ACCOUNTANCY PROFESSION ACT

ACCOUNTANCY PROFESSION

CHAPTER 281

ACCOUNTANCY PROFESSION ACT

To regulate the accountancy profession and to provide for matters

connected therewith or ancillary thereto.

1st April, 1980;

30th March, 1981;

1st February, 1987;

1st April, 1987

ACT XXVIII of 1979, as amended by Acts XIII of 1983 , XXXIV of

1986 , XVI of 1991, XVIII of 2002 , and II and XIV of 2003; Legal

Notice 423 of 2007 ; Acts IX of 2008 , and III and XXIII of 2009; Legal

Notice 335 of 2010 ; and Acts VIII , XXXVI and LIV of 2016 and XXI of

2020 .

The short title of this Act is the Accountancy Profession

Act.

(1)

In this Act, unless the context otherwise requires -

"accountant" means a warrant holder or an accountancy firm;

"accountancy firm" means an entity, regardless of its legal form,

formed in accordance with article 10 and any connected

undertaking;

"aptitude test" means a test limited to the professional knowledge

of the applicant, made by the Board with the aim of assessing the

ability of the applicant to pursue the profession of auditor in Malta;

"audit" means the audit of historical financial statements and

includes the statutory audit; the term "auditing" shall be construed

accordingly;

"audit client" means an entity in respect of which an auditor

conducts an audit;

Audit Directive" means Directive 2006/43/EC of the European

Parliament and of the Council of 17 May 2006 on statutory audits

of annual accounts and consolidated accounts as amended by

Directive 2014/56/EU of the European Parliament and of the

Council of 16 April 2014;

"Audit Regulation" means Regulation (EU) No. 537/2014 of the

European Parliament and of the Council of 16 April 2014 or the

specific requirements regarding statutory audit of public interest

entities;

"audit firm" means an entity, regardless of its legal form, which

is authorised to practise in the field of auditing in terms of article

10 and any connected undertaking;

"auditor" is a holder of a practising certificate to practise in the

field of auditing and includes an audit firm;

"approved accountancy body" means a local association of

accountants for the time being recognized by the Board as an

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approved accountancy body under article 9;

"Board" means the Accountancy Board established by article 6;

"CEAOB" means the Committee of European Auditing Oversight

Bodies;

"competent authority" means the authority designated by the law

of Member States to be responsible for the regulation and, or

oversight of statutory auditors and audit firms or of specific aspects

thereof;

"compliance principal" shall mean a principal of a firm, who,

acting on behalf of and under the instructions of such firm, is

responsible for ensuring compliance with the provisions of this Act

or the regulations or directives issued under it, and in the case of a

sole practitioner, shall, in all cases, be the sole practitioner;

"connected undertaking" m eans a n undertaking which i s

effectively managed or promoted as one practice with the firm or as

a related undertaking of the firm;

"financial statements" means the individual accounts of an entity

or the consolidated accounts of a group of entities;

"firm" means, unless otherwise specified in a directive issued or

regulation made under this Act, an audit firm or an accountancy

firm;

"generally accepted accounting principles and practice" means

the generally accepted accounting principles and practice as

defined in the regulations prescribed by the Minister in terms of

article 8;

"home Member State" means a Member State in which an auditor

or audit firm is approved in accordance with regulation 4(1) of the

Accountancy Profession Regulations;

"host Member State" means a Member State in which an auditor

approved by his or her home Member State seeks also to be

approved in another Member State, or a Member State in which an

audit firm approved by its home Member State seeks to be

registered or is registered in another Member State;

"medium-sized undertakings" means undertakings referred to in

paragraph 1 of Part I of the Third Schedule of the Companies Act;

"Member State" means a member state of the European Union;

"Minister" means the Minister responsible for finance and, to the

extent of any functions delegated to it by the Minister, includes the

Board;

"network" means the larger structure which is

(a) aimed at cooperation and to which an auditor belongs;

and

(b) clearly aimed at profit- or cost-sharing or shares

common ownership, control or management, common

quality-control policies and procedures, a common

business strategy, the use of a common brand-name or

a significant part of professional resources;

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"non-practitioner" means any natural person who, during his or

her involvement in the governance of the Board and during the

period of three years immediately preceding that involvement has

not carried out statutory audits, has not held voting rights in an

audit firm, has not been a member of the administrative or

management body of an audit firm and has not been employed by,

or otherwise associated with, an audit firm;

"practising certificate" shall have the meaning assigned to it in

article 4(2);

"principal" means every member of the ad-ministrative or

management body of a firm, and any individual who is authorised

to sign a report on behalf of a firm; and in the case of an audit firm,

shall include any individual responsible for leading the

engagement

Provided that any individual carrying out the role of an

engagement quality control reviewer on a statutory audit, and who

is not authorised to sign a report on behalf of the firm in any

capacity, is not deemed a principal

Provided further that a warrant holder or a holder of a

practising certificate who acts as a sole practitioner, may not

engage a principal to act on his behalf;

"public-interest entity" means an entity governed by the law of a

Member State whose transferable securities are admitted to trading

on a regulated market of any Member State within the meaning of

point 14 of Article 4(1) of Directive 2004/39/EC, a credit

institution as defined in point 1 of Article 3(1) of Directive 2013/

36/EU of the European Parliament and of the Council of 26 June

2013 on access to the activity of credit institutions and the

prudential supervision of credit institutions and investment firms,

other than those referred to in Article 2 of that Directive, an

insurance undertaking within the meaning of Article 2(1) of

Directive 91/674/EEC and such other entities as may be prescribed

in regulations made by the Minister under this Act. References to

the Directives in this definition shall include any other legislation

amending or substituting such Directives;

"small undertakings" means the companies referred to in article

185(1) of the Companies Act;

"statutory audit" means an audit of annual financial statements or

consolidated financial statements in so far as

(a) required by European Union law;

(b) required by Maltese law as regards small undertakings;;

"third-country" means a country which is not a Member State;

"third-country audit entity" means an entity, regardless of its

legal form, which carries out audits of entities incorporated in a

third country, other than an entity which is registered as an audit

firm in any Member State as a consequence of approval in

accordance with Article 3 of the Audit Directive;

"third-country auditor" means an individual who carries out

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audits of an entity incorporated in a third country, other than an

individual who is registered as a statutory auditor in any Member

State as a consequence of approval in accordance with Article 3

and 44 of the Audit Directive;

" Tr i b u n a l " m e a n s t h e A d m i n i s t r a t i v e R e v i e w Tr i b u n a l

established by article 5(1) of the Administrative Justice Act;

"warrant holder" shall mean a person who holds a warrant issued

in terms of article 4(1).

(2) For the purposes of this Act references to a warrant issued

thereunder includes references to a warrant deemed to have been so

(3) In this Act and in any regulations, directives or guidelines

made thereunder, if there is any conflict between the English and

Maltese texts, the English text shall prevail.

(1) Except where otherwise prescribed in regulations made

by the Minister under this Act, no person shall practise the

profession of accountant unless he is a warrant holder.

(2) A person shall not qualify for a warrant under article 4

(a) he is of good conduct and repute;

(b) he is of full legal capacity;

(c) he has

(i) successfully completed the course leading to the

award of the professional accountancy degree

organized by the University of Malta; or

(ii) attained university entrance or equivalent level,

then completed a course of theoretical

instruction recognised by the Board

Provided that in every case the courses referred to in

this subarticle shall cover such subjectsat such levels as

may be prescribed in regulations made by the Minister

under this Act;

(d) unless covered in the courses referred to in paragraph

(c), he has passed an examination, part or all of which

must be in writing, of professional competence of

University final or equivalent examination level,

recognised or set by the Board for that purpose

Provided that the Board shall ensure that in the case of

an application for a practising certificate in the field of

auditing the examination of professional competence

referred to in this subarticle adequately covers the

necessary level of theoretical knowledge of the

subjects prescribed in regulations made by the

Minister under this Act relevant to auditing as well as

the ability to apply such knowledge in practice

Provided further that where a person has completed a

course of theoretical instruction and passed an

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examination of professional competence of university

final or equivalent examination level relating to the

accountancy profession and recognised by the Board

but which did not cover all of the subjects prescribed

in regulations made by the Minister under this Act, the

Board may accept such qualification after such person

shall have passed such examination or examinations in

local laws and in those other subjects as the Board may

determine according to the particular circumstances;

and

(e) he satisfies the Board that he has adequate experience

in the practice of accountancy for an aggregate period

of three years, of which an equivalent of at least one

year’s experience shall be gained after he has obtained

the academic qualifications stipulated in paragraph (c).

(3) Notwithstanding the provisions of subarticle (2), the Board

may issue, to any person who is duly qualified to act as accountant

in any third-country, a warrant to act as accountant in Malta for

such limited period or periods or such specific purpose or purposes,

or both such period and purpose, and subject to such other

conditions as may be specified in the warrant.

(4) Any person who acts in contravention of any of the

provisions of this article shall be guilty of an offence and shall be

liable on conviction for each offence, in respect of the first offence

to a fine (multa) not exceeding one thousand and two hundred euro

(€1,200.00) and in respect of a second or subsequent offence to a

fine (multa) not exceeding six thousand euro (€6,000.00) or to

imprisonment for a period not exceeding six months, or to both

such fine and imprisonment, and in the case of a continuing offence

to an additional fine (multa) not exceeding one hundred and twenty

euro (€120.00) for each day during which the offence continues.

(5) Any person who, for the purpose of obtaining a warrant or

practising certificate under this Act, gives any wrong information

or otherwise acts in a deceitful or fraudulent manner, shall be guilty

of an offence and shall be liable on conviction for each offence to a

fine (multa) not exceeding twelve thousand euro (€12,000.00) or to

imprisonment not exceeding twelve months or to both such fine and

imprisonment.

(6) Any person who, not being a warrant holder or a holder of a

practising certificate in the field of auditing issued under this Act,

assumes the title or designation of "certified public accountant" or

of "certified public accountant and auditor" or their abbreviations

"CPA" or "CPAA" or in any other manner indicates that he is

entitled to exercise the profession of accountant or to act as auditor

in Malta, shall be guilty of an offence and shall be liable on

conviction for each offence to a fine (multa) not exceeding two

thousand and three hundred euro (2,300.00) and in respect of a

second or subsequent offence to imprisonment for a period not

exceeding three months or to both such fine and imprisonment.

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(1) A warrant to practise the profession of accountant shall

be issued by the Board to any person who satisfies the requirements

of article 3(2).

(2) A person holding a warrant issued in terms of this article

may in addition hold one or more certificates issued by the Board

(hereinafter in this Act also referred to as "a practising certificate")

to practise in such fields of the profession of accountant, including

auditing, as may be prescribed in directives issued by the Board

under this Act and may not practise in such fields unless he holds

the relative certificate.

(3) The Board shall issue a practicing certificate to practise in

the field of auditing in Malta to an individual of good repute who is

an approved auditor in any Member State provided that such

individual has, to the satisfaction of the Board, passed an aptitude

test, covering the local laws and regulations relevant to auditing,

set by the Board for this purpose.

(4) Where a practicing certificate in the field of auditing is

withdrawn for any reason, the Board shall communicate that fact

and the reasons for the withdrawal to the relevant competent

authorities of the Member States where the auditor is also

registered.

(5) The Minister acting on the recommendation of the Board

may make regulations prescribing the qualifications required for

the issue of certificates in terms of subarticles (2), (3) and (6) as

well as to regulate their suspension, withdrawal or the taking of any

other regulatory measures which may be reasonably necessary to

protect the public interest.

(6) Subject to reciprocity and subject to such directives as may

be prescribed by the Board under this Act, the Board may issue a

practising certificate to practice in the field of auditing to a third-

country auditor if it is satisfied that such individual is in possession

of the qualifications set out in article 3(2), has passed an aptitude

test set by the Board in accordance with subarticle (3) and satisfies

any other conditions which may be prescribed in regulations made

by the Minister under this Act.

A warrant holder shall be entitled to use the designation

"Certified Public Accountant" as well as the abbreviation "CPA".

Every warrant holder shall give to the Board such

information as the Board may reasonably require or as may be

prescribed in directives issued by the Board under this Act, and

shall give notice to the Board of any relevant change in any

information previously given to it within fifteen days after the date

on which the change occurs.

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(1) There shall be a Board, to be known as the

Accountancy Board, consisting of a Chairman and six other

members, all of whom shall be non-practitioners and who are

knowledgeable in the areas relevant to statutory audit and

accounting, who shall be appointed by the Minister in accordance

with the provisions of this Act and shall hold office for such term

not exceeding three years, and under such conditions as may be set

out in their respective letter of appointment

Provided that on the expiration of the term for which a

person is appointed under this sub-article, he shall be eligible for

re-appointment.

(2)

The Board shall consist of

(a) a chairman of recognised standing and experience in

the accountancy and auditing profession;

(b) a member from a list of two nominated by the

University of Malta from among the teaching staff of

the Faculty or Faculties in which teaching of and

research in the field of accountancy and auditing is

organised;

(c) a senior official of the Ministry responsible for

finance;

(d) two members from a list of four nominated by a

recognised accountancy body; and

(e) two other members.

(3) The number of members present necessary to form a

quorum shall be four, but, subject to the presence of a quorum, the

Board may act notwithstanding any vacancy among its members.

(4) Save as aforesaid the Board may make its own rules and

otherwise regulate its own procedure.

(5) The Minister may also designate a public officer to act as

secretary to the Board, but the secretary shall not have a vote.

(6) In order to carry out its functions, the Board shall make use

of such funds as the Minister may from time to time make available

to it; as well as such funds as it may under regulations made under

this Act collect as fees or otherwise.

(1) The Board shall engage two practitioners in a

permanent role to assist it in the proper discharge of its duties. The

two practitioners shall be appointed by the Board for a one-year

term and chosen from a panel of six, nominated by a recognised

accountancy body. In the fulfilment of their duties, the practitioners

shall not be involved in any decision-making of the Board. The

practitioners shall leave the room each time a vote is taken or there

is dissension among board members. The practitioners shall be

required to desist from their work when any possible conflict of

interest arises. A practitioner who has served for a one-year term

shall only be eligible for re-appointment after three years have

elapsed from his term of duty.

(2)

The Board shall be independent of statutory auditors and

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audit firms.

(3) The Board shall act in a transparent manner; this shall

include the publication of annual work programmes and activity

(4) The system of public oversight shall be adequately funded

and shall have adequate resources to initiate and conduct

investigations. The funding of the public oversight system shall be

secure and free from any undue influence by statutory auditors or

audit firms.

(1) The Board shall regulate the accountancy profession in

the public interest and shall have the following functions

(a) to decide on applications for the issue of warrants or

practicing certificates;

(b) to deal, through disciplinary committees appointed

under article 7(16), with cases of professional

misconduct and other disciplinary proceedings in

respect of warrant holders or holders of a practising

certificate including cases leading to the suspension or

withdrawal of any warrant or practising certificate

issued under this Act;

(c) to take such measures as may be reasonably necessary

to protect the public interest and the integrity of the

profession including the placing of restrictions, the

imposition of fines and other similar measures on

warrant holders and holders of a practising certificate

which in no case shall exceed twelve thousand euro

(12,000.00) per warrant holder, practising certificate

holder or firm;

(d) to advise, or make recommendations or otherwise

express its views to the Minister on any matter on

which the Minister is to consult with the Board or on

which the Board is to make recommendations to the

Minister or on which the views of the Board are sought

by the Minister;

(e) to carry out all such things as may be necessary to

meet the obligations arising from Directive 2006/43/

EC, Directive 2014/56/EU and Regulation (EU) No.

537/2014;

(f) to establish procedures for the registration referred to

in subarticle (4);

(g) to operate an appropriate system of quality assurance;

(h) to carry out all such things as may be necessary to

meet the obligations arising from the Services

(Internal Market) Act, and to fulfill the powers,

functions and responsibilities attributed to a competent

authority in terms of the same Act, including the

provision of assistance to competent authorities of

other Member States in accordance with the provisions

of the same Act;

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(i)

to carry out all such things as may be necessary to

meet the obligations arising from the Mutual

Recognition of Qualifications Act;

(j) to inform any authority that it deems appropriate of

any sanctions or restrictions imposed by it or any other

matters that the Board considers necessary to protect

the public interest, on any warrant holder and holders

of a practising certificate, audit firms and accounting

firms;

(k) to publish guidelines on the interpretation of this Act

and the regulations and directives issued under it;

(l) where necessary, to initiate and conduct investigations

in relation to auditors and audit firms and the right to

take appropriate action;

(m) to regularly monitor the developments in the market

for providing statutory audit services to public-interest

entities and shall in particular assess the following

(i) the risks arising from high incidence of quality

deficiencies of an auditor or an audit firm,

including systematic deficiencies within an audit

firm network, which may lead to the demise of

any audit firm, the disruption in the provisions

of statutory audit services whether in a specific

sector or across sectors, the further

accumulation of risk of audit deficiencies and

the impact on the overall stability of the

financial sector;

(ii) the market concentration levels, including in

specific sectors;

(iii) the performance of audit committees;

(iv) the need to adopt measures to mitigate the risks

referred to in paragraph (a);

(n) to take measures in order to ensure that the application

of auditing standards to the statutory audit of small

undertakings is proportionate to the scale and

complexity of such undertakings; and

(o) such other functions as are or may be assigned to it by

this or any other law or as may be delegated to it by

the Minister.

(2) In the exercise of its functions under subarticle (1), the

Board may consult with such persons as it may deem appropriate,

and may also appoint committees, of which the chairman shall be a

member of the Board, for the carrying out of such studies or other

work as the Board may assign to them, including but not limited to,

the establishment and operation of a system of quality assurance.

(3) In the exercise of its function under subarticle (1)(e), the

Board shall be empowered to exchange confidential information

with the competent authorities of other Member States.

(4) The Board shall maintain an updated register, separately

identifying the following

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(a)

warrant holders and holders of practising certificates;

(b)

audit firms and accountancy firms;

(c)

third-country auditors and third-country audit entities;

(d)

suspended, revoked and withdrawn warrants and

practising certificates;

(e) suspended, revoked and withdrawn firm registrations;

(f) defaulter warrant holders and holders of a practising

certificate;

(g) defaulter audit and accountancy firms; and

(h) warrant holders and holders of a practising certificate

who have obtained an exemption from Continued

Professional Education in terms of Directive 1 and are

temporarily not in practice.

(5) The Minister may, upon recommendation of the Board,

prescribe, by regulations made under this Act, the details to be

contained in the register.

(6) The Board shall, in accordance with the provisions of this

article, register every third-country auditor and third-country audit

entity, where that third-country auditor or audit entity provides an

audit report concerning the annual or consolidated financial

statements of an undertaking incorporated outside the European

Union whose transferable securities are admitted to trading on the

regulated market in Malta within the meaning of point 14 of Article

4(1) of Directive 2004/39/EC, except when the undertaking in

question is an issuer exclusively of outstanding debt securities for

which one of the following applies

(a) they have been admitted to trading on a regulated

market in a Member State within the meaning of point

(c) of Article 2(1) of Directive 2004/109/EC of the

European Parliament and of the Council of 15

December 2004 prior to 31 December 2010 and the

denomination per unit of which is, at the date of issue,

at least fifty thousand euro (€50,000) or, in the case of

debt securities denominated in another currency,

equivalent, at the date of issue, to at least fifty

thousand euro (€50,000);

(b) they are admitted to trading on a regulated market in a

Member State within the meaning of point (c) of

Article 2(1) of Directive 2004/109/EC from 31

December 2010 and the denomination per unit of

which is, at the date of issue, at least one hundred

thousand euro (€100,000) or, in the case of debt

securities

denominated

in

another

currency,

equivalent, at the date of issue, to at least one hundred

thousand euro (€100,000).

(7) The audit report, referred to in subarticle (6), shall have no

legal effect until the third-country auditor or the third-country

audit-entity have been registered in accordance with the provisions

of this article.

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(8) Registered third-country auditors and third-country audit

entities shall, mutatis mutandis, be subject to the rules, obligations,

penalties and offences under this Act or the regulations or

directives issued under it

Provided that a third-country auditor or a third-country

audit entity may be exempt from being subject to the quality

assurance system if another Member State’s or third country’s

system of quality assurance that has been assessed as equivalent by

the Board in accordance with subarticle (9) has carried out a quality

review of the third-country auditor or audit-entity concerned during

the preceding three years.

(9) The Board may, on the basis of reciprocity disapply or

modify the requirements provided in subarticle (6) and (8) if the

third-country auditors or third-country audit entities are subject to

systems of public oversight, quality assurance and investigations

and penalties in the third-country that are equivalent to those under

this Act or the regulations and directives issued under it.

(10) The equivalence referred to in subarticle (9) shall be

assessed by the Board which may also rely on the assessments

carried out by another Member State.

(11) The Board may register a third-country auditor or a third-

country audit entity only if

(a) he/she/it is of good repute;

(b) in the case of a third-country audit entity, the majority

of the members of the administrative or management

body of the third-country audit entity meet the

requirements which are equivalent to those laid down

in article 10(6);

(c) the third-country auditor or the third-country auditor

carrying out the audit on behalf of the third-country

audit entity meets requirements which are equivalent

to those laid down in article 3(2);

(d) the audit referred to in sub-article (6) is carried out in

accordance with international auditing standards and

complies with the requirements of independence,

objectivity and audit fees set out in this Act or by the

Board or with equivalent standards and requirements;

(e) he/she/it publishes on his/her/its website an annual

transparency report which includes the information

referred to in article 18(1) or it complies with

equivalent disclosure requirements.

(12) The equivalence referred to in subarticle (11)(b), (c), (d)

and (e) shall be assessed by the Board.

(13) All the persons registered in accordance with the provisions

of this article shall notify the Board in writing of any change to the

information contained in the register pertaining to them within

fifteen days after the date on which the change occurs. The

notification shall be signed by the warrant holder, practising

certificate holder, third-country auditor, properly authorised

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representative of the registered firm or the third-country audit

entity and delivered to the Board by not later than such term as may

be prescribed in directives issued by the Board for that purpose

under this Act

Provided that the Board shall establish procedures for the

notification referred to in this subarticle to take place by electronic

means.

(14) The register shall be updated without undue delay and in

any case not later than four weeks following notification referred to

in subarticle (13).

(15) The register shall be made available electronically through

the Board’s website.

(16) The Board shall exercise its functions under subarticle

(1)(b) or under any regulations made by the Minister in terms of

article 8A, through disciplinary committees appointed in respect of

each particular proceeding and which shall in each case be

composed of five members appointed by the Board as to two from a

list of not less than ten persons submitted to the said Board each

year by approved accountancy bodies and as to the remaining three

members, at least one shall be a person holding a warrant under

article 4(1) who has practised his profession for such period as may

be prescribed in directives issued by the Board under this Act. The

Board shall appoint one of the said members being a warrant holder

or a person who had been a warrant holder to be the chairman of the

disciplinary committee.

(17) Without prejudice to any power granted to the disciplinary

committee under the Act or the regulations or directives issued

under it, the disciplinary committee shall have the power to impose

administrative fines against any person in case of professional

misconduct and other disciplinary proceedings which shall in each

case not exceed twelve thousand euro (12,000.00).

(18) The Board may with the agreement of the Minister

delegate, under such terms and conditions as it may deem

appropriate and subject to its overall supervision or control, any of

its functions, other than those under subarticle (1)(b) or those under

article 4, to an approved accountancy body.

(19) The Board shall publish an annual report including details

of its annual work programmes and activity reports, including its

tasks under the Audit Regulation, a description of the work carried

out by the disciplinary committee, a summary of the works carried

out in respect of quality assurance and the overall results of the

quality assurance system, the aggregated information on the

findings and conclusions of inspections referred to in Article 49 of

Directive Number 4 of the Accountancy Profession (Quality

Assurance) Directive and such other things which the Board deems

relevant.

This report shall also include information on

recommendations issued, follow-up on the recommendations,

supervisory measures taken and sanctions imposed. It shall also

include quantitative information and other key performance

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information on financial resources and staffing, and the efficiency

and effectiveness of the quality assurance system..

(20) The annual report shall be published by not later than the

31st March of every year.

(21) The Board shall cooperate with competent authorities with

a view to achieving a convergence of the requirements set out in

article 3(2)(c), (d) and (e). When engaging in such cooperation, the

Board and the other competent authorities shall take into account

developments in auditing and in the audit profession and, in

particular, convergence that has already been achieved by the

profession. They shall cooperate with the Committee of European

Auditing Oversight Bodies (CEAOB) and the competent authorities

referred to in Article 20 of the Audit Regulation in so far as such

convergence relates to the statutory audit of public-interest entities.

(22) The Board shall cooperate with other competent authorities

within the framework of the CEAOB with a view to achieving a

convergence of the requirements of the aptitude test mentioned in

article 4(3). The competent authorities shall enhance the

transparency and predictability of the requirements. They shall

cooperate with the CEAOB and with the competent authorities

referred to in Article 20 of the Audit Regulation in so far as such

convergence relates to statutory audits of public-interest entities.

(1) Without prejudice to Article 26 of the Audit

Regulation, in carrying out its tasks under the Act and the Audit

Regulation, the Board and any other public authorities may not

interfere with the content of audit reports.

(2) The Board shall have all the supervisory and investigatory

powers that are necessary for the exercise of its functions under the

Act and the Audit Regulation, including, but not limitedly the

power to

(a) access data related to the statutory audit or other

documents held by auditors or audit firms in any form

relevant to the carrying out of their tasks and to

receive or take a copy thereof;

(b) obtain information related to the statutory audit from

any person;

(c) carry out on-site inspections of auditors or audit firms;

(d) refer matters for criminal prosecution;

(e) request experts to carry out verifications or

investigations;

(f) take the administrative measures, and impose the

sanctions referred to in article 14.

(3) The Board may use the powers referred to in sub-article

(2)(a) only in relation to

(a) auditors and audit firms carrying out statutory audit of

public-interest entities;

(b) persons involved in the activities of auditors and audit

ACCOUNTANCY PROFESSION

firms carrying out statutory audit of public-interest

entities;

(c) audited public-interest entities, their affiliates and

related third parties;

(d) third parties to whom auditors and the audit firms

carrying out statutory audit of public-interest entities

have outsourced certain functions or activities; and

(e) persons otherwise related or connected to statutory

auditors and audit firms carrying out statutory audit of

public-interest entities.

(4) The Board shall exercise its supervisory and investigatory

powers in any of the following ways

(a) directly;

(b) in collaboration with other authorities;

(c) by application to the competent judicial authorities.

(5) The supervisory and investigatory powers of the Board

shall be exercised in full compliance with Maltese law, and in

particular, with the principles of respect for private life and the

right of defence.

(6) The processing of personal data processed in the exercise of

the supervisory and investigatory powers pursuant to this article

shall be carried out in accordance with the Data Protection Act and

Directive 95/46/EC.

(1) The Board may delegate any of the tasks required to be

undertaken pursuant to this Act and the Audit Regulation to other

authorities or bodies designated or otherwise authorised by law to

carry out such tasks, except for tasks related to

(a) the quality assurance systems referred to in Directive 4

Accountancy Profession (Quality Assurance);

(b) investigations arising from that quality assurance

system or from a referral by another authority; and

(c) sanctions and measures related to the quality assurance

reviews or investigation of auditors of public-interest

entities.

(2) Any execution of tasks by other authorities or bodies shall

be the subject of an express delegation by the Board. The

delegation shall specify the delegated tasks and the conditions

under which they are to be carried out.

Where the Board delegates tasks to other authorities or

bodies, it shall be able to reclaim these competences on a case-by-

case basis.

(3) The authorities or bodies shall be organised in such a

manner that there are no conflicts of interest. The ultimate

responsibility for supervising compliance with the Audit

Regulation, this Act and the implementing measures adopted

pursuant thereto shall lie with the Board.

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The Board shall inform the European Commission and the

competent authorities of Member States of any arrangement

entered into with regard to the delegation of tasks, including the

precise conditions governing such delegation.

(1) The Minister may, on the recommendation of the

Board, make regulations not inconsistent with the provisions of this

Act, to give better effect to any of such provisions and generally to

regulate the profession of accountants, and, without prejudice to

the generality of the foregoing, such regulations may in particular

include provisions with respect to -

(a) the establishment and definition of accounting

standards, procedures and generally accepted

accounting principles and practice applicable in

respect of the preparation of financial statements of

entities;

(b) the establishment and definition of auditing standards

and generally accepted auditing principles and practice

and other duties and practices to be followed by

auditors, either generally or in particular fields of

activity, including, but not limitedly, the laying down

of additional requirements in relation to the content of

the audit report referred to in articles 179 and 179A of

the Companies Act;

(c) the recognition of an approved accountancy body, the

conditions for such recognition and the suspension or

withdrawal thereof;

(d) the work which cannot be performed and the services

which cannot be rendered, whether wholly or in part,

except by a person holding a warrant or a practising

certificate under this Act;

(e) the work which cannot be performed and the services

which cannot be rendered by persons holding a

warrant or a practising certificate under this Act;

(f) any matter which is required or is authorised by this

Act to be prescribed;

(g) the procedure to be followed by the Board in relation

to applications for the issue of warrants or practising

certificates under article 4;

(h) the procedures to be followed in cases of professional

misconduct or other disciplinary proceedings;

(i) the procedure of the Board;

(j) the implementation of the provisions of Directive

2006/43/EC, Directive 2014/56/EU and Regulation

(EU) No. 537/2014;

(k) the implementation of the powers, functions and

responsibilities attributed to the Board as a competent

authority in terms of the Services (Internal Market)

Act;

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(l)

the punishments, penalties and other consequences and

effects to which a person may become liable or may

take place in the event of any contravention or non-

compliance with any provision of any regulations or

directive issued under or pursuant to this article; so

however that no punishment so prescribed may exceed

a fine (multa) of twenty-five thousand euro

(€25,000.00), or imprisonment for a term of one year

with or without such fine, or in the case of a

continuing offence a fine (multa) of one hundred and

twenty euro (€120.00) for each day on which the

offence continues, whether or not in addition to the

punishment aforesaid;

(m) the equivalence criteria of audits of the annual and

consolidated financial statements referred to in article

7(6);

(n) the general equivalence criteria to be used in assessing

the annual and consolidated financial statements

referred to in article 7(6);

(o) the equivalence referred to in article 7(9);

(p) the establishment of general equivalence criteria

which are to be used in assessing the public oversight,

quality assurance, investigation and sanctions systems

of a third country;

(q) the adequacy of the third countries referred to in

regulation 9 of the Accountancy Profession

Regulations;

(r) the establishment of general adequacy criteria which

are to be used in order to assess whether the competent

authorities of third countries may be recognised as

adequate to cooperate with the Board on the exchange

of audit working papers or other documents held by

auditors and audit firms;

(s) the establishment of non-binding guidelines on

methodology for reporting non-financial information,

including non-financial key performance indicators,

general and sectoral, with a view to facilitating

relevant, useful and comparable disclosure of non-

financial information by undertakings.

(2) The Board may, with the approval of the Minister, issue

directives or guidelines regulating the activity of warrant holders,

practising certificate holders or firms on the following

(a) the professional conduct of warrant holders, practising

certificate holders or firms, code of ethics, standards

on internal quality control of audit firms and standards

of competency and integrity and independence to be

kept by the profession;

(b) the confidentiality of information obtained by a

warrant holder, practising certificate holder, firm or

their employees in connection with work performed or

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services rendered in connection with the accountancy

profession;

(c)

advertising and publicity by warrant holders,

practising certificate holders and firms;

(d)

obtaining professional work;

(e)

the manner in which experience for the purposes of

article 3(2)(e) or which may be required to obtain

practising certificates under article 4(2), and the

persons with whom such practice and experience may

be undertaken;

(f)

clients’ accounts and monies held on behalf of clients

and third parties;

(g)

continued professional education;

(h)

the establishment and operation of a system of quality

assurance;

(i)

the meaning and interpretation of any provision of this

Act and any regulations made in terms of subarticle

(1);

(j)

the punishments, penalties and other consequences and

effect to which a person may become liable or which

may take place in the event of any contravention of, or

non-compliance with the provisions of any directive,

so however that these may not exceed such parameters

as may be set out in the Act;

(k)

the implementation of the provisions of Directive

2006/43/EC, Directive 2014/56/EU and Regulation

(EU) No. 537/2014;

(l)

the implementation of the powers, functions and

responsibilities attributed to the Board as a competent

authority in terms of the Services (Internal Market)

Act;

(m) the provision of such information as may be required

from warrant holders, practising certificate holders

and firms by the Board in order to enable it to carry

out any of its functions under this Act;

(n) the establishment of a system of registration and

renewals for warrants and practising certificates;

(o) in exceptional circumstances, the signature(s) required

in the audit report mentioned in articles 179 and 179A

of the Companies Act need not be disclosed to the

public if such disclosure could lead to an imminent

and significant threat to the personal security of any

person, even though the name(s) of the person(s)

involved shall be known to the Board;

(p) other sanctioning powers in addition to those referred

to in article 14(2); and

(q) such other matters as may be prescribed by regulation.

(3)

Directives and guidelines issued in terms of subarticle (2)

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shall be published

(a) in the Gazette; or

(b) by the Ministry of Finance in a separate publication

and the fact of publication thereof shall be notified in

the Gazette together with information as to where the

said publication may be viewed or copies thereof

obtained by the public.

(4) Directives and guidelines issued in terms of subarticle (2)

shall not become operative before the lapse of one week from the

publication in the Gazette made in terms of subarticle (3), or such

later date as may be specified therein.

(5) Regulations, directives or guidelines made under any of the

provisions of this Act may be made in the English language only.

The Minister may make regulations for bringing into effect

the provisions of the Mutual Recognition of Qualifications Act and

subsidiary legislation issued thereunder.

(1) The Board may recognize any local association of

accountants as an approved accountancy body for the purposes of

this Act if the Board is satisfied, among such other matters as may

be prescribed, that the educational and professional qualifications

demanded by such association for associate membership thereof

conform to currently accepted standards and that such membership

is open to all persons having such qualifications.

(2) Such recognition shall be subject to such conditions as the

Board may, in granting recognition, impose or as may from time to

time be prescribed; and if at any time any of the conditions

aforesaid, or any of the provisions contained in or prescribed under

the next following subarticle, is not observed or fulfilled, or there

is a m aterial change in the circumstances under which the

recognition was granted, the Board may suspend or withdraw the

recognition.

(3) An approved accountancy body shall keep a register of its

associate members and shall enter therein the names of all persons

who qualify for such membership. The said register shall be kept in

such manner as may be prescribed.

(1) Where two or more persons intend to practise jointly

as accountants, they may form an accountancy firm having as one

of its main objects the practice of accountancy

Provided that for an accountancy firm to practise as an

audit firm it shall be required to have as one of its main objects the

practice of auditing and shall fulfil such other conditions as may be

prescribed in directives issued by the Board under this Act from

time to time

Provided further that a firm may provide other services

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subject to compliance at all times with the rules on scepticism,

independence and professional ethics set out in the Code of Ethics

and any other regulations, directives or guidelines issued in terms

of article 8.

(2) Where an accountancy firm is authorised to act as an audit

firm it may indicate such fact in or together with the firm’s name as

the case may be.

(3) No person may be a principal in an accountancy firm which

is not also an audit firm unless such person

(a) holds a warrant issued under article 4(1); or

(b) is a person of good repute and is appropriately

qualified either by way of academic or professional

qualifications or experience.

(4) In an accountancy firm which is not also an audit firm the

persons listed in subarticle (3)(a) shall

(a) hold more than fifty per centum of the voting rights in

the firm; and

(b) constitute more than sixty per centum of the firm’s

administrative or management body

Provided that in the case of an accountancy firm which is

owned, managed and controlled by two individuals, only one of the

individuals sitting on the administrative or management body of the

firm shall be required to satisfy the conditions laid down in

subarticle (3)(a).

(5) No person may be a principal in an audit firm unless such

person

(a) holds a practising certificate to practise in the field of

auditing; or

(b) is an audit firm of good repute approved in a Member

State; or

(c) is a person of good repute and is appropriately

qualified either by way of academic or professional

qualifications or experience.

(6) An audit firm shall be of good repute and shall satisfy the

following conditions

(a) the individuals who carry out the audit on behalf of the

audit firm must hold a practising certificate in the field

of auditing;

(b) the majority of the voting rights in the audit firm must

be held by an audit firm or audit firms approved in any

Member State or by individuals holding a practising

certificate in the field of auditing; and

(c) sixty per centum of the administrative or management

body of the audit firm must be made up of an audit

firm or audit firms approved in any Member State or

by individuals holding a practising certificate in the

field of auditing

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Provided that in the case of an audit firm which is owned,

managed and controlled by two individuals, only one of the

individuals sitting on the administrative or management body of the

audit firm shall be required to satisfy the conditions laid down in

this paragraph (c).

(7) A firm shall, when duly formed according to law, be

registered with the Board, and upon such registration the

principals, shall, for so long as it is so registered, be authorised by

the Board to act, in the name and on behalf of the firm and where

applicable, to bring to the notice of the public the fact that it may

practise in any field of the profession of accountant for which a

certificate may be required under article 4(2); and in the case of an

accountancy firm it shall be entitled accordingly to use the

designation of certified public accountants and the abbreviation

"CPAs".

(8) When an audit firm carries out an audit, the audit report

shall be signed at least by an individual auditor carrying out the

audit on behalf of the audit firm.

(9) Every firm registered under this article shall give to the

Board such information as the Board may reasonably require or as

may be prescribed in directives issued by the Board under this Act,

and shall give notice to the Board of any relevant change in any

information previously given to it within fifteen days after the date

on which the change occurs.

(10) Notwithstanding any other provisions of this Act or of any

other enactment and notwithstanding any agreement to the

contrary, the principals shall be responsible for the maintenance of

the required professional standards and conduct including any

applicable Code of Ethics, and generally responsible for the

f u l f i l m e n t o f t h e i r o b l i g a t i o n s u n d e r t h i s A c t o r a n y ot h e r

applicable law.

(11) Any person who makes use of the designation "certified

public accountants" or its abbreviation "CPAs" and, or, bringing to

the notice of the public the holding of any particular certificate in

relation to a firm which is not registered under this article or in any

other manner knowingly makes use of a name falsely implying the

existence of such a firm, or that such a firm is registered, or may

otherwise lawfully function, under this article, or does any other act

calculated to lead to the belief that any of the facts aforesaid exists

when in fact it does not, shall be guilty of an offence and shall be

liable on conviction, for each offence, in respect of a first offence

to a fine (multa) not exceeding two thousand and five hundred euro

(€2,500.00), and in respect of a second or subsequent offence to a

fine (multa ) not exceeding twelve thousand euro (€12,000.00) or to

imprisonment to a term not exceeding three months or to both such

imprisonment and fine, and in the case of a continuing offence to

an additional fine (multa) not exceeding two hundred and fifty euro

(€250.00) for each day during which the offence continues.

(12) The provisions of article 3(5) shall, mutatis mutandis, apply

to the registration of a firm under this article as they apply to the

issue of a warrant under this Act.

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(1) By way of derogation from article 10(7), an audit firm

which is approved in another Member State shall be entitled to

perform statutory audits provided that the key audit partner who

carries out the statutory audit on behalf of the audit firm complies

with article 3(1) and (2) and regulation 4(1) and (2) and regulation

7 of the Accountancy Profession Regulations.

(2) Where an audit firm which qualifies under sub-article (1)

wishes to carry out statutory audits, it shall register with the Board

in accordance with article 7(4) and (15) and regulation 6 of the

Accountancy Profession Regulations.

(3) The Board shall register the audit firm if it is satisfied that

the audit firm is registered with the competent authority in the

home Member State. Where the Board intends to rely on a

certificate attesting to the registration of the audit firm in the home

Member State, the Board may require that the certificate issued by

the competent authority in the home Member State be not more

than three months old. The Board shall inform the competent

authority in the home Member State of the registration of the audit

firm.

(1) Every firm formed under article 10 and every warrant

holder or a holder of a practising certificate, shall, for so long as

they hold such a warrant or practising certificate or, as the case may

require, for so long as they are so formed, and thereafter with

respect to anything done or omitted during that time, be covered by

an indemnity insurance, by such company, in such manner and for

such amount as may be prescribed in regulations made by the

Minister under this Act, against any liability which such person or

firm may incur for compensation in respect of any loss or damage

which a client or any other person may suffer as a result of any

negligent act, error or omission committed by any such person or

firm, or any principal thereof, or by any of their employees, in the

carrying out of their functions as well as against any claim in

respect of any loss or damage brought about or contributed by any

dishonest, fraudulent, criminal or malicious act or omission of any

of their employees.

(2) (a) The indemnity insurance referred to in subarticle (1)

shall also extend to cover claims in respect of loss or

damage made in the five years immediately following

the cessation of the policy as a result of the retirement

of or the surrender of the warrant or practising

certificate by any principal and provided that the

negligent act, error or omission giving rise to the claim

had occurred during the period of insurance of the

policy.

(b) In the event that an insurance policy is transferred

from one insurer to another, the new policy shall

extend to indemnify the assured against any loss or

claim made against the assured in respect of any

negligent act, error or omission which has occurred, or

is alleged to have occurred, prior to the inception of

the new policy, provided that the assured is unaware of

ACCOUNTANCY PROFESSION

such loss or claim at the time of completing the new

policy, and such loss or claim has not been notified

under any other policy attaching prior to the inception

of the new policy.

(3) (a) The requirement of an indemnity insurance under this

article shall not apply to any person who is a warrant

holder or a holder of a practising certificate in respect

of any year in which he has not exercised the

profession of accountant or auditor and who has before

the commencement of such year informed the Board in

writing that during that year he will not be exercising

the profession of accountant or auditor.

(b) The provisions of paragraph (a) shall not be construed

as exempting any person from the obligation to be

covered by an indemnity insurance for the further

period of five years immediately following any year in

which he so exercised such profession.

(c) For the purpose of this subarticle any warrant holder or

a holder of a practising certificate who in any year -

(i) does not in any manner exercise the said

profession; or

(ii) exercises the said profession as an employee of

the Government or of a body corporate

established by law, or of another person, or of a

firm, in respect only of the exercise of such

profession in the course of his duties during such

employment,

shall be exempted from the obligation to be covered by

an indemnity insurance under subarticle (1).

(4) Every person or firm bound to be covered by an indemnity

insurance under this article shall each year, together with the

annual return, inform the Board in writing of the name of the

insurance company, the relative number of the insurance policy,

provide documentary evidence from the insurance company that

such person or firm is actually covered by the identified policy of

insurance, and shall declare to the Board that such level of

insurance cover amounts to not less than such minimum levelas

may be prescribed in regulations made by the Minister under this

Act.

(5) Every person who fails to comply with any of the foregoing

provisions of this article shall be guilty of an offence and shall be

liable on conviction for each offence to a fine (multa) not

exceeding six thousand euro (€6,000.00), or to imprisonment for a

period not exceeding three months, or to both such fine and

imprisonment, and in the case of a continuing offence to an

additional fine not exceeding six hundred euro (€600.00) for each

day during which the offence continues.

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Every person who acts or omits to act in breach of his

professional duty as accountant or auditor, shall, if such act or

omission amounts to dishonesty or serious misconduct, be liable on

conviction to imprisonment for a period of not less than one year

and not exceeding five years, and the court may also inflict on such

person a fine ( multa ) not exceeding sixty thousand euro

(€60,000.00).

Any agreement or other arrangement, as may be prescribed

in regulations made by the Minister under this Act, purporting to

exempt a warrant holder or a holder of a practising certificate, from

any liability, responsibility or duty relative to the statutory audit,

except under a policy of insurance made out under article 11, to

indemnify him against any such liability or responsibility, shall be

null and void.

(1) In the case of a breach of any rules under this Act or

any regulations or directives issued under it, the Board shall have

the power to issue administrative fines and reprimands, and to take

such other measures as it may deem appropriate according to the

circumstances of the case.

(2) The Board shall have the power to take and, or impose at

least the following administrative measures and sanctions for

breaches of the provisions of the rules under this Act and, where

applicable, the Audit Regulation

(a) a notice requiring the natural or legal person

responsible for the breach to cease the conduct and to

abstain from any repetition of that conduct;

(b) a public statement which indicates the person

responsible and the nature of the breach, published on

the website of the Board;

(c) a temporary prohibition, of up to three years’ duration,

banning the statutory auditor, the audit firm or the key

audit partner from carrying out statutory audits and, or

signing audit reports;

(d) a declaration that the audit report does not meet the

requirements of article 179A of the Companies Act or,

where applicable, article 179B of that Act;

(e) a temporary prohibition, of up to three years’ duration,

banning a member of an audit firm from exercising

functions in audit firms or public-interest entities;

(f) the imposition of administrative pecuniary sanctions

on natural and legal persons.

(3) When determining the type and level of administrative

sanctions and measures mentioned in sub-article (1), article 7(17)

and article 15, the Board and, or the disciplinary committees

appointed in terms of article 7(16) shall take into account all

relevant circumstances, including where appropriate

(a) the gravity and the duration of the breach;

(b) the degree of responsibility of the responsible person;

(c) the financial strength of the responsible person, for

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example as indicated by the total turnover of the

responsible undertaking or the annual income of the

responsible person, if that person is a natural person;

(d) the amounts of the profits gained or losses avoided by

the responsible person, in so far as they can be

determined;

(e) the level of cooperation of the responsible person with

the Board;

(f) previous breaches by the responsible legal or natural

person.

Additional factors may be taken into account by the Board

and, or the disciplinary committees appointed in terms of article

7(16) where such factors are specified in a legal provision,

regulation or Directive.

(1) Without prejudice to article 14, a warrant or practising

certificate issued under any of the provisions of this Act may be

suspended or subjected to other conditions, and the registration of a

firm under article 10 may be suspended, cancelled or subjected to

other conditions, by the Board, in accordance with the provisions of

this article, if the person to whom such a warrant or practising

certificate was issued or the firm or any of the principals of the

firm

(a) has, following an enquiry held by the disciplinary

committee appointed under article 7(16), been found

guilty of any of the following acts or omissions

(i) dishonesty, serious misconduct or gross

negligence in the exercise of his profession;

(ii) a contravention of any regulation made or directive

issued in terms of this Act where the regulation or

directive provides for the suspension, cancellation,

withdrawal or subjection to conditions of a warrant

or practising certificate as a consequence of such

contravention;

(iii) material contravention of regulations or

directives with respect to professional standards,

practices or integrity;

(iv) grievous conduct discreditable to the profession;

(v) failure to comply with any condition attached to

a warrant or practising certificate under

subarticle (5) when such failure is of a material

nature; or

(b) has been found guilty by a court of law -

(i) of an offence under this Act or any regulations

made thereunder; or

(ii) of a crime affecting public trust or of theft or of

fraud or of knowingly receiving property

obtained by theft or fraud or of any crime

punishable by a term of imprisonment exceeding

one year

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Provided that the Board may, in any of the cases

referred to in (a) or (b) above

(i) revoke or withdraw a practising certificate; or

(ii) revoked or cancelled by the Board.

(2)

Without prejudice to the provisions of subarticle (1)

(a)

a warrant may be withdrawn or cancelled by the

Board at the request of the warrant holder;

(b)

a practising certificate may be withdrawn or cancelled

by the Board at the request of the practising certificate

holder or the firm;

(c)

the registration of a firm may be cancelled by the

Board at the request of the firm;

(d)

a warrant may be revoked or cancelled by the Board,

whenever the Board is of the opinion that there are

material circumstances concerning the person to whom

the warrant was issued or if the warrant had not been

issued, would disqualify such person from obtaining a

warrant;

(e)

a practising certificate and the registration of a firm

may be revoked or cancelled by the Board whenever

the Board is of the opinion that there are material

circumstances concerning the person to whom the

practising certificate was issued or the firm which, if

the warrant or practising certificate had not been

issued or the firm registered, as the case may require,

would disqualify such person from obtaining a

practising certificate or such firm from being

registered;

(f)

Where the approval of an audit firm is withdrawn for

any reason, the Board shall communicate that fact and

the reasons for the withdrawal to the relevant

competent authorities of Member States where the

audit firm is also registered.

(3) In exercising its functions under this article the disciplinary

committee shall act in accordance with such rules and procedures

as shall be prescribed in directives issued by the Board under this

(4) Where a warrant or practising certificate or registration has

been suspended or subjected to conditions or when the practising

certificate or the registration of the firm has been withdrawn or

cancelled under any of the provisions of this article, the suspension

or the conditions may be lifted by the Board at any time; and where

the warrant or practising certificate has been withdrawn under

subarticle (2)(a) or (b) or the registration cancelled under subarticle

2(c), a new warrant or practising certificate may be issued or a new

registration made at any time if the conditions for such issue or

registration are satisfied.

(5) Where a warrant has been revoked under any of the

provisions of this article, other than subarticle (1)(a)(i) and (b), in

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respect of an offence against article 3(5), article 10(11) or article

10(12), the Board may, after the expiration of two years from the

date of the revocation, issue a fresh warrant under article 4, under

such conditions as it may impose.

(6) Where a practising certificate has been revoked under any

of the provisions of this article, other than subarticle (1)(a)(i) and

(b), in respect of an offence against article 3(5), article 10(11) or

article 10(12), the Board may, after the expiration of two years

from the date of the revocation, issue a fresh practising certificate

under article 4, under such conditions as may be imposed by the

Board.

(7) Upon the revocation or withdrawal of a warrant or

practising certificate issued under this Act, or during such period as

such a warrant or practising certificate is suspended, the person to

whom the warrant or practising certificate was issued shall cease to

be the holder of such warrant or practising certificate; and upon the

cancellation of any registration of a firm under article 10, or for

such period as such registration is suspended, the firm shall cease

to be registered.

(1) A right of appeal to the Tribunal, from the decisions

referred to in article 15B, shall be competent to any person

aggrieved by the decision

Provided that in any case, a person making an appeal to the

Tribunal shall also explain his juridical interest in impugning the

decision appealed from.

(2) Unless otherwise provided by the Administrative Justice

Act or any regulations made thereunder, an appeal from the

decisions referred to in article 15B shall be made by application

and shall be filed in the registry of the Tribunal within twenty days

from the date on which the said decision has been notified to the

party appealing.

Unless otherwise provided by law, an appeal shall lie to the

Tribunal from the following decisions made under this Act

(a) any decision of the Board taken pursuant to article

7(1)(a);

(b) any decision of the Board pursuant to article 7(1)(b)

taken following an enquiry held by the disciplinary

committee appointed under article 7(16);

(c) any decision of the Board to take a measure in terms of

article 7(1)(c);

(d) any decision of the disciplinary committee to impose

an administrative fine pursuant to article 7(17);

(e) any decision of the Board to refuse the registration of a

firm pursuant to article 10(7) or any decision of the

Board pursuant to article 15(1) to suspend, cancel or

subject to other conditions the registration of a firm or

to revoke or cancel the registration of a firm pursuant

to article 15(2)(e);

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(f)

any decision of the Board, pursuant to article 14, to

issue administrative fines or reprimands or to impose

other measures;

(g) any decision taken by the Board, pursuant to article

15(1), to revoke, withdraw or suspend a practising

certificate, or to subject such practising certificate to

other conditions, or to revoke or cancel a practising

certificate pursuant to article 15(2)(e);

(h) any decision taken by the Board, pursuant to article

15(1), to suspend a warrant or to subject such warrant

to other conditions;

(i) any decision taken by the Board, pursuant to article

15(1) or article 15(2)(d), to revoke or withdraw a

warrant; and

(j) any decision taken in terms of regulations or directives

issued under this Act, when the regulation or directive

explicitly grants a right of appeal in terms of this

article.

(1) The decision of the Board shall stand pending an

appeal, whether before the Tribunal or the Court of Appeal, and

shall be adhered to by all the parties to whom the decision applies.

(2) The Tribunal or the Court of Appeal, as the case may be,

where it considers it to be appropriate, may on the application of a

party to the appeal, suspend the decision of the Board, pending the

final determination of the appeal. The Tribunal or the Court of

Appeal, in deciding to suspend the decision, shall state their

reasons for doing so.

(1) The provisions of this Act establishing offences and

punishments in respect thereof shall not affect the operation of any

other law establishing offences and punishments in respect of the

same acts or omissions and shall not, in particular, affect the

application of any higher punishments under any other law.

(2) For the purposes of article 3(6) and of article 10(11), the

use on any card, letterhead, sign, board, plate, advertisement or

other written, printed or engraved device, instrument or document,

of the words "certified public accountant" or its abbreviation

"CPA", whether in its singular or plural form, in relation to a name,

shall be sufficient evidence of the knowledge of such use by the

person in relation to whose name the said words or abbreviations

are used, unless such person proves that the use was made without

his knowledge and that upon becoming aware of the use he took

adequate steps to stop it.

(3)

For the purposes of this Act

(a) a person shall not be deemed to exercise the profession

of accountant if he acts simply as an employee of, or

assistant to, an accountant, and does not issue any

accounting or financial statement over his name;

(b) to the extent that is so prescribed, a person shall not be

deemed to exercise the profession of accountant if he

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is in such employment or holds or acts in such office,

or performs only such work, services, acts or

functions, as may be prescribed in directives issued by

the Board under this Act;

(c) to the extent that is so prescribed in directives issued

by the Board under this Act, a person shall not be

deemed to exercise the profession of accountant if he

gives assurances on the future viability of an audited

entity or on the efficiency or effectiveness with which

the management or the board of directors has

conducted or will conduct the affairs of the entity.

(4) The conduct by the Board of proceedings for professional

misconduct and other disciplinary proceedings in terms of article 7

shall be without prejudice to any proceedings which may be taken

against the person concerned under the provisions of the Criminal

Code or of any other law and any proceedings so taken shall be

without prejudice to any proceedings that may be taken by the

Board.

(5) The Minister may by regulation prescribe that the

provisions of subarticle (2) be applied mutatis mutandis in respect

of the holding of a practising certificate in the field of auditing.

(1) An auditor shall, in the case of his dismissal or

resignation as auditor of an audit client during his term of

appointment, inform the Board in writing of such dismissal or

resignation of an audit and shall give adequate explanations for the

reasons thereof.

(2) The notification referred to in subarticle (1) shall be made

within fourteen days from the dismissal or resignation as the case

may be.

(1) An auditor or an audit firm that carries out statutory

audits of public-interest entities shall make public an annual

transparency report at the latest four months after the end of each

financial year. That transparency report shall be published on the

website of the auditor or the audit firm and shall remain available

on that website for at least five years from the day of its publication

on the website. If the auditor is employed by an audit firm, the

obligations under this article shall be incumbent on the audit firm.

An auditor or an audit firm shall be allowed to update its

published annual transparency report. In such a case, the auditor or

the audit firm shall indicate that it is an updated version of the

report and the original version of the report shall continue to

remain available on the website.

Auditors and audit firms shall communicate to the

competent authorities that the transparency report has been

published on the website of the auditor or the audit firm or, as

appropriate, that it has been updated.

(2) The annual transparency report shall include at least the

following

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(a) a description of the legal structure and ownership of

the audit firm;

(b) where the auditor or the audit firm is a member of a

network

(i) a description of the network and the legal and

structural arrangements in the network;

(ii) the name of each auditor operating as a sole

practitioner or audit firm that is a member of the

network;

(iii) the countries in which each auditor operating as

a sole practitioner or audit firm that is a member

of the network is qualified as a statutory auditor

or has his, her or its registered office, central

administration or principal place of business;

(iv) the total turnover achieved by the auditors

operating as sole practitioners and audit firms

that are members of the network, resulting from

the statutory audit of annual and consolidated

financial statements;

(c) a description of the governance structure of the audit

firm;

(d) a description of the internal quality control system of

the auditor or of the audit firm and a statement by the

administrative or management body on the

effectiveness of its functioning;

(e) an indication of when the last quality assurance review

referred to in Article 26 of the Audit Regulation was

carried out;

(f) a list of public-interest entities for which the auditor or

the audit firm carried out statutory audits during the

preceding financial year;

(g) a statement covering the auditor’s or the audit firm’s

independence practices which also confirms that an

internal review of independence compliance has been

conducted;

(h) a statement on the policy followed by the auditor or

the audit firm concerning the continuing education of

auditors as referred in Directive 1 Accountancy

Profession (Continued Professional Education);

(i) information concerning the basis for the principals’

remuneration in audit firms;

(j) a description of the auditor’s or the audit firm’s policy

concerning the rotation of key audit partners and staff

in accordance with Article 17(7) of the Audit

Regulation;

(k) where not disclosed in its financial statements within

the meaning of article 167(2) of the Companies Act,

information about the total turnover of the auditor or

the audit firm, divided into the following categories

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(i)

revenues from the statutory audit of annual and

consolidated financial statements of public-

interest entities and entities belonging to a group

of undertakings whose parent undertaking is a

public-interest entity;

(ii) revenues from the statutory audit of annual and

consolidated financial statements of other

entities;

(iii) revenues from permitted non-audit services to

entities that are audited by the statutory auditor

or the audit firm; and

(iv) revenues from non-audit services to other

entities.

The auditor or the audit firm may, in exceptional

circumstances, decide not to disclose the information required in

paragraph (f) to the extent necessary to mitigate an imminent and

significant threat to the personal security of any person. The

auditor or the audit firm shall be able to demonstrate to the Board

the existence of such threat.

(3) The transparency report shall be signed by the auditor or

the audit firm.

(1) An auditor or an audit firm carrying out the statutory

audit of a public-interest entity, or any member of the network to

which the auditor or the audit firm belongs, shall not directly or

indirectly provide to the audited entity, to its parent undertaking or

to its controlled undertakings within the European Union any

prohibited non-audit services in

(a) the period between the beginning of the period audited

and the issuing of the audit report; and

(b) the financial year immediately preceding the period

referred to in paragraph (a) in relation to the services

listed in sub-article (2)(e).

(2) For the purposes of sub-article (1), prohibited non-audit

services shall mean

(a) tax services relating to

(i) preparation of tax forms;

(ii) payroll tax;

(iii) customs duties;

(iv) identification of public subsidies and tax

incentives unless support from the auditor or the

audit firm in respect of such services is required

by law;

(v) support regarding tax inspections by tax

authorities unless support from the auditor or the

audit firm in respect of such inspections is

required by law;

(vi) calculation of direct and indirect tax and

deferred tax;

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(vii) provision of tax advice;

(b) services that involve playing any part in the

management or decision-making of the audited entity;

(c) bookkeeping and preparing accounting records and

financial statements;

(d) payroll services;

(e) designing and implementing internal control or risk

management procedures related to the preparation and,

or control of financial information or designing and

implementing financial information technology

systems;

(f) valuation services, including, valuations performed in

connection with actuarial services or litigation support

services;

(g) legal services, with respect to

(i) the provision of general counsel;

(ii) negotiating on behalf of the audited entity; and

(iii) acting in an advocacy role in the resolution of

litigation;

(h) services related to the audited entity’s internal audit

functions;

(i) services linked to the financing, capital structure and

allocation, and investment strategy of the audited

entity, except providing assurance services in relation

to the financial statements, such as the issuing of

comfort letters in connection with prospectuses issued

by the audited entity;

(j) promoting, dealing in, or underwriting shares in the

audited entity;

(k) human resources services, with respect to

(i) management in a position to exert significant

influence over the preparation of the accounting

records or financial statements which are the

subject of the statutory audit, where such

services involve

-

searching for or seeking out candidates for

such position; or

-

undertaking

reference

checks

of

candidates for such positions;

(ii) structuring the organisation design; and

(iii) cost control.

(3) By way of derogation from sub-article (2), the services

referred to in paragraphs (a)(i), (a)(iv) to (a)(vii) and (f) of the said

sub-article may be provided, provided that the following

requirements are complied with

(a) they have no direct or have immaterial effect,

separately or in the aggregate on the audited financial

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statements;

(b) the estimation of the effect on the audited financial

statements is comprehensively documented and

explained in the additional report to the audit

committee referred to in Article 11 of the Audit

Regulation; and

(c) the principles of independence laid down in the Code

of Ethics issued by the Board are complied with by the

auditor or the audit firm.

(4) An auditor or an audit firm carrying out statutory audits of

public-interest entities and, where the auditor or the audit firm

belongs to a network, any member of such network, may provide to

the audited entity, to its parent undertaking or to its controlled

undertakings non-audit services other than the prohibited non-audit

services referred to in sub-articles (1) and (2), subject to the

approval of the audit committee after it has properly assessed

threats to independence and the safeguards applied in accordance

with the Code of Ethics issued by the Board.

(5)

(a) When a member of a network to which the auditor or

the audit firm carrying out a statutory audit of a public-

interest entity belongs provides any of the non-audit

services, referred to in sub-articles (1) and (2), to an

undertaking incorporated in a third country which is

controlled by the audited public-interest entity, the

auditor or the audit firm concerned shall assess

whether his, her or its independence would be

compromised by such provision of services by the

member of the network.

(b) If his, her or its independence is affected, the auditor

or the audit firm shall apply safeguards where

applicable in order to mitigate the threats caused by

such provision of services in a third country. The

auditor or the audit firm may continue to carry out the

statutory audit of the public-interest entity only if he,

she or it can justify, in accordance with Article 6 of the

Audit Regulation and the Code of Ethics issued by the

Board, that such provision of services does not affect

his, her or its professional judgement and the audit

report.

(c) For the purposes of this sub-article

(i) being involved in the decision-taking of the

audited entity and the provision of the services

referred to in sub-article (2)(b), (c) and (e) shall

be deemed to affect such independence in all

cases and to be incapable of mitigation by any

safeguards.

(ii) provision of the services referred to in sub-

article (2), other than paragraphs (b), (c) and (e)

thereof, shall be deemed to affect such

independence and therefore to require

safeguards to mitigate the threats caused

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thereby.

(1) The information provided to the Board under the

provisions of this Act or the rules and directives issued under it

shall be signed by the compliance principal.

(2) The Board may issue rules prescribing the use of electronic

signatures as defined in point 1 of Article 2 of Directive 1999/93/

EC of the European Parliament and of the Council of 13 December

1999 on a Community framework for electronic signatures.

(1) The Board shall appropriately disclose to the public all

the measures taken and the penalties imposed on auditors in terms

of this Act or the regulations and directives issued under it

including the appropriate disclosure of penalties imposed. The

disclosure required by this article may take place through the

annual report published in terms of article 7(19).

(2) Without prejudice to the generality of subarticle (1), the

Board shall notify by registered mail the decisions taken pursuant

to articles 7(1)(a), 7(1)(b), 7(1)(c), 7(17), 10(7), 14, 15(1), 15(2)(d)

and 15(2)(e) to any person to whom such decision applies.

(1) The Board shall publish on its official website at least

any administrative sanction imposed for breach of the provisions of

this Act, the regulations made under it or Directives, or of the Audit

Regulation in respect of which all rights of appeal have been

exhausted or have expired, as soon as reasonably practicable

immediately after the person sanctioned has been informed of that

decision, including information concerning the type and nature of

the breach and the identity of the natural or legal person on whom

the sanction has been imposed

Provided that where the sanctions imposed are subject to

appeal, publication shall only be made after all rights of appeal

have been exhausted or have expired.

(2) The Board shall publish the sanctions imposed on an

anonymous basis, and in a manner which is in conformity with

Maltese law, in any of the following circumstances

(a) where, in the event that the sanction is imposed on a

natural person, publication of personal data is shown

to be disproportionate by an obligatory prior

assessment of the proportionality of such publication;

(b) where publication would jeopardise the stability of

financial markets or an ongoing criminal investigation;

(c) where publication would cause disproportionate

damage to the institutions or individuals involved.

(3) The Board shall ensure that any publication in accordance

with sub-article (1) is of proportionate duration and that it remains

on its official website for a minimum period of five (5) years after

all rights of appeal have been exhausted or have expired.

(4) The publication of sanctions and measures and of any

public statement by the Board shall respect fundamental rights as

laid down in the Charter of Fundamental Rights of the European

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Union, the Constitution of Malta and the Convention for the

Protection of Human Rights and Fundamental Freedoms; in

particular the right to respect for private and family life and the

right to the protection of personal data

Provided that such publication or any public statement is

not to contain personal data of third parties within the meaning of

the provisions of the Data Protection Act.

(1) The Board shall establish effective mechanisms that

encourage reporting of breaches of this Act, the regulations made

under it and Directives or of the Audit Regulation to the Board.

(2) The mechanisms referred to in sub-article (1) shall include

at least

(a) specific procedures for the receipt of reports of

breaches and their follow-up;

(b) protection of personal data concerning both the person

who reports the suspected or actual breach and the

person who is suspected of committing, or who has

allegedly committed that breach, in compliance with

the principles laid down in the Data Protection Act;

(c) appropriate procedures to ensure the right of the

accused person to a defence and to be heard before the

adoption of a decision concerning him or her, and the

right to seek an effective remedy before a tribunal

against any decision or measure concerning him or her.

(3) Audit firms shall establish appropriate procedures for their

employees to report potential or actual breaches of this Act, the

regulations made under it and Directives or of the Audit Regulation

internally through a specific channel.

(1) The Board shall provide the CEAOB annually with

aggregated information regarding all administrative measures and

all sanctions imposed in accordance with articles 7(17), 14, 15, 20,

20A and 20B.

(2) The Board shall immediately communicate to the CEAOB

all temporary prohibitions referred to in article 14(2)(c) and (e).

A warrant holder, practising certificate holder or firm shall,

if so requested by the Board and in the manner determined by the

Board, demonstrate compliance with the obligations imposed on

such warrant holder, practising certificate holder or firm pursuant

to the Services (Internal Market) Act.