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Instructions of the Finnish Patent and Registration Office on maintaining the approval prerequisites of auditors after family leave (TAS 300/2019, issued on 22 November 2019)

Instructions of the Finnish Patent and Registration Office on maintaining the approval prerequisites of auditors after family leave (TAS 300/2019, issued on 22 November 2019)

The Ombudsman for Equality has, on his own initiative, investigated whether the instructions issued by the Finnish Patent and Registration Office on the withdrawal of the approval of KHT auditors, or authorised public accountants, when the auditor is not engaged in tasks that maintain their professional competence is compliant with the Act on Equality between Women and Men (hereinafter the Equality Act). Based on an inquiry sent to the Ombudsman for Equality, the Finnish Patent and Registration Office has instructed KHT auditors to withdraw their authorisation for the duration of their family leave and then apply for the reinstation of said authorisation. If the authorisation is not withdrawn, the auditor will be required to fulfil all of the requirements for maintaining the prerequisites of the authorised public accountant approval process, as well as to maintain and develop their professional competence during a three-year monitoring period.

The Ombudsman for Equality requested the Finnish Patent and Registration Office to submit a report on the matter. In its report, the Finnish Patent and Registration Office stated that, for example, it is responsible for monitoring that auditors maintain their professional competence. The Finnish Patent and Registration Office referenced the Auditing Act, according to which all auditors are required to maintain and develop their professional competence. According to the instructions given by the Finnish Patent and Registration Office, maintaining and developing the professional competence of a HT, KHT, JHT and JHTT auditor requires that the auditor completes a specific number of statutory auditing tasks or tasks comparable to these and participates in a specific number of hours of training in a three-year monitoring period. According to the report, no types of work absences – for example due to family leave, sick leave, military service, international assignments or working in other tasks – are taken into account when monitoring the fulfilment of the prerequisites.

Assessment of the case

The Ombudsman for Equality assessed the instructions given by the Finnish Patent and Registration Office from the perspective of the general prohibition of discrimination presented in section 7 of the Equality Act.

The Ombudsman for Equality first assessed whether the work and training requirements for auditors causes an auditor who is away from work due to family leave to be treated in such a different manner than an auditor who does not have any gaps in their career that the situation could be considered to constitute the type of discrimination referred to in the Equality Act. According to the preliminary work done for the Equality Act, if a procedure causes a person to be treated differently in a way that is prohibited by the Equality Act but that is still minor in nature, then it should not be considered discriminatory. 

An auditor who exercises their right to family leave will have a shorter period of time to fulfil the work and training requirements set for them than an auditor who has not been away from their work. However, based on the report submitted to the Ombudsman, fulfilling the work and training requirements does not require working full-time throughout the entire three-year monitoring period. Thus, if an auditor decides to go on family leave, they will not be automatically disqualified from fulfilling their approval prerequisites for each monitoring period. For example, if an auditor decides to go on full maternity leave, the negative effect that this will have on their ability to fulfil the required work and training prerequisites was, according to the estimate of the Ombudsman for Equality, so minor that this part of the investigation did not indicate the existence of discrimination prohibited by the Equality Act. The Ombudsman for Equality also assessed the effect that the requirements had on paternity leave.

According to the estimate of the Ombudsman for Equality, an auditor’s ability to fulfil the necessary approval prerequisites is affected first and foremost by how the auditor chooses to exercise their right to parental and childcare leave. The effect that these leaves have on the auditor’s actual ability to fulfil the work and training requirements set for them depends, yet again, on the total length and arrangement of each family leave. According to the assessment done by the Ombudsman for Equality, the use of parental and childcare leave cannot, in every case, be considered to have a substantial effect on the fulfilment of the work and training requirements set for auditors.

According to the report submitted by the Finnish Patent and Registration Office, so far no auditors who have neglected their work and training requirements have been issued with any penalties for their negligence. According to the report, auditors are also provided with several opportunities to correct their situation if they have not fulfilled their work and training requirements for a certain monitoring period. This means that neglecting these requirements will not cause any immediate actions, such as the revocation of an auditor’s authorisation. An auditor can also anticipate any longer absences from working life by withdrawing their auditor authorisation. In such cases, they will not be required to fulfil the requirements set for maintaining their professional competence and they will not be required to perform any of the other duties set for auditors, such as annual auditor fees. According to the estimate of the Ombudsman for Equality, the consequences of neglecting to fulfil the work and training requirements set for auditors were fairly minor in nature.

Based on the report submitted to the Ombudsman for Equality, the Ombudsman felt that, at least in most cases, an auditor who decides to go on family leave is not treated in such a different manner than any other auditors that the matter would constitute the type of discrimination referred to in the Equality Act.

Finally, the Ombudsman for Equality also assessed the matter from the perspective that an auditor who decides to go on parental or childcare leave is treated in such a different manner that this difference could no longer be considered minor in nature.

The requirement for auditors to maintain and develop their professional competence is based on the Auditing Act. The maintenance of the professional competence of auditors can be considered to constitute the type of acceptable objective that may be used as a basis for treating an auditor who is away from their work due to family leave in a different way than an auditor who continues to work.

The Ombudsman for Equality also concluded that the maintenance of one’s professional competence could also be justifiably considered to require a person to concretely work and participate in training activities for a specific minimum number of hours during a three-year monitoring period. This conclusion was also supported by the fact mentioned in the report submitted by the Finnish Patent and Registration Office that the operating environment of auditors is changing constantly. The prerequisites set for the approval of auditors, i.e. the achievement of specific work and training objectives during a three-year monitoring period, are pertinent and necessary in relation to the stated objective of these measures, i.e. the maintenance of the professional competence of auditors. In addition, the consequences to the auditors who decide to go on family leave are not disproportionate when viewed from the perspective of the aforementioned objective.

On the basis of these factors, the Ombudsman for Equality noted that the instructions issued by the Finnish Patent and Registration Office and the monitoring methods used in connection with 

31.12.2019