PIE Audit Requirements Under the EU Audit Regulation

A PIE audit is any statutory audit of a Public Interest Entity — a category defined by the EU Audit Directive and, in Cyprus, by the Cyprus Auditors Law. PIEs include listed companies (regulated market), credit institutions (banks), and insurance and reinsurance undertakings. Cyprus law can also designate additional entities as PIEs.

Any auditor accepting a PIE audit engagement takes on additional obligations under the EU Audit Regulation (Regulation 537/2014). These obligations are layered on top of the standard statutory audit requirements and cover independence, engagement performance, reporting and firm-wide governance.

Mandatory audit firm rotation is one of the headline PIE audit requirements. A PIE cannot use the same audit firm indefinitely — the maximum duration of the engagement is capped (10 years, with limited extensions to 20 or 24 years subject to tender or joint audit). A cooling-off period of four years applies before the same firm can re-tender.

Non-audit services are tightly restricted for PIE audit clients. A 'black list' of prohibited services (certain tax, valuation, legal and internal audit services) applies, and permitted non-audit services are capped at 70 percent of the average statutory audit fee over three consecutive financial years.

Communication with the Audit Committee is intensified. A PIE audit requires an Additional Report to the Audit Committee explaining the audit approach, significant findings, independence, and material weaknesses in internal control. The audit report itself must include Key Audit Matters under ISA 701.

At the firm level, any audit firm signing PIE audit reports must publish an Annual Transparency Report describing its governance, quality management system, and PIE engagement portfolio. GCP Auditors Ltd publishes its Transparency Report annually and applies enhanced independence and Engagement Quality Review procedures to every PIE audit engagement.

If your entity is (or is about to become) a PIE, engage an audit firm with real PIE audit experience early — the enhanced procedures take time to design, and non-audit service restrictions can affect existing advisor relationships.