I move: "That the Bill be now read a Second Time."
My speech is being circulated along with an information pack of supplementary documents which I have also made available to Deputies.
I am very pleased to bring this Bill before the House. The legislation regulates the profession of statutory auditor and the conduct of statutory audits. The role of the statutory auditor is to review and certify the financial statements of companies or other entities that are obliged to have a statutory audit under EU law. In the aftermath of the international financial crisis, the European Commission undertook to examine how the audit function could be enhanced in order to contribute to increased financial stability. The outcome of that examination was the adoption in 2014 of new rules in the form of an EU directive and an accompanying EU regulation. The directive builds on the 2006 audit directive and introduces significant reforms. It is concerned with the approval and regulation of statutory auditors and the system of public oversight. It also sets out the rules for the conduct of all statutory audits that are required by EU law. The EU regulation then adds stricter rules for the audits of entities that have a particular position in the economy. These are referred to as "public interest entities" and include entities such as banks, insurers, collective investment funds and companies that are listed on a regulated market.
As I mentioned, these rules were adopted in mid-2014 and the deadline for them to come into operation in Ireland was 17 June 2016. Furthermore, as the EU regulation took direct effect in Irish law on that date, it was necessary to ensure that implementing measures were in place on time. For these reasons, the essential elements of the EU rules were introduced into Irish law by way of statutory instrument Sl 312 of 2016. Consequently, much of what is in the Bill before us has been in operation for over a year now. However, the EU laws of 2014 presented us with options that are not necessitated, consequential or essential to the transposition of either the directive or the EU regulation. Therefore, it was not possible to give effect to them in a statutory instrument. However, the Government sees some of these options as desirable to further enhance the rules for statutory audit and the oversight framework. Therefore, this Bill will replace the current statutory instrument, elevate its provisions to primary legislation, implement some of the options in the EU rules that could not be implemented in secondary legislation, and introduce some new measures that will enhance the system of public oversight.
Before I go into the detail of the Bill, I would like to mention a few preliminary matters. First, the Bill takes the form of an amendment to the Companies Act 2014. Deputies will remember the major legislative project that led to that Act and the significant modernisation of company law that it introduced. The Bill before the House makes amendments to Parts 6 and 15 of the 2014 Act. The Bill also inserts a new separate Part, Part 27, to provide more specifically for the conduct of audits, the regulation of statutory auditors and the obligations on public interest entities. As well as giving effect to EU rules, the Bill introduces some changes in respect of the rules governing the late filing of annual returns and the accompanying loss of the audit exemption. The Bill removes the outdated term "public auditor" and replaces it with "statutory auditor" in the Statute Book.
The Bill is large, so I propose to deal with related sections together, highlighting anything new or significant. Part 1 contains standard provisions to set out matters such as the Title, the commencement arrangements and repeals. In Part 2, some sections are clearly technical, updating cross-references, introducing necessary definitions or giving effect to essential elements of the EU rules. Section 7 implements an option in the EU directive that was not previously exercised.