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Duties and rights of auditors |
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(1) | A company’s auditor, in preparing his report, must carry out such |
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investigations as will enable him to form an opinion as to— |
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(a) | whether adequate accounting records have been kept by the company |
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and returns adequate for their audit have been received from branches |
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(b) | whether the company’s individual accounts are in agreement with the |
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accounting records and returns, and |
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(c) | in the case of a quoted company, whether the auditable part of the |
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company’s directors’ remuneration report is in agreement with the |
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accounting records and returns. |
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(2) | If the auditor is of opinion— |
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(a) | that adequate accounting records have not been kept, or that returns |
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adequate for their audit have not been received from branches not |
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(b) | that the company’s individual accounts are not in agreement with the |
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accounting records and returns, or |
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(c) | in the case of a quoted company, that the auditable part of its directors’ |
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remuneration report is not in agreement with the accounting records |
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| the auditor shall state that fact in his report. |
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(3) | If the auditor fails to obtain all the information and explanations which, to the |
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best of his knowledge and belief, are necessary for the purposes of his audit, he |
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shall state that fact in his report. |
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(a) | the requirements of regulations under section 418 (disclosure of |
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directors’ benefits: remuneration, pensions and compensation for loss |
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of office) are not complied with in the annual accounts, or |
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(b) | in the case of a quoted company, the requirements of regulations under |
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section 427 as to information forming the auditable part of the |
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directors’ remuneration report are not complied with in that report, |
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| the auditor must include in his report, so far as he is reasonably able to do so, |
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a statement giving the required particulars. |
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(5) | If the directors of the company have prepared accounts and reports in |
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accordance with the small companies regime and in the auditor’s opinion they |
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were not entitled so to do, the auditor shall state that fact in his report. |
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513 | Auditor’s general right to information |
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(1) | An auditor of a company— |
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(a) | has a right of access at all times to the company’s books, accounts and |
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vouchers (in whatever form they are held), and |
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(b) | may require any of the following persons to provide him with such |
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information or explanations as he thinks necessary for the performance |
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of his duties as auditor. |
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(a) | any officer or employee of the company; |
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(b) | any person holding or accountable for any of the company’s books, |
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(c) | any subsidiary undertaking of the company which is a body corporate |
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incorporated in the United Kingdom; |
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(d) | any officer, employee or auditor of any such subsidiary undertaking or |
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any person holding or accountable for any books, accounts or vouchers |
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of any such subsidiary undertaking; |
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(e) | any person who fell within any of paragraphs (a) to (d) at a time to |
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which the information or explanations required by the auditor relates |
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(3) | A statement made by a person in response to a requirement under this section |
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may not be used in evidence against him in criminal proceedings except |
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proceedings for an offence under section 515. |
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(4) | Nothing in this section compels a person to disclose information in respect of |
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which a claim to legal professional privilege (in Scotland, to confidentiality of |
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communications) could be maintained in legal proceedings. |
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514 | Auditor’s right to information from overseas subsidiaries |
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(1) | Where a parent company has a subsidiary undertaking that is not a body |
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corporate incorporated in the United Kingdom, the auditor of the parent |
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company may require it to obtain from any of the following persons such |
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information or explanations as he may reasonably require for the purposes of |
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(b) | any officer, employee or auditor of the undertaking; |
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(c) | any person holding or accountable for any of the undertaking’s books, |
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(d) | any person who fell within paragraph (b) or (c) at a time to which the |
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information or explanations relates or relate. |
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(3) | If so required, the parent company must take all such steps as are reasonably |
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open to it to obtain the information or explanations from the person concerned. |
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(4) | A statement made by a person in response to a requirement under this section |
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may not be used in evidence against him in criminal proceedings except |
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proceedings for an offence under section 515. |
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(5) | Nothing in this section compels a person to disclose information in respect of |
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which a claim to legal professional privilege (in Scotland, to confidentiality of |
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communications) could be maintained in legal proceedings. |
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515 | Auditor’s rights to information: offences |
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(1) | A person commits an offence who knowingly or recklessly makes to an auditor |
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of a company a statement (oral or written) that— |
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(a) | conveys or purports to convey any information or explanations which |
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the auditor requires, or is entitled to require, under section 513, and |
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(b) | is misleading, false or deceptive in a material particular. |
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(2) | A person guilty of an offence under subsection (1) is liable— |
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(a) | on conviction on indictment, to imprisonment for a term not exceeding |
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two years or a fine (or both); |
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(b) | on summary conviction— |
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(i) | in England and Wales, to imprisonment for a term not |
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exceeding twelve months or to a fine not exceeding the |
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statutory maximum (or both); |
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(ii) | in Scotland or Northern Ireland, to imprisonment for a term not |
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exceeding six months or to a fine not exceeding the statutory |
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(3) | A person who fails to comply with a requirement under section 513 without |
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delay commits an offence unless it was not reasonably practicable for him to |
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provide the required information or explanations. |
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(4) | If a parent company fails to comply with section 514, an offence is committed |
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(b) | every officer of the company who is in default. |
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(5) | A person guilty of an offence under subsection (3) or (4) is liable on summary |
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conviction to a fine not exceeding level 3 on the standard scale. |
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(6) | Nothing in this section affects any right of an auditor to apply for an injunction |
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(in Scotland, an interdict or an order for specific performance) to enforce any |
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of his rights under section 513 or 514. |
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516 | Auditor’s rights in relation to resolutions and meetings |
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(1) | In relation to a written resolution proposed to be agreed to by a private |
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company, the company’s auditor is entitled to receive all such communications |
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relating to the resolution as, by virtue of any provision of Chapter 2 of Part 14 |
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of this Act, are required to be supplied to a member of the company. |
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(2) | A company’s auditor is entitled— |
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(a) | to receive all notices of, and other communications relating to, any |
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general meeting which a member of the company is entitled to receive, |
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(b) | to attend any general meeting of the company, and |
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(c) | to be heard at any general meeting which he attends on any part of the |
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business of the meeting which concerns him as auditor. |
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(3) | Where the auditor is a firm, the right to attend or be heard at a meeting is |
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exercisable by an individual authorised by the firm in writing to act as its |
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representative at the meeting. |
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Signature of auditor’s report |
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517 | Signature of auditor’s report |
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(1) | The auditor’s report must state the name of the auditor and be signed and |
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(2) | Where the auditor is an individual, the report must be signed by him. |
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(3) | Where the auditor is a firm, the report must be signed by the senior statutory |
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auditor in his own name, for and on behalf of the auditor. |
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518 | Senior statutory auditor |
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(1) | The senior statutory auditor means the individual identified by the firm as |
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senior statutory auditor in relation to the audit in accordance with— |
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(a) | standards issued by the European Commission, or |
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(b) | if there is no applicable standard so issued, any relevant guidance |
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(i) | the Secretary of State, or |
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(ii) | a body appointed by order of the Secretary of State. |
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(2) | The person identified as senior statutory auditor must be eligible for |
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appointment as auditor of the company in question (see Chapter 2 of Part 42 of |
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(3) | The senior statutory auditor is not, by reason of being named or identified as |
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senior statutory auditor or by reason of his having signed the auditor’s report, |
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subject to any civil liability to which he would not otherwise be subject. |
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(4) | An order appointing a body for the purpose of subsection (1)(b)(ii) is subject to |
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negative resolution procedure. |
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519 | Names to be stated in published copies of auditor’s report |
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(1) | Every copy of the auditor’s report that is published by or on behalf of the |
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(a) | state the name of the auditor and (where the auditor is a firm) the name |
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of the person who signed it as senior statutory auditor, or |
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(b) | if the conditions in section 520 (circumstances in which names may be |
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omitted) are met, state that a resolution has been passed and notified to |
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the Secretary of State in accordance with that section. |
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(2) | For the purposes of this section a company is regarded as publishing the report |
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if it publishes, issues or circulates it or otherwise makes it available for public |
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inspection in a manner calculated to invite members of the public generally, or |
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any class of members of the public, to read it. |
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(3) | If a copy of the auditor’s report is published without the statement required by |
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this section, an offence is committed by— |
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(b) | every officer of the company who is in default. |
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(4) | A person guilty of an offence under this section is liable on summary |
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conviction to a fine not exceeding level 3 on the standard scale. |
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520 | Circumstances in which names may be omitted |
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(1) | The auditor’s name and, where the auditor is a firm, the name of the person |
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who signed the report as senior statutory auditor, may be omitted from— |
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(a) | published copies of the report, and |
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(b) | the copy of the report delivered to the registrar under Chapter 10 of |
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Part 16 (filing of accounts and reports), |
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| if the following conditions are met. |
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(2) | The conditions are that the company— |
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(a) | considering on reasonable grounds that statement of the name would |
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create or be likely to create a serious risk that the auditor or senior |
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statutory auditor, or any other person, would be subject to violence or |
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intimidation, has resolved that the name should not be stated, and |
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(b) | has given notice of the resolution to the Secretary of State, stating— |
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(i) | the name and registered number of the company, |
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(ii) | the financial year of the company to which the report relates, |
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(iii) | the name of the auditor and (where the auditor is a firm) the |
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name of the person who signed the report as senior statutory |
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Offences in connection with auditor’s report |
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521 | Offences in connection with auditor’s report |
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(1) | A person to whom this section applies commits an offence if he knowingly or |
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recklessly causes a report under section 509 (auditor’s report on company’s |
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annual accounts) to include any matter that is misleading, false or deceptive in |
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(2) | A person to whom this section applies commits an offence if he knowingly or |
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recklessly causes such a report to omit a statement required by— |
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(a) | section 512(2)(b) (statement that company’s accounts do not agree with |
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accounting records and returns), |
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(b) | section 512(3) (statement that necessary information and explanations |
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(c) | section 512(5) (statement that directors wrongly took advantage of |
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exemption from obligation to prepare group accounts). |
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(3) | This section applies to— |
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(a) | where the auditor is an individual, that individual and any employee |
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or agent of his who is eligible for appointment as auditor of the |
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(b) | where the auditor is a firm, any director, member, employee or agent of |
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the firm who is eligible for appointment as auditor of the company. |
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(4) | A person guilty of an offence under this section is liable— |
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(a) | on conviction on indictment, to a fine; |
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(b) | on summary conviction, to a fine not exceeding the statutory |
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522 | Guidance for regulatory and prosecuting authorities: England, Wales and |
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(1) | The Secretary of State may issue guidance for the purpose of helping relevant |
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regulatory and prosecuting authorities to determine how they should carry out |
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their functions in cases where behaviour occurs that— |
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(a) | appears to involve the commission of an offence under section 521 |
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(offences in connection with auditor’s report), and |
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(b) | has been, is being or may be investigated pursuant to arrangements— |
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(i) | under paragraph 15 of Schedule 10 (investigation of complaints |
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against auditors and supervisory bodies), or |
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(ii) | of a kind mentioned in paragraph 24 of that Schedule |
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(independent investigation for disciplinary purposes of public |
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(2) | The Secretary of State must obtain the consent of the Attorney General before |
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issuing any such guidance. |
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(3) | In this section “relevant regulatory and prosecuting authorities” means— |
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(a) | supervisory bodies within the meaning of Part 42 of this Act, |
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(b) | bodies to which the Secretary of State may make grants under section |
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16(1) of the Companies (Audit, Investigations and Community |
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Enterprise) Act 2004 (c. 27) (bodies concerned with accounting |
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(c) | the Director of the Serious Fraud Office, |
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(d) | the Director of Public Prosecutions or the Director of Public |
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Prosecutions for Northern Ireland, and |
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(e) | the Secretary of State. |
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(4) | This section does not apply to Scotland. |
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523 | Guidance for regulatory authorities: Scotland |
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(1) | The Lord Advocate may issue guidance for the purpose of helping relevant |
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regulatory authorities to determine how they should carry out their functions |
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in cases where behaviour occurs that— |
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(a) | appears to involve the commission of an offence under section 521 |
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(offences in connection with auditor’s report), and |
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(b) | has been, is being or may be investigated pursuant to arrangements— |
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(i) | under paragraph 15 of Schedule 10 (investigation of complaints |
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against auditors and supervisory bodies), or |
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(ii) | of a kind mentioned in paragraph 24 of that Schedule |
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(independent investigation for disciplinary purposes of public |
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(2) | The Lord Advocate must consult the Secretary of State before issuing any such |
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(3) | In this section “relevant regulatory authorities” means— |
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(a) | supervisory bodies within the meaning of Part 42 of this Act, |
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(b) | bodies to which the Secretary of State may make grants under section |
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16(1) of the Companies (Audit, Investigations and Community |
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Enterprise) Act 2004 (bodies concerned with accounting standards etc), |
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(c) | the Secretary of State. |
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(4) | This section applies only to Scotland. |
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Removal, resignation, etc of auditors |
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524 | Resolution removing auditor from office |
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(1) | The members of a company may remove an auditor from office at any time. |
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(2) | This power is exercisable only— |
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(a) | by ordinary resolution at a meeting, and |
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(b) | in accordance with section 525 (special notice of resolution to remove |
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(3) | Nothing in this section is to be taken as depriving the person removed of |
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compensation or damages payable to him in respect of the termination— |
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(a) | of his appointment as auditor, or |
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(b) | of any appointment terminating with that as auditor. |
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(4) | An auditor may not be removed from office before the expiration of his term of |
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office except by resolution under this section. |
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525 | Special notice required for resolution removing auditor from office |
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(1) | Special notice is required for a resolution at a general meeting of a company |
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removing an auditor from office. |
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(2) | On receipt of notice of such an intended resolution the company must |
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immediately send a copy of it to the person proposed to be removed. |
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(3) | The auditor proposed to be removed may make with respect to the intended |
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resolution representations in writing to the company (not exceeding a |
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reasonable length) and request their notification to members of the company. |
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(4) | The company must (unless the representations are received by it too late for it |
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(a) | in any notice of the resolution given to members of the company, state |
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the fact of the representations having been made, and |
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(b) | send a copy of the representations to every member of the company to |
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whom notice of the meeting is or has been sent. |
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(5) | If a copy of any such representations is not sent out as required because |
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received too late or because of the company’s default, the auditor may (without |
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prejudice to his right to be heard orally) require that the representations be |
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(6) | Copies of the representations need not be sent out and the representations need |
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not be read at the meeting if, on the application either of the company or of any |
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other person claiming to be aggrieved, the court is satisfied that the auditor is |
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using the provisions of this section to secure needless publicity for defamatory |
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| The court may order the company’s costs (in Scotland, expenses) on the |
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application to be paid in whole or in part by the auditor, notwithstanding that |
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he is not a party to the application. |
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