Board of Directors Decision No. (25) of 2015 concerning the Registration of Auditors of Public Shareholding Companies and Mutual Funds

Transcription

1 Board of Directors Decision No. (25) of 2015 concerning the Registration of Auditors of Public Shareholding Companies and Mutual Funds The Chairman of the Board of Directors of the Securities and Commodities Authority, Having considered the Federal Law No. (4) of 2000 concerning the Emirates Securities and Commodities Authority and Market, as amended; The Federal Law No. (12) of 2014 concerning Auditing Profession; The Federal Law No. (2) of 2015 concerning Commercial Companies; The Federal Decree No. (65) of 2014 concerning the Composition of the Council of Ministers of the United Arab Emirates, as amended; The Council of Ministers Resolution No. (324/11 and /23 m) of 2014 concerning the Restructuring of the Board of Directors of the Securities and Commodities Authority; and The approval of the Board of Directors at its fifth meeting of the fifth term convened on 06/07/2015; and After consultation and coordination with the Ministry of Economy, and as required for the public interest, Has decided: Definitions Article (1) The following expressions and words shall have the meanings assigned thereto hereunder unless the context indicates otherwise: State: Ministry: Minister: United Arab Emirates. The Ministry of Economy. The Minister of Economy.

2 Law: Authority: CEO: Competent Authority: Register: Profession: Auditor: Audit Firm: Company(s): Mutual Fund(s): Related Parties: Federal Law No. (12) of 2014 concerning Auditing Profession. The Securities and Commodities Authority. The Chief Executive Officer of the Authority. The local competent authority concerned with licensing auditors to practice the profession in the concerned Emirate. The register where auditors of public shareholding companies and mutual funds are registered with the Authority. Auditing profession. An auditor of the audit firm enrolled in the Register. The company that audits the accounts of public shareholding companies and mutual funds. Local public shareholding company(s). The mutual fund established in the State to practice the activity of accumulating money from investors for investment purposes against issuing investment units that are equal in value and rights. Chairman and members of the board of directors; members of the senior executive management of the company or the fund; companies where any of the aforesaid owns a controlling stake; mother, subsidiary, sister or affiliate companies of the company or fund; Relatives of the chairman or member of the board of directors or senior executive management up to the first degree. A natural or corporate person who was, during the year preceding the year of trading, a shareholder of 10% and more in the company or the fund or a member in the board of directors of any one of such companies or their mother or subsidiary companies. A person who has control over the company or the fund.

3 International Standards for Auditing Quality: The international standards to ensure the quality of the audit issued by the International Auditing and Assurance Standards Board (IAASB). International Auditing Standards: The International Auditing Standards issued by the International Federation of Accountants (IFAC). International Financial Reporting Standards: The International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). International Code of Ethics for Professional Accountants : The international code of ethics for Professional accountants issued by the International Ethics Standards Board for Accountants (IESBA). International Accounting Standards: International Accounting Standards issued by the International Accounting Standards Board (IASB) Article (2) A register shall be established in the Authority for the registration of audit firms. Only auditors enrolled in the register may review accounts or prepare reports on interim or annual accounts, or the financial statements of companies or mutual funds. Article (3) First: To register audit firms in the register, the following requirements must be satisfied: 1. To be a national company or a foreign company branch having a minimum of five years of practical experience in auditing. 2. To be enrolled in the roster of practicing auditors with the Ministry and licensed to practice the profession by the competent authority. 3. To have the necessary regulations, procedures and control devices to ensure the performance of its business and compliance with:

4 a. International Auditing Standards; b. International Standards for Audit Quality; c. International Code of Ethics for Professional Accountants; d. International Financial Reporting Standards; and e. International Accounting Standards. 4. Each branch of the audit firm in the State shall have one representative or more authorized by the mother company and registered in the roster of auditors practicing the profession with the Ministry. 5. To provide a proof that it has satisfied the professional insurance indemnity certificate required for registration in the roster of practicing auditors with the Ministry. Second: The Authority may impose any additional conditions or requirements, or exempt any condition or requirement in accordance with the public interest requirements. Article (4) 1. Applications for registration shall be submitted to the Authority using the form designed for this purpose, enclosing the documents supporting the application and resumes of partners and managers of the audit firm. The auditor who is responsible for the audit of each company or fund shall be determined. The fees of the application for registration shall be paid. 2. The Authority may request any additional clarifications, information or documents from the audit firm, if it deems necessary. The audit firm shall provide such clarifications or information within (10) working days, otherwise the Authority may consider such failure as a waiver of the application for registration. 3. The Authority shall decide on the application for registration within a period of no more than (30) days from the date of submission of the complete application, or from the date of completing the required documents, data or information. If the Authority did not decide on the application during the said period, this shall be considered as a rejection of the application.

5 Article (5) 1. The Authority shall notify the audit firms that have met the required conditions of the approval for registration, or rejection of the applications for registration where the conditions have not been met, along with a statement of the reasons for rejection. A new application shall not be submitted to the Authority before the lapse of six months from the date of rejection of the application or deemed rejected. 2. The Approval shall be considered void if the audit firm fails to pay the registration fees within thirty (30) days from the date of its notification of the approval for registration. The Authority shall inform the Ministry and the competent authority of the names of audit firms that have been recorded in the Register. Article (6) An applicant may appeal the decision of the Authority to reject its application for registration to the CEO within (30) days of notification of the decision or upon the lapse of (60) days from the date of the application without a decision made thereon. The decision in such appeal may be challenged before the competent court within (30) days from the date of notifying the audit firm of such decision, or after the lapse of (60) days from the date of the appeal without a decision made thereon. Article (7) 1. The Authority, in case of accepting the application for registration, shall record the name, address, nationality and registration number of the audit firm. The registration of the audit firm shall be valid for a period of three years ending by the end of December of the third year. The term of the first registration shall be valid from the date of registration through the end of December of the third year. 2. The registration shall be renewed upon an application submitted by the audit firm during the last month of the third year on the designated form enclosing the supporting documents that confirm the satisfaction of the registration requirements, and payment of the registration renewal fees.

6 Article (8) The registered audit firm shall notify the Authority within a maximum period of (30) days from the date of occurrence of the following cases: 1. Changing the person in-charge of auditing the accounts of the company or the fund; 2. Filing a lawsuit in the State against the audit firm related to practicing the profession; 3. Any amendment or change in the data of the audit firm with the Authority. Article (9) Without prejudice to the relevant laws, decrees, regulations and decisions, it is prohibited for registered audit firms to observe the following: 1. Carrying out any additional technical, administrative or consultancy services or work related to the work it is engaged in or may affect its decisions and independence; or any services or work which the Authority deems impermissible to be provided. 2. The firm or any of its employees shall neither buy nor sell the securities of the company or fund subject to account audit by the audit firm, directly or indirectly, neither provide any advice to any person concerning such securities. Article (10) 1. The audit firm shall review and audit the accounts of the company or the fund; examine the balance sheet and profit and loss account; review the transactions of the company or the fund with related parties. 2. In preparing his report, the auditor must express his fair and neutral opinion regarding the following: a. The accuracy of the accounting records maintained by the company or the fund b. The extent of conformity between the financial statements of the company or the fund and the accounting records.

7 3. The Audit firms shall comply with the International Auditing Standards when reviewing the interim and annual financial statements; and comply as well with the regulations, decisions and circulars issued by the Ministry or the Authority to the companies, mutual funds or auditors. Article (11) It is not permissible to appoint an audit firm to review and audit the accounts of a company or a fund for a period exceeds three consecutive fiscal years. After such period, the same audit firm may not be re-appointed before the lapse of two fiscal years. Article (12) 1. Without prejudice to Article (249) of the Federal Law No. (2) of 2015 concerning Commercial Companies, the Authority may revoke the registration of an audit firm from the Register or suspend its registration for a period of no more than three months, along with notifying the Ministry and competent authority, in the following cases: a. The audit firm fails to meet one of the registration conditions set forth in this Decision; b. The audit firm fails to pass the quality control assessment carried out by the Authority; c. The audit firm fails to comply with the international standards set forth in clause (3) of Article (3) of this Decision; d. Upon a request of the audit firm; e. Failure to renew the registration with the Authority for a period of six months; f. Abstention of the audit firm to allow the inspection committee to perform its work; g. Breach of duties by the audit firm in practicing the profession, or committing a demeaning act; or

8 h. Breach by the audit firm to the applicable laws in the State or the decrees, regulations or decisions issued in implementation thereof. 2. Before revoking or suspending the registration, the Authority may also warn the audit firm to rectify its status. 3. Those concerned may appeal the decision of the Authority to revoke or suspend the registration of the audit firm to the CEO within (30) days of notification of the decision. The decision in such appeal may be challenged before the competent court within (30) days from the date of notifying the audit firm of such decision, or after the lapse of (60) days from the date of the appeal without a decision made thereon. Article (13) The audit firm that had its registration revoked from the Authority s register may submit to the Authority, after one year from the date of the registration revocation, an application for reregistration using the designated form, enclosing the supporting documents and paying the application fee for re-registration. The Authority may accept the application if it considers that the lapsed period was sufficient to remove the impact of such revocation and that the firm has satisfied all the conditions and requirements set forth in this Decision. The firm shall be reregistered after payment of the prescribed fees for the new registration. Article (14) The Authority may conduct or request an investigation or inspection for the registered audit firms to ensure their compliance with the provisions of law, decrees, regulations and decisions issued in implementation thereof. The Authority may seek assistance in the inspection form one or more of the technical expertise parties. It may also, as it deems appropriate, require the documents, statements, data or information in relation to the auditing operations that carried out by audit firms, which shall provide all required records, documents, information and clarifications.

9 Article (15) The audit firms shall adjust their status in accordance with the provisions of this Decision within a period of no more than six months from the date of its enforcement. The audit firms which fail to adjust their status within the said period may not accept any new audit assignments from companies or funds. Article (16) This Decision shall be published in the Official Gazette and shall come into effect from the day following the date of its publication. Eng. Sultan bin Saeed Al Mansouri Chairman of Board of Directors Issued in Abu Dhabi on 30/07/2015