General Auditor Requirements
Auditors must meet the qualification requirements contained in Isle of Man company law in order to be eligible for appointment as auditor of any company incorporated in the Isle of Man. The main requirements are listed in sections 14 to 14H of the Companies Act 1982 ('the Act').
The qualification requirements are linked to an auditor’s membership of a “recognised accountancy body”, which are listed in section 14F as follows:
- Institute of Chartered Accountants in England and Wales;
- Institute of Chartered Accountants of Scotland;
- Institute of Chartered Accountants in Ireland;
- Association of Chartered Certified Accountants;
- Chartered Institute of Public Finance and Accountancy; or
- Association of Authorised Public Accountants.
Note: 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.
Authorisation under section 14E of the Companies Act 1982
Auditors that are not members of a “recognised accountancy body” may apply to the Isle of Man Financial Services Authority (‘the Authority’) for authorisation under section 14E of the Companies Act 1982. Authorisation under section 14E is given only in very limited circumstances.
The Authority will only consider applications where an applicant is able to demonstrate that it meets the following criteria:
|1.||International coverage||For example, is a member firm of a large international accounting group that includes a major firm in the British Isles.|
|2.||Understanding of Isle of Man company law||Is able to demonstrate sufficient understanding of Isle of Man company law and can evidence how it maintains up-to-date knowledge of this law.|
|3.||Ability to conduct audit work in accordance with relevant international standards||Is able to conduct audit work in accordance with IAS/IFRS, US GAAS/GAAP and UK GAAS/GAAP and can evidence this.|
Authorisations may be given subject to conditions. Examples include —
- Restrictions as to which companies the applicant may audit
- Restrictions as to who may act as a ‘Responsible Individual’ for the audit
- A requirement to submit information, such as an annual compliance declaration
- 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
- A requirement for changes in controller to be notified to, or approved by, the Authority
- A requirement in relation to details of complaints about the applicant to be notified to the Authority, together with the outcome of any investigations.
Auditors of Alternative Investment Funds
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 is unlikely to meet the requirements to audit an Isle of Man Alternative Investment Fund ('AIF') that is marketed into the European Economic Area ('EEA').
Note: The Authority will therefore not consider applications for authorisation under section 14E in relation to the audit of any Isle of Man AIF.
There are currently no application fees or annual fees in respect of a section 14E authorisation, however the Authority intends to introduce fees in due course.
Applying for authorisation under section 14E of the Companies Act 1982
Applications for authorisation should be submitted to the Authority in writing and contain the following information:
- A brief description of the applicant;
- A copy of the applicant’s constitutional documents;
- A list of the applicant’s key individuals (i.e. its controllers, members, partners, employees, or agents, as appropriate) along with details of their membership of any accountancy bodies;
- An organisation chart or organogram for the applicant and its key individuals;
- Details of the applicant’s membership of any accountancy bodies and confirmation from those bodies that the applicant is currently in good standing;
- The names of any Isle of Man-incorporated companies that the applicant seeks to audit, along with details of any exchanges on which they are listed or admitted to trade;
- The names of any Isle of Man-incorporated companies that the applicant already audits, along with details of any exchanges on which they are listed or admitted to trade;
- The requirements under sections 14 to 14H of the Act that the applicant does not meet;
- Confirmation that neither the applicant nor any of its key individuals are disqualified from appointment under section 14D of the Act;
- The reasons for the application, e.g. why the applicant is seeking to audit the Isle of Man-incorporated companies;
- An explanation of how the applicant meets the authorisation criteria listed above:
- International coverage;
- Understanding of Isle of Man company law; and
- Ability to conduct audit work in accordance with relevant international standards.
- Details of the proposed ‘Responsible Individual(s)’ for the audit of the Isle of Man companies along with details of their membership of any accountancy bodies and whether or not they hold a certificate of practice; and
- A copy of (or link to) the rules of the accountancy bodies to which the applicant and the proposed ‘Responsible Individual(s)’ belong and its requirements in relation to fitness and propriety, complaints, continuing competence etc.
Applications for authorisation should be sent by post to the following address and may be copied by email to [email protected]:
Policy & Authorisations Division
Isle of Man Financial Services Authority
PO Box 58
Finch Hill House
Isle of Man
If you have any questions regarding the general auditor requirements or applications under section 14E, please contact a member of the Policy & Authorisations Division from the Contact details webpage.