It is expected that the recently published Companies (Statutory Audits) Bill 2017 (Bill) will be enacted in Q2 of 2018. Once enacted, the regulatory framework proposed by the EU's 2014 audit reform package will be complete. The mandatory provisions of that package either had direct effect in Ireland or were implemented in Ireland in 2016 by way of a statutory instrument. In addition, the Irish Government considers the Bill as one of the measures that will assist Ireland in combatting ‘white collar’ crime.

Background to audit reform in Ireland

In 2014, the Council of the European Union adopted a legislative package for audit reform in the EU consisting of:

  • an Audit Directive, 2014/56/EU, which impacts all audits to some degree, and
  • an Audit Regulation, EU 537/2014, which imposes specific requirements on the statutory audits of listed companies, credit institutions, which includes our banks and insurance bodies, collectively known as Public Interest Entities 

The Frequently Asked Questions on audit reform published by the European Commission note that the objective behind the reform was to improve audit quality and restore investor confidence in financial information following the economic crisis.

The Audit Directive and the Audit Regulation

Both the Audit Directive and the Audit Regulation contain mandatory and optional provisions:

  • The mandatory provisions of the Audit Regulation have had direct effect in Ireland since 17 June 2016, meaning that they applied immediately in Ireland from that date without the need for any Irish legislation. 
  • The mandatory provisions of the Audit Directive were implemented into Irish law by way of a 2016 statutory instrument. 
  • Some of the Member State options in both the Audit Regulation and Audit Directive were exercised in Ireland through the 2016 statutory instrument. Others, however, were not exercised as they were not considered appropriate for secondary legislation. This means they were not considered to be measures incidental, supplementary or consequential to the implementation of the mandatory provisions.

In short, the mandatory provisions and some of the optional provisions of both the Audit Directive and the Audit Regulation have been law in Ireland since 2016. 

Implementation of optional provisions

The Bill proposes to exercise a number of Member State options contained in the EU audit package, which were not exercised in the 2016 statutory instrument. The options that it proposes to implement include:

  • authorise the Oireachtas, Ireland's legislature, to designate additional entities as Public Interest Entities
  • add to the sanction powers of IAASA (the Irish Auditing and Accounting Supervisory Authority), being the competent body in Ireland for the oversight of statutory audits
  • authorise IAASA to adopt audit procedures in addition to the international auditing standards adopted by the European Commission in certain circumstances
  • allow IAASA to lay down additional requirements in relation to the content of the audit report

The then Department of Jobs, Enterprise and Innovation sought the views of industry stakeholders on each of the Member State options contained in the EU audit package in 2016 and prior to the enactment of the 2016 statutory instrument.

Enactment of the Bill

The Bill is at an early stage in the Dáil, the lower house of Ireland's legislature. It is expected that the Bill will be enacted in Q2 of 2018.


When the provisions in the Bill become law they will:

  • further incorporate the Audit Directive and Audit Regulation into Irish law. Ireland will have a single coherent body of legislation that clearly aligns the mandatory and optional provisions under the EU legislative audit reform package
  • elevate the provisions of the 2016 statutory instrument into primary legislation
  • give IAASA, as the competent authority with ultimate responsibility for oversight of statutory audits, the appropriate powers to ensure effective monitoring and enforcement of the new requirements

We will provide further updates when the Bill is enacted in 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.