specific expertise in financial markets, financial reporting, auditing or other fields relevant for inspections, including practising statutory auditors.
2. The competent authorities designated under Article 20(1) shall establish an effective system of audit quality assurance.
They shall carry out quality assurance reviews of statutory auditors and audit firms that carry out statutory audits of public-interest entities on the basis of an analysis of the risk and:
(a)
in the case of statutory auditors and audit firms carrying out statutory audits of public-interest entities other than those defined in points (17) and (18) of Article 2 of Directive 2006/43/EC at least every three years; and,
(b)
in cases other than those referred to in point (a), at least every six years.
3. The competent authority shall have the following responsibilities:
(a)
approval and amendment of the inspection methodologies, including inspection and follow-up manuals, reporting methodologies and periodic inspection programmes;
(b)
approval and amendment of inspection reports and follow-up reports;
(c)
approval and assignment of inspectors for each inspection.
The competent authority shall allocate adequate resources to the quality assurance system.
4. The competent authority shall organise the quality assurance system in a manner that is independent of the reviewed statutory auditors and audit firms.
The competent authority shall ensure that appropriate policies and procedures related to the independence and objectivity of the staff, including inspectors, and the management of the quality assurance system are put in place.
5. The competent authority shall comply with the following criteria when appointing inspectors:
(a)
inspectors shall have appropriate professional education and relevant experience in statutory audit and financial reporting combined with specific training on quality assurance reviews;
(b)
a person who is a practising statutory auditor or is employed by or otherwise associated with a statutory auditor or an audit firm shall not be allowed to act as an inspector;
(c)
a person shall not be allowed to act as an inspector in an inspection of a statutory auditor or an audit firm until at least three years have elapsed since that person ceased to be a partner or employee of that statutory auditor or of that audit firm or to be otherwise associated with that statutory auditor or audit firm;
(d)
inspectors shall declare that there are no conflicts of interest between them and the statutory auditor and the audit firm to be inspected.
By way of derogation from point (b) of paragraph 1, a competent authority may contract experts for carrying out specific inspections when the number of inspectors within the authority is insufficient. The competent authority may also be assisted by experts when this is essential for the proper conduct of an inspection. In such instances, the competent authorities and the experts shall comply with the requirements of this paragraph. Experts shall not be involved in the governance of, or employed or otherwise contracted by professional associations and bodies but may be members of such associations or bodies.
6. The scope of inspections shall at least cover:
(a)
an assessment of the design of the internal quality control system of the statutory auditor or of the audit firm;
(b)
adequate compliance testing of procedures and a review of audit files of public-interest entities in order to verify the effectiveness of the internal quality control system;
(c)
in the light of the findings of the inspection under points (a) and (b) of this paragraph, an assessment of the contents of the most recent annual transparency report published by a statutory auditor or an audit firm in accordance with Article 13.
7. At least the following internal quality control policies and procedures of the statutory auditor or the audit firm shall be reviewed:
(a)
compliance by the statutory auditor or the audit firm with applicable auditing and quality control standards, and ethical and independence requirements, including those set out in Chapter IV of Directive 2006/43/EC and Articles 4 and 5 of this Regulation, as well as relevant laws, regulations and administrative provisions of the Member State concerned;
(b)
the quantity and quality of resources used, including compliance with continuing education requirements as set out in Article 13 of Directive 2006/43/EC;
(c)
compliance with the requirements set out in Article 4 of this Regulation on the audit fees charged.
For the purposes of testing compliance, audit files shall be selected on the basis of an analysis of the risk of a failure to carry out a statutory audit adequately.
Competent authorities shall also periodically review the methodologies used by statutory auditors and audit firms to carry out statutory audits.
In addition to the inspection covered by the first subparagraph, competent authorities shall have the power to perform other inspections.
8. The findings and conclusions of inspections on which recommendations are based, including the findings and conclusions related to a transparency report, shall be communicated to and discussed with the inspected statutory auditor or audit firm before an inspection report is finalised.
Recommendations of inspections shall be implemented by the inspected statutory auditor or audit firm within a reasonable period set by the competent authority. Such period shall not exceed 12 months in the case of recommendations on the internal quality control system of the statutory auditor or of the audit firm.
9. The inspection shall be the subject of a report which shall contain the main conclusions and recommendations of the quality assurance review.
Monitoring market quality and competition
1. The competent authorities designated under Article 20(1) and the European Competition Network (ECN), as appropriate, shall regularly monitor the developments in the market for providing statutory audit services to public-interest entities and shall in particular assess the following:
(a)
the risks arising from high incidence of quality deficiencies of a statutory auditor or an audit firm, including systematic deficiencies within an audit firm network, which may lead to the demise of any audit firm, the disruption in the provision of statutory audit services whether in a specific sector or across sectors, the further accumulation of risk of audit deficiencies and the impact on the overall stability of the financial sector;
(b)
the market concentration levels, including in specific sectors;
(c)
the performance of audit committees;
(d)
the need to adopt measures to mitigate the risks referred to in point (a).
2. By 17 June 2016, and at least every three years thereafter, each competent authority and the ECN, shall draw up a report on developments in the market for providing statutory audit services to public-interest entities and submit it to the CEAOB, ESMA, EBA, EIOPA and the Commission.
The Commission, following consultations with the CEAOB, ESMA, EBA and EIOPA shall use those reports to draw up a joint report on those developments at Union level. That joint report shall be submitted to the Council, the European Central Bank and the European Systemic Risk Board, as well as, where appropriate, to the European Parliament.
Transparency of competent authorities
Competent authorities shall be transparent and shall at least publish:
(a)
annual activity reports regarding their tasks under this Regulation;
(b)
annual work programmes regarding their tasks under this Regulation;
(c)
a report on the overall results of the quality assurance system on an annual basis. This report shall include information on recommendations issued, follow-up on the recommendations, supervisory measures taken and sanctions imposed. It shall also include quantitative information and other key performance information on financial resources and staffing, and the efficiency and effectiveness of the quality assurance system;
(d)
the aggregated information on the findings and conclusions of inspections referred to in the first subparagraph of Article 26(8). Member States may require the publication of those findings and conclusions on individual inspections.
CHAPTER III — Cooperation between competent authorities and relations with the european supervisory authorities
Obligation to cooperate
The competent authorities of the Member States shall cooperate with each other where it is necessary for the purposes of this Regulation, including in cases where the conduct under investigation does not constitute an infringement of any legislative or regulatory provision in force in the Member State concerned.
Establishment of the CEAOB
1. Without prejudice to the organisation of national auditing oversight, the cooperation between competent authorities shall be organised within the framework of the CEAOB.
2. The CEAOB shall be composed of one member from each Member State who shall be high level representatives from the competent authorities referred to in Article 32(1) of Directive 2006/43/EC, and one member appointed by the ESMA, hereinafter referred to as ‘members’.
3. The EBA and EIOPA shall be invited to attend meetings of the CEAOB as observers.
4. The CEAOB shall meet at regular intervals and, where necessary, at the request of the Commission or a Member State.
5. Each member of the CEAOB shall have one vote, except the member appointed by ESMA, who shall not have voting rights. Unless otherwise stated, decisions of the CEAOB shall be taken by simple majority of its members.
6. The Chair of the CEAOB shall be elected from a list of applicants representing the competent authorities referred to in Article 32(1) of Directive 2006/43/EC, or removed, in each case by a two-thirds majority of members. The Chair shall be elected for a four-year term. The Chair may not serve consecutive terms in the same position, but may be re-elected after a cooling-off period of four years.
The Vice-Chair shall be appointed or removed by the Commission.
The Chair and the Vice-Chair shall not have voting rights.
In the event that the Chair resigns or is removed before the end of his or her term of office, the Vice-Chair shall act as Chair until the next meeting of the CEAOB, which shall elect a Chair for the remainder of the term.
7. The CEAOB shall:
(a)
facilitate the exchange of information, expertise and best practices for the implementation of this Regulation and of Directive 2006/43/EC;
(b)
provide expert advice to the Commission as well as to the competent authorities, at their request, on issues related to the implementation of this Regulation and of Directive 2006/43/EC;
(c)
contribute to the technical assessment of public oversight systems of third countries and to the international cooperation between Member States and third countries in that area, as referred to in Articles 46(2) and 47(3) of Directive 2006/43/EC;
(d)
contribute to the technical examination of international auditing standards, including the processes for their elaboration, with a view to their adoption at Union level;
(e)
contribute to the improvement of cooperation mechanisms for the oversight of public-interest entities' statutory auditors, audit firms or the networks they belong to;
(f)
carry out other coordinating tasks in the cases provided for in this Regulation or in Directive 2006/43/EC.
8. For the purposes of carrying out its tasks referred to in point (c) of paragraph 7, the CEAOB shall request the assistance of ESMA, EBA or EIOPA insofar as its request relates to international cooperation between Member States and third countries in the field of statutory audit of public-interest entities supervised by those European Supervisory Authorities. Where such assistance is requested, ESMA, EBA or EIOPA shall assist the CEAOB in its task.
9. For the purposes of carrying out its tasks, the CEAOB may adopt non-binding guidelines or opinions.
The Commission shall publish the guidelines and opinions adopted by the CEAOB.
10. The CEAOB shall assume all existing and on-going tasks, as appropriate, of the European Group of Audit Oversight Bodies (EGAOB) created by Commission Decision 2005/909/EC.
11. The CEAOB may establish sub-groups on a permanent or ad hoc basis to examine specific issues under the terms of reference established by it. Participation in the sub-group discussions may be extended to competent authorities from the countries of the European Economic Area (hereinafter referred to as EEA) in the field of audit oversight or by invitation, on a case-by-case basis, to competent authorities from non-EU/EEA countries, subject to the approval of the CEAOB members. The participation of a competent authority from a non-EU/EEA country may be subject to a limited time period.
12. The CEAOB shall establish a sub-group for the purpose of carrying out the tasks referred to in point (c) of paragraph 7. That sub-group shall be chaired by the member appointed by ESMA pursuant to paragraph 2.
13. At the request of at least three members, or on its own initiative, where this is considered useful and/or necessary, the Chair of the CEAOB may invite experts, including practitioners, with specific competence on a subject on the agenda to participate in the CEAOB's or its sub-group's deliberations as observers. The CEAOB may invite representatives of competent authorities from third countries which are competent in the field of audit oversight to participate in the CEAOB's or its sub-group's deliberations as observers.
14. The Secretariat of the CEAOB shall be provided by the Commission. The expenses of the CEAOB shall be included in the estimates of the Commission.
15. The Chair shall prepare the provisional agenda of each meeting of the CEAOB with due regard to members' written contributions.
16. The Chair or, in his or her absence, the Vice-Chair shall communicate the CEAOB views or positions only with the approval of the members.
17. The CEAOB's discussions shall not be public.
18. The CEAOB shall adopt its rules of procedure.
Cooperation with regard to quality assurance reviews, investigations and on-site inspections
1. Competent authorities shall take measures to ensure effective cooperation at Union level in respect of quality assurance reviews.
2. The competent authority of one Member State may request the assistance of the competent authority of another Member State with regard to the quality assurance reviews of statutory auditors or audit firms belonging to a network carrying out significant activities in the requested Member State.
3. Where a competent authority receives a request from a competent authority of another Member State to assist in the quality assurance review of a statutory auditor or an audit firm belonging to a network carrying out significant activities in that Member State, it shall allow the requesting competent authority to assist in such quality assurance review.
The requesting competent authority shall not have the right to access information which might breach national security rules or adversely affect the sovereignty, security or public order of the requested Member State.
4. Where a competent authority concludes that activities contrary to the provisions of this Regulation are being carried out or have been carried out on the territory of another Member State, it shall notify the competent authority of the other Member State of that conclusion in as specific a manner as possible. The competent authority of the other Member State shall take appropriate action. It shall inform the notifying competent authority of the outcome of that action and, to the extent possible, of significant interim developments.
5. A competent authority of one Member State may request that an investigation be carried out by the competent authority of another Member State on the latter's territory.
It may also request that some of its own personnel be allowed to accompany the personnel of the competent authority of that Member State in the course of the investigation, including with regard to on-site inspections.
The investigation or inspection shall be subject throughout to the overall control of the Member State on whose territory it is carried out.
6. The requested competent authority may refuse to act on a request for an investigation to be carried out as provided for in the first subparagraph of paragraph 5, or on a request for its personnel to be accompanied by personnel of a competent authority of another Member State as provided for in the second subparagraph of paragraph 5, in the following cases:
(a)
where such an investigation or on-site inspection might breach national security rules or adversely affect the sovereignty, security or public order of the requested Member State;
(b)
where judicial proceedings have already been initiated in respect of the same actions and against the same persons before the authorities of the requested Member State;
(c)
where a final judgment has already been delivered in respect of the same actions and the same persons by the authorities of the requested Member State.
7. In the event of a quality assurance review or an investigation with cross-border effects, the competent authorities of the Member States concerned may address a joint request to the CEAOB to coordinate the review or investigation.
Colleges of competent authorities
1. In order to facilitate the exercise of the tasks referred to in Articles 26, and 31(4) to(6) of this Regulation and Article 30 of Directive 2006/43/EC with regard to specific statutory auditors, audit firms or their networks, colleges may be established with the participation of the competent authority of the home Member State and of any other competent authority, provided that:
(a)
the statutory auditor or the audit firm is providing statutory audit services to public-interest entities within the jurisdiction of the Member States concerned; or
(b)
a branch which is a part of the audit firm is established within the jurisdiction of the Member States concerned.
2. In the case of specific statutory auditors or audit firms, the competent authority of the home Member State shall act as facilitator.
3. With regard to specific networks, competent authorities of the Member States where the network carries out significant activities may request the CEAOB to establish a college with the participation of the requesting competent authorities.
4. Within 15 working days of the establishment of the college of competent authorities with regard to a specific network, its members shall select a facilitator. In the absence of agreement, the CEAOB shall appoint a facilitator from among the members of the college.
Members of the college shall review the selection of the facilitator at least every five years to ensure that the selected facilitator remains the most appropriate occupant of that position.
5. The facilitator shall chair the meetings of the college, coordinate the actions of the college and ensure efficient exchange of information among members of the college.
6. The facilitator shall, within 10 working days of his or her selection, establish written coordination arrangements within the framework of the college regarding the following matters:
(a)
information to be exchanged between competent authorities;
(b)
cases in which the competent authorities must consult each other;
(c)
cases in which the competent authorities may delegate supervisory tasks in accordance with Article 33.
7. In the absence of agreement concerning the written coordination arrangements under paragraph 6, any member of the college may refer the matter to the CEAOB. The facilitator shall give due consideration to any advice provided by the CEAOB concerning the written coordination arrangements before agreeing on their final text. The written coordination arrangements shall be set out in a single document containing full reasons for any significant deviation from the advice of the CEAOB. The facilitator shall transmit the written coordination arrangements to the members of the college and to the CEAOB.
Delegation of tasks
The competent authority of the home Member State may delegate any of its tasks to the competent authority of another Member State subject to the agreement of that authority. Delegation of tasks shall not affect the responsibility of the delegating competent authority.
Confidentiality and professional secrecy in relation to cooperation among competent authorities
1. The obligation of professional secrecy shall apply to all persons who work or who have worked for the bodies involved in the framework of cooperation between competent authorities as referred to in Article 30. Information covered by professional secrecy shall not be disclosed to another person or authority except where such disclosure is necessary for legal proceedings or required by Union or national law.
2. Article 22 shall not prevent bodies involved in the framework of cooperation between competent authorities as referred to in Article 30 and the competent authorities from exchanging confidential information. Information thus exchanged shall be covered by the obligation of professional secrecy, to which persons employed or formerly employed by competent authorities are subject.
3. All the information exchanged under this Regulation between bodies involved in the framework of cooperation between competent authorities as referred to in Article 30, and the competent authorities and other authorities and bodies shall be treated as confidential, except where its disclosure is required by Union or national law.
Protection of personal data
1. Member States shall apply Directive 95/46/EC to the processing of personal data carried out in the Member States pursuant to this Regulation.
2. Regulation (EC) No 45/2001 shall apply to the processing of personal data carried out by the CEAOB, ESMA, EBA and EIOPA in the context of this Regulation and of Directive 2006/43/EC.
CHAPTER IV — Cooperation with third-country authorities and with international organisations and bodies
Agreement on exchange of information
1. The competent authorities may conclude cooperation agreements on exchange of information with the competent authorities of third countries only if the information disclosed is subject, in the third countries concerned, to guarantees of professional secrecy which are at least equivalent to those set out in Articles 22 and 34. The competent authorities shall immediately communicate such agreements to the CEAOB and notify the Commission of them.
Information shall only be exchanged under this Article where such exchange of information is necessary for the performance of the tasks of those competent authorities under this Regulation.
Where such exchange of information involves the transfer of personal data to a third country, Member States shall comply with Directive 95/46/EC and the CEAOB shall comply with Regulation (EC) No 45/2001.
2. The competent authorities shall cooperate with the competent authorities or other relevant bodies of third countries regarding the quality assurance reviews and investigations of statutory auditors and audit firms. Upon request by a competent authority, the CEAOB shall contribute to such cooperation and to the establishment of supervisory convergence with third countries.
3. Where the cooperation or exchange of information relates to audit working papers or other documents held by statutory auditors or audit firms, Article 47 of Directive 2006/43/EC shall apply.
4. The CEAOB shall prepare guidelines on the content of the cooperation agreements and exchange of information referred to in this Article.
Disclosure of information received from third countries
The competent authority of a Member State may disclose the confidential information received from competent authorities of third countries where a cooperation agreement so provides, only if it has obtained the express agreement of the competent authority which has transmitted the information and, where applicable, the information is disclosed only for the purposes for which that competent authority has given its agreement, or where such disclosure is required by Union or national law.
Disclosure of information transferred to third countries
The competent authority of a Member State shall require that confidential information communicated by it to a competent authority of a third country may be disclosed by that competent authority to third parties or authorities only with the prior express agreement of the competent authority which has transmitted the information, in accordance with its national law and provided that the information is disclosed only for the purposes for which that competent authority of the Member State has given its agreement, or where such disclosure is required by Union or national law or is necessary for legal proceedings in that third country.
Exercise of the delegation
1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article.
2. The power to adopt delegated acts referred to in Article 9 shall be conferred on the Commission for a period of five years from 16 June 2014. The Commission shall draw up a report in respect of the delegation of power not later than nine months before the end of the five-year period. The delegation of power shall be tacitly extended for periods of an identical duration, unless the European Parliament or the Council opposes such extension not later than three months before the end of each period.
3. The delegation of power referred to in Article 9 may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.
4. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.
5. A delegated act adopted pursuant to Article 9 shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.
Review and reports
1. The Commission shall review and report on the operation and effectiveness of the system of cooperation between competent authorities within the framework of the CEAOB, referred to in Article 30, in particular as regards the performance of the CEAOB tasks defined in paragraph 7 of that Article.
2. The review shall take into account international developments, particularly in relation to strengthening cooperation with the competent authorities of third countries and contributing to the improvement of cooperation mechanisms for the oversight of statutory auditors and audit firms of public-interest entities belonging to international audit networks. The Commission shall complete its review by 17 June 2019.
3. The report shall be submitted to the European Parliament and to the Council, together with a legislative proposal, if appropriate. That report shall consider the progress made in the field of cooperation between competent authorities within the framework of the CEAOB from the beginning of the operation of that framework and propose further steps to enhance the effectiveness of the cooperation between Member States' competent authorities.
4. By 17 June 2028 the Commission shall submit a report on the application of this Regulation to the European Parliament and to the Council.
Transitional provisions
1. As from 17 June 2020, a public-interest entity shall not enter into or renew an audit engagement with a given statutory auditor or audit firm if that statutory auditor or audit firm has been providing audit services to that public-interest entity for 20 and more consecutive years at the date of entry into force of this Regulation.
2. As from 17 June 2023, a public-interest entity shall not enter into or renew an audit engagement with a given statutory auditor or audit firm if that statutory auditor or audit firm has been providing audit services to that public-interest entity for 11 and more but less than 20 consecutive years at the date of entry into force of this Regulation.
3. Without prejudice to paragraphs 1 and 2, the audit engagements that were entered into before 16 June 2014 but which are still in place as at 17 June 2016 may remain applicable until the end of the maximum duration referred to in the second subparagraph of Article 17(1) or in point (b) of Article 17(2). Article 17(4) shall apply.
4. Article 16(3) shall only apply to audit engagements after the expiry of the period referred to in the second subparagraph of Article 17(1).
National provisions
The Member States shall adopt appropriate provisions to ensure the effective application of this Regulation.
Repeal of Commission Decision 2005/909/EC
Commission Decision 2005/909/EC is hereby repealed.
Entry into force
This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union .
It shall apply from 17 June 2016.
However, Article 16(6) shall apply from 17 June 2017.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
