The Irish Auditing and Accounting Supervisory Authority (IAASA) has written to the leading UK audit firms to give advice on preparations for a no-deal Brexit scenario.
The IAASA has stated that in the event of a no-deal exit from the EU, UK audit firms will have to register as ‘third country’ auditors to continue their operations in Ireland or for Irish clients.
While the UK still remains a member of the EU, UK firms cannot register as ‘third country’ auditors. However, firms can prepare and submit draft paperwork to register as ‘third country’ auditors.
Theoretically, this could be signed off by IAASA the day after the UK leaves the EU. However, a spokesperson for IAASA said that this would be unlikely as checks would have to be made to ensure the firm could be registered as a ‘third country’ auditor. The spokesperson also warned firms would not be immediately accepted just because they have previously been able to operate in Ireland.
The spokesperson said that a timeline could not be confirmed for this process as it depends on the amount of paperwork that needs to be checked. However, they did say that this process would likely take ‘a matter of weeks’ as opposed to months.
Even if it is a matter of weeks, this could still have ramification for audit firms and their clients.
Following the rejection of UK Prime Minister Theresa May’ proposed Brexit deal in parliament on 15 January by a record defeat, the UK is currently set to leave the EU on 29 March 2019 without a deal in place.
One of the main points of contention in May’s proposed deal was the possibility of an indefinite ‘backstop’ between Northern Ireland (NI) and the Republic of Ireland (RoI). The border between the ROI and NI will be the UK’s only land border with the EU and there are concerns about how a no-deal Brexit could affect future relations between the two countries.
The situation is delicate as, although the relationship between the UK and the ROI is to a degree governed by EU law, the UK and the RoI currently respect a freedom of movement between the two countries regardless of EU law. There are concerns that the future relationship between the two countries, if the UK leaves with no-deal, could conflict with the Good Friday Agreement which was signed in 1999 and brought an end to The Troubles.