Understanding CPD categories

Working in practice

If you work for an accountancy firm, either as a member of staff or as a partner/director of the firm, then you are considered to be working in practice. An accountancy firm can be structured in a number of different ways, for example as a partnership, a Limited Liability Partnership, a limited company, or an unincorporated business (including as a sole trader).

For the purposes of the CPD Regulations, it does not matter how the accountancy firm is structured; if the organisation you work for provides accountancy services, then you are considered to be 'in practice' if you are client facing or support the provision of those services.

In a public sector context, if you are employed by a public sector audit agency such as the National Audit Office, Audit Wales or Audit Scotland, and your role is to perform audit work, then you would be in practice for the purpose of the CPD categories.

If you work in an audit regulatory role within an accountancy professional body, a training organisation or an oversight body, then you would be classified as being in practice.

• See a list of services that are regarded as accountancy and finance work in relation to CPD.

Not working in practice

If you do not work for an accountancy firm or a public sector audit agency as outlined above, then you are likely to be considered as 'not working in practice'. This will include the following members/relevant persons:

• Those employed in a business, either in the finance department or in a non-finance role.
• Those working as a self-employed consultant providing services to businesses.
• A company director, whether executive or non-executive (for a company that does not provide accountancy services).
• A partner in a partnership (that does not provide accountancy services).
• A trustee or employee of a charity.
• A trustee or employee of a pension fund.
• Those employed in a public sector organisation, such as a local authority, NHS trust, school or central government department.
• Lecturers.

Please note that this list is not exhaustive. For more information read our list of further accountancy and finance work in relation to CPD.

Members outside the UK

The CPD categories use UK terminology for the roles that individuals hold and the organisations that they work for. For example, a "responsible individual" for audit and a "Public Interest Entity" as a particular type of company. Given the extensive number of territories that ICAEW members operate in, it is not feasible to define an international equivalent for all the terms used in the CPD categories. 

However, the aim of the CPD categories is for those individuals working in high profile or high responsibility roles, dealing with organisations in which there is a significant public interest, to be in CPD category 1 (for practice or not in practice). 

Similarly, the substance of CPD category 2 (for practice and not in practice) is to capture those individuals who have a slightly lower profile or lower responsibility role, or deal with organisations of less significant public interest, albeit still of substantial importance, such as large companies.

If you are an ICAEW member outside the UK, you should therefore reflect on the nature of your role and the organisation you work for, or the clients you serve, and assess which CPD category you think is the most directly comparable to your activities. This should take into account relevant national laws and regulations where appropriate.

Contact ICAEW’s advisory services if you need help with this, on +44(0)1908 248 250. 

Types of entity in the CPD categories

Public Interest Entity

A Public Interest Entity (PIE) is any entity that falls within the definition in the Financial Reporting Council’s Glossary of Terms (Auditing and Ethics):

“Public Interest Entity - these are: 

(a) An issuer whose transferable securities are admitted to trading on a UK regulated market; 

(b) A credit institution within the meaning of Article 4(1)(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council 17, which is a CRR firm within the meaning of Article 4(1)(2A) of that Regulation; 

(c) A person who would be an insurance undertaking as defined in Article 2(1) of Council Directive 91/674/EEC of 19 December 1991 of the European Parliament and of the Council on the annual accounts and consolidated accounts of insurance undertaking as that Article had effect immediately before exit day, were the United Kingdom a Member State. 

No other entities have been specifically designated in law in the UK as 'public interest entities'.”

Broadly, this includes listed companies, banks, building societies and insurance companies. Whether a client entity is a PIE is of significance for other regulatory requirements such as auditor independence, so the firm should be aware which clients meet the definition of a PIE.

Major Local Audit

A Major Local Audit (MLA) is defined by the Financial Reporting Council as:

“The definition of a Major Local Audit is one which meets the following criteria: 

• Total income or expenditure of at least £500m; or 
• For a Local Authority pension scheme, at least 20,000 members or gross assets in excess of £1,000m.”

Large company

A large company is one which does not meet the small or medium sized company criteria in the Companies Act 2006. Broadly, this means that a company is large if it meets two out of three of the following criteria:

• Turnover greater than £36m. 
• Balance sheet value greater than £18m.
• More than 250 employees. 

Public sector body

A public sector body is defined by the Office for National Statistics in its Public sector classification guide and forward work plan.

Large charity

A charity with:

• incoming resources of more than £100m, and 
• gross assets of more than £1bn. 

Large pension fund

A pension fund with:

• gross assets of more than £1bn, and
• more than 10,000 members.

Types of roles in the CPD practice categories

Responsible individual (RI)

A responsible individual is a principal or employee in an audit registered firm who is responsible for the audit work under ICAEW’s Audit Regulations, and registered with ICAEW and/or the Financial Reporting Council for that role.

For those working outside the UK, responsible individuals are ICAEW members or regulated individuals working in audit with the right to sign an audit report.

Engagement quality reviewer

The engagement quality reviewer is the partner, other individual in the firm, or an external individual, appointed by the firm to perform the engagement quality review.

Key audit partner (KAP)

Individuals who sign local audit reports within a registered local audit firm are called key audit partners (KAPs). The detailed eligibility requirements are set by the Local Audit and Accountability Act and the FRC’s Guidance for Recognised Supervisory Bodies on the approval of KAPs for local audit.

Engagement partner 

Under ISA 220, the engagement partner is defined as:

“The partner or other individual, appointed by the firm, who is responsible for the audit engagement and its performance, and for the auditor’s report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body.”

CASS audit and engagement team

A client asset assurance (CASS) audit and auditor are defined by the FRC as follows:

CASS audit: A client asset assurance engagement that involves providing a client assets report to the Financial Conduct Authority (FCA). 

CASS auditor: The person or persons conducting the CASS audit or other CASS assurance engagement, usually the CASS engagement leader or other members of the engagement team, or, as applicable, the auditing firm.

Where a requirement expressly intends that it be fulfilled by the CASS engagement leader the term ‘‘CASS engagement leader’’ rather than ‘‘CASS auditor’’ is used.

Please note that a CASS auditor need not be the firm’s statutory auditor.

Insolvency practitioner

The definition of insolvency practitioner depends on whether the licence held is to take insolvency appointments or is a non-appointment taking licence.

An insolvency practitioner who is authorised to take insolvency appointments is defined as follows:

• ICAEW members authorised under either section 390A(2) or 390A(3) of the Insolvency Act 1986 and articles 349A(2) or 349A(3) of the Insolvency (Northern Ireland) Order 1989.
• Non-ICAEW members registered with ICAEW under either section 390A(2) or 390A(3) of the Insolvency Act 1986 and articles 349A(2) or 349A(3) of the Insolvency (Northern Ireland) Order 1989.

An insolvency practitioner who holds a non-appointment taking licence is defined as follows:

• ICAEW members authorised under either section 390A(2) or 390A(3) of the Insolvency Act 1986 and articles 349A(2) or 349A(3) of the Insolvency (Northern Ireland) Order 1989 but who are not permitted to act as an insolvency officeholder by the rules of their authorising body.
• Non-ICAEW members registered with ICAEW under either section 390A(2) or 390A(3) of the Insolvency Act 1986 and articles 349A(2) or 349A(3) of the Insolvency (Northern Ireland) Order 1989 but who are not permitted to act as an insolvency officeholder by ICAEW.

Probate work 

Those undertaking probate work includes those who are principals or employees of an accredited probate firm who are designated under section 4 of the Legal Services Regulations.

Non-reserved legal services

Non-reserved legal services include the undertaking of non-reserved legal activities including, but not limited to, will writing or acting as an executor, whether charging a fee or not.

Designated professional body (investment business) licensed

Designated professional body (investment business) licensed includes individuals who are principals or employees of a firm licensed by a designated professional body under Part XX of the Financial Services and Markets Act 2000 and who are directly involved in advising on or facilitating all steps in an investment transaction (other than selecting a particular investment product in a number of situations), in the course of providing exempt regulated services to the firm’s clients.

Designated professional body (consumer credit) licensed

Designated professional body (consumer credit) licensed includes individuals who are principals or employees of a firm which is eligible to undertake exempt credit-related activities under Part XX of the Financial Services and Markets Act 2000 and who are directly involved in conducting such activities as specified in the Financial Services and Markets Act (Regulated Activities) Order 2001 no 544 (as amended) in the course of business on behalf of a consumer client.

Corporate finance advice

Corporate finance advice includes members involved in transactions in which existing capital is used and new capital raised to create, develop and grow new projects and ventures, and to acquire other businesses. 

• Further explanations and examples of corporate finance advice.

Tax services 

The type of tax services you provide will affect which CPD category you sit in.

If you provide tax services to large companies, listed or international companies or groups, or high-net-worth individuals, then you are within CPD practice category 1.

If the only tax work you do is limited to certain services, then you are within CPD practice category 3. These services are:

• simple income tax self-assessment returns for individuals and partnerships who are UK resident, UK domiciled, and not high-net-worth individuals; and/or
• VAT compliance (not advice) for entities that are not large companies, listed or international companies or groups; and/or
• payroll administration.

If you do more than these services listed above, but do not deal with the types of clients in category 1, then you are within CPD practice category 2.

High-net-worth individuals

For the purposes of the CPD Regulations, we define high-net-worth individuals as those with net worth greater than £20m.

Types of roles in non-practice member CPD categories

Member of management board

Any individual who sits on the management board, in either an executive or non-executive capacity, including as chair, chief executive and chief operating officer, for example.

Chief financial officer/financial director/other head or chief roles

This category of individual seeks to include all who hold a chief, director or head role, which may include:

• Chief financial officer
• Finance director
• Head of tax
• Head of internal audit
• Group financial controller
• Those that report into the CFO
• Member of the audit committee

Audit committee members

In most cases, members of the audit committee would also be members of the management board and would therefore be captured in the CPD category for those individuals. However, for the avoidance of doubt, members of the audit committee who do not sit on the management board are also included in the relevant CPD category for the PIE/large company/public sector body.

Financial controller/financial reporting manager or other manager level roles

This category of individual seeks to include all who hold a manager level role, which may include:

• Financial controller
• Financial reporting manager
• Internal audit manager
• Tax manager
• Finance business partner
• Financial planning and analysis manager

FCA senior managers certification regime

The Financial Conduct Authority's senior managers certification regime is as detailed on the FCA website. 

Other concepts in the CPD categories

Category 3 as the default

If you review the roles that are listed in CPD categories 1 and 2 (for practice/non-practice members as applicable) and your role does not feature, then the default position is that you should follow the requirements of CPD category 3.

This means that you are required to undertake 20 hours of CPD in a CPD year, and either 10 hours or five hours of that CPD must be verifiable, depending on whether you are in practice or not.

You should note that the hours prescribed by the CPD Regulations are a minimum, and you should reflect on whether the nature of your role means that you should do more than the minimum to ensure you are sufficiently up to date.

30% or more of professional time

The CPD categories include those who spend more than 30% of their time on particular types of work. The purpose of this threshold is to only bring individuals into one of the higher CPD categories if a substantial part of their role is on these higher profile/higher public interest pieces of work.

For example, an individual may be asked to provide specialist advice on one element of a large audit engagement for a public interest entity. It would be disproportionate for that individual to fall into CPD category 1 only by virtue of that one piece of work if the rest of their role is on other services that do not feature in CPD category 1.

Less than 30% of professional time on any one type of category 1 or category 2 audit, but more than 40% in aggregate across types

There is a catch-all in CPD category 2 for individuals who may not spend 30% of their time on one of the particular types of audit engagement that is included in CPD categories 1 and 2, such as public interest entities or large companies, but in aggregate they do spend a large proportion (more than 40%) of their time on multiple types of these audit engagements. On that basis, it would be appropriate for these individuals to be in CPD category 2.

Employed in a role

The CPD Regulations refer to an individual being employed in a role. However, you should interpret this widely to include any kind of contracting relationship between an entity and an individual, including in an interim capacity. The employment status of the individual is not relevant for the purposes of the CPD Regulations.

Charity trustees, senior finance or executive roles

There is a separate CPD category for individuals who are trustees of charities, or who work in senior finance or executive roles on a voluntary basis. This category has no minimum hours’ requirement but, instead, anyone falling into this category will be required to undertake CPD to keep themselves up to date with developments impacting their role as charity trustees. ICAEW will make available a free training programme for charity trustees, and you can either use this course, or undertake other learning that keeps you up to date.