Auditors are not generally subject to licensing, registration or supervision by the Isle of Man Financial Services Authority (“the Authority”), or any Isle of Man Government body. However, where auditors perform the audit of specific types of companies (Isle of Man-incorporated "market traded companies") they must be registered with the Authority as “Recognised Auditors”.
Auditors that do NOT audit Isle of Man market traded companies do not need to be registered as Recognised Auditors – such auditors do not have lesser status than those that are registered as Recognised Auditors. Also, the register of Recognised Auditors should not be interpreted as a list of the only audit firms that are acceptable to the Authority, or any Government body. For further information on Recognised Auditors see section A below.
All auditors that audit companies incorporated in the Isle of Man are subject to qualification requirements contained in the Companies Acts. Isle of Man companies that are incorporated under the Companies Act 1931 or the Companies Act 2006 may only be audited by persons who meet the qualification requirements contained in sections 14 to 14E of the Companies Act 1982. This applies to such companies, irrespective of whether they are public or private companies and whether or not they are listed or traded on any exchange.
Auditors that are not members of “recognised accountancy bodies”, but that wish to audit Isle of Man companies, may apply for authorisation under section 14E of the Companies Act 1982, subject to the criteria in section B below. Authorisation under section 14E is only granted in very limited circumstances.
In this context, "recognised accountancy body" means -
A. Recognised Auditors – more information
The term "Recognised Auditor" only applies to those auditors that are registered to audit “market traded companies" that are incorporated in the Isle of Man. It does not indicate any assessment of suitability of auditors generally.
Market traded companies are defined in the EU legislation below. However, as a brief overview, the definition is limited to those Isle of Man companies whose transferable securities are admitted to trading on a European Union regulated market. "EU regulated market" is also defined in the legislation and includes, for example, the London Stock Exchange Ltd but does not include the Alternative Investment Market (AIM).
Further information regarding market traded companies may be found on the EU’s website. (No responsibility is accepted for the content of pages on external websites.)
Legislation and procedures relevant to Recognised Auditors
The “Register of Recognised Auditor Regulations 2010” lists the criteria for entry to the Register of Recognised Auditors (“the Register”). The Register contains information about each Recognised Auditor.
Auditors applying for Recognised Auditor status must submit the “Application Form” and fee to the Authority. A “Notification of Appointment of Responsible Individual Form” is required for each designated Responsible Individual. The “Forms and Fees page” lists all forms and fees relating to Recognised Auditors.
Recognised Auditors must agree to be bound by the ICAEW's Crown Dependencies’ Audit Rules and Guidance ("the Rules"). These are common to the Isle of Man, Jersey and Guernsey and are based on the rules of the Institute of Chartered Accountants in England and Wales ("ICAEW") in the UK.
Recognised Auditors that submit to the regime, which includes the Accounting (Recognised Auditors) Regulations 2010 and the Public Oversight of Recognised Auditors Regulations 2010, agree to monitoring by the ICAEW and oversight by the ICAEW and/or bodies of the Financial Reporting Council (“FRC”). The Legislation and Rules page lists the legislation and rules relating to Recognised Auditors. In June 2013 the European Commission confirmed decision 2013/288/EU that the Isle of Man’s auditor oversight regime is considered equivalent to that of EU auditor regulators in respect of the supervision of auditors and audit firms.
An Annual Return Form and fee must be submitted to theAuthority by 15 September annually in order to remain on the Register.
The information on this webpage is intended as a general guide only and must be read in conjunction with the relevant legislation. It should not be relied upon as a substitute for legal advice.
B. Auditor authorisation under section 14E Companies Act 1982
Prior to granting an authorisation under section 14E of the Companies Act 1982 ("the Act"), the Authority must be satisfied that the audit firm applying for authorisation -
There are specific requirements under the European Union ("EU") Alternative Investment Fund Managers Directive ("AIFMD") which mean that a non-EU (or non-Isle of Man) audit firm would likely be unable to audit an Isle of Man Alternative Investment Fund ("AIF") that is marketed into the European Economic Area ("EEA"). The Authority will therefore not consider applications for authorisation under section 14E in relation to the audit of any Isle of Man AIF.
The Authority will consider the following information in respect of any application under s14E of the Act to be appointed as an auditor of an Isle of Man company. Please note that the Authority retains the right to request further information.
Information to be supplied to the Authority as part of a written application (to be addressed to the Policy & Legal Division):
- A copy of the audit firm’s (“the Applicant’s”) constitutional documents.
- Details of the Applicant’s members/employees/partners/agents etc. (“its Members”), especially its controllers, together with details of their membership of any recognised accountancy bodies (“RABs”).
- Confirmation from a RAB, or the professional organisation to which the applicant belongs, in relation to the Applicant’s professional good standing.
- The names of the Isle of Man companies (incorporated under either the Companies Act 1931 or Companies Act 2006), and any exchanges on which they may be listed or admitted to trade, which the Applicant already audits.
- The name of the Isle of Man companies (incorporated under either the Companies Act 1931 or Companies Act 2006), and any exchanges on which they may be listed or admitted to trade, that the Applicant wishes to be authorised to audit.
- Confirmation that neither the Applicant nor any of its Members are disqualified from appointment as auditor under section 14D of the Act.
- The provision of an organisation chart of the Applicant and its Members.
- The names of the “Responsible Individuals” authorised by the Applicant to sign audit reports with confirmation that these persons hold a practicing certificate issued by a RAB.
- Where the Applicant is not a member of a RAB, provision of copies of the rules of the professional body to which the applicant belongs, and its requirements in relation to fitness and propriety, complaints, continuing competence, etc.
- Identification of those areas in which the Applicant does not meet the requirements for appointment as an auditor under section 14 of the Act.
In the rare cases where authorisation is granted under section 14E of the Act, the Authority may impose conditions upon the authorisation. Examples of conditions that may be imposed include the following:
- Provision of such information or documentation as the Authority may require such as the completion and submission of an annual declaration of compliance.
- Restrictions on which persons the Authority may deem to be appropriately qualified to be responsible individuals.
- Restrictions as to which companies the applicant may audit.
- A requirement to agree to inclusion on a public register under section 14G of the Act.
- A requirement to comply with the Isle of Man’s Audit Regulations and Rules made under sections 17B and 17C of the Act.
- Requirements for changes in controller to be notified to or approved by the Authority.
- Requirements in relation to details of complaints about the applicant to be forwarded to the Authority, together with the outcome of any investigations.