ACCOUNTANCY PROFESSION REGULATIONS

SUBSIDIARY LEGISLATION 281.01

ACCOUNTANCY PROFESSION REGULATIONS

1st October, 2008

LEGAL NOTICE 18 of 2009, as amended by Legal Notices 111 of 2010

234 of 2016, 78 of 2019 and 314 of 2020.

The title of these regulations is the Accountancy

Profession Regulations.

Substituted by

L.N. 111 of 2010;

(Regulation 11)

L.N. 234 of 2016.

Rules of Procedure

1. The title of these rules is the Accountancy Profession Rules of Procedures.

2. (1)

In these rules

"the Act" means the Accountancy Profession Act;

"the Code" means the Code of Organization and Civil Procedure;

" t h e Di r e c t i v e " m e a n s t h e A c c o u n ta n c y P r of e s s i o n ( A n n u a l R e t u r n an d

Registration Fees) Directive, 2016;

"disciplinary committee" means a disciplinary committee appointed in terms of

article 7(16) of the Act;

"Secretary" means the Secretary of the Accountancy Board appointed in

accordance with the provisions of article 6(5) of the Act;

(2) Unless the context otherwise requires, terms used in these regulations and

which are not defined herein shall have the meaning assigned to them in the Act.

3. (1) Proceedings of the Board or a disciplinary committee in terms of

regulation 11 of the Accountancy Profession Regulations may be initiated

(a) by the Board ex officio;

(b) following a complaint or information received by the Board in writing

from any person on the conduct of a warrant holder, practicing

certificate holder or a firm; or

(c) following a complaint or information received by the Board in writing

from any person that a warrant holder or practicing certificate holder is

unfit to continue to practice his profession on the grounds of mental

infirmity.

(2)

(a) The Board may determine the form in which a complaint to the Board is

to be made;

(b) The form shall be made available on the official website of the Board.

(3) Any complaint or information received shall be submitted by the Secretary

to the Chairman who shall place such complaint or information on the agenda for

consideration by the Board at the next meeting of the Board.

(4)

(a) The Board may, at its discretion, require the complaint or information to

be confirmed by means of a declaration under oath by the person making

the complaint or providing the information;

(b) Such declaration shall state the address and description of the declarant,

and if any fact declared is not within the personal knowledge of the

declarant, such declaration shall state the source of the declarant’s

information and the grounds for his belief in the truth of the fact.

(5) If, on assessment of the complaint or information received, the Board

reaches the conclusion that the complaint or information received is

ACCOUNTANCY PROFESSION

(a) frivolous or vexatious, the Secretary shall notify by registered mail such

conclusion to the person who submitted the complaint or information,

and the Board shall not proceeded any further, however the person who

submitted the complaint or information has a right to appeal in terms of

article 15A of the Act;

(b)

admissible, the Board appoints a disciplinary committee to take

cognisance of such proceedings and reference to the Committee in sub-

rules (6) to (11) shall be construed as references to the disciplinary

committee.

(6) A member of the Committee shall in proceedings in which he may have a

conflict of interest or may be or may fairly be suspected to be biased, abstain from

taking part in any such proceedings.

(7) In the event of a commencement of proceedings, the Committee shall direct

the Secretary to

(a) serve on the warrant holder, practicing certificate holder or firm with

(i)

a copy of the notice of the initiation of the proceedings against

him or it;

(ii) if applicable, full details of the complaint or information

received;

(iii) if applicable, a copy of the declaration under oath made in

pursuant to sub-rule (4);

(b) invite the warrant holder, practicing certificate holder or firm to make

submissions in writing which are to reach the Secretary within a period

to be determined by the Committee, which period shall in no event be

less than fifteen days;

(c) warn the warrant holder, practicing certificate holder or firm with the

possible outcome of the proceedings including, if applicable

(i) the administrative fine that may be imposed;

(ii) the suspension, revocation and withdrawal of a warrant holder

and, or practicing certificate; and

(iii) the listing of the name of the warrant holder, practicing certificate

holder or firm within the list of the register of default warrant

holders and holders of practicing certificates;

(8) Proceedings of the Committee shall be held in public. However the

Committee may, when it considers it necessary or expedient, order that the

proceedings be held in private.

(9)

The Committee shall hold its own procedures. The Committee may

(a) seek clarifications from the complainant, the person providing the

information, the warrant holder, practicing certificate holder or the

representative of the firm to enable a proper evaluation of the complaint

or information received;

(b) invite the complainant, the person providing the information, the

warrant holder, practicing certificate holder or the representative of the

firm, to make oral submissions to the Committee;

(c) request the complainant or the person providing the information to be

confronted with the warrant holder, practicing certificate holder or the

representative of a firm;

(d) seek expert advice on a complaint or information received;

(e) take such action which it deems appropriate in terms of the Act and

directives issued under the Act.

(10) (a) The decision of the Committee shall be rendered in writing and

presented to the Board for its approval.

(b) The Committee shall indicate

(i) the infringement committed;

(ii) the reasons upon which such decision was taken;

(iii) the imposition of an administrative fine, if any, and the period

within which the amount is to be paid;

(iv) the revocation, suspension or withdrawal of the warrant and or

practicing certificate, where applicable; and

(v) any conditions attached to such revocation, suspension or

withdrawal, including the listing of the name of the warrant

holder, practicing certificate holder or firm within the register of

warrant holders and holders of practicing certificates in terms of

article 7(4) of the Act;

(c) The Board may approve or reject the decision of the Committee, and in

the case of rejection must provide the Committee with its reasons.

Nothing shall preclude the Committee from subsequently re-presenting

a revised decision to the Board for its approval relating to the same

matter.

(d) Following approval by the Board, the decision of the Committee shall

be notified by the Board to the warrant holder, practicing certificate

holder or firm, and the complainant, as the case may be.

The

notification to a warrant holder, practicing certificate holder or firm

shall be effected at the last address made known to the Board in terms of

article 5A of the Act and rule 6 of Directive 3.

(11) Any injured party may file an appeal before the Appeals Tribunal in terms of

article 15A of the Act, and article 15C of the Act shall apply accordingly.

4. (1) Without prejudice to the powers conferred on the Board under the

Directive, in the event that -

(a) a decision confirms that an amount is due by the warrant holder,

practicing certificate holder or firm; and, or

(b) a decision imposes an administrative fine on the said warrant holder,

practicing certificate holder or firm; and

(c) after 30 days from the date of the notification of the decision; and

(d)

should it be confirmed that an appeal has not been filed by any

aggrieved person in terms of article 15A of the Act

the Board may on the basis of article 166A of the Code, recover the amount of the

debt which is due together with the costs incurred up to the final decision, by

proceeding with the filing of a judicial letter which shall be drawn up in the form

established under the said article 166A, and serve it upon the warrant holder,

practicing certificate holder or firm concerned.

(2) Where the warrant holder, practicing certificate holder or firm do not oppose

the claim within 30 days from the notification thereof, the judicial letter shall upon

registration in terms of article 166B of the Code, constitute an executive title and the

provisions of Title VII of Part 1 of Book Second of the said Code shall apply.

ACCOUNTANCY PROFESSION

(3) Where the warrant holder, practicing certificate holder or firm oppose the

claim within 30 days from the notification thereof, the procedure contemplated

under article 166A of the Code shall be followed.

(4) Notwithstanding the provisions of article 256(2) of the Code, the executive

title referred to in sub-regulation (1) shall not be enforceable before the lapse of

fifteen days from the day the said judicial letter shall constitute an executive title in

terms of sub-rule (2).

In these regulations unless the context otherwise requires -

"the Act" means the Accountancy Profession Act;

"affiliate" means any undertaking, regardless of its legal form,

which is connected to a firm by means of common ownership,

control or management;

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

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

specific requirements regarding statutory audit of public-interest

entities;

"CEAOB" means the Committee of European Auditing Oversight

Bodies;

"competent authorities of other Member States" means the

authorities designated by the law of the other Member States

responsible for approval, registration, quality assurance, inspection

or oversight of statutory auditors in terms of the Directive;

"compilation engagement" means an engagement in which a

practitioner applies accounting and financial reporting expertise to

assist management in the preparation and presentation of financial

information of an entity in accordance with an applicable financial

reporting framework, and reports as required by International

Standard on Related Services;

"the 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;

"group auditor" means the auditor carrying out the audit of

consolidated accounts;

"review engagement" means an engagement carried out by an

auditor with the objective of enabling the auditor to state whether,

on the basis of procedures which do not provide all the evidence

that would be required in an audit, anything has come to the

auditor ’s attention that causes the auditor to believe that the

financial statements are not prepared, in all material respects, in

accordance with the applicable financial reporting framework;

"the Schedule" means the Schedule to these regulations;

"statutory auditor" means an individual who is approved by the

Board in terms of the Act and these regulations to carry out a

statutory audit;

"temporary service provider" means any individual, other than a

w a r r a n t h o l d e r, s e e k i n g t o p r o v i d e w o r k a n d , o r s e r v i c e s

comparable to those listed in regulation 3(2) on a temporary and

occasional basis in Malta;

"warrant holder" means a person who has been issued with a

warrant to practice the profession of accountant or is a firm

registered under article 10 of the Act.

(2) Unless the context otherwise requires, terms used in these

regulations and not defined shall have the meaning assigned to

them in the Act.

(1) No person other than a warrant holder may perform the

work or render the services listed in subregulation (2)

Provided that a person shall, for all intents and purposes of

law, be deemed to be a warrant holder upon receipt of a letter by

the Chairman of the Board containing a declaration that such

person has the requirements of article 3(2) of the Act and that he

may perform the work or render the services listed in subregulation

(2)

Provided further that a temporary service provider may

perform the work or render the services listed in subregulation (2)

subject to the temporary service provider meeting the conditions

contained in regulations made by the Minister in terms of article

8A of the Act.

(2)

The services indicated in subregulation (1) are

(a) the issuing of reports on prospective financial

information prepared for the promotion of investment

in an entity or for the raising of finance;

(b) the issuing of independent reports on share valuations

or valuations of businesses;

(c) acting as reporting accountants in prospectuses,

offering memoranda and other similar documents

intended for public subscription;

(d) the issuing of reports, including reports on a

compilation engagement, with respect to interim or

annual financial statements of any entity but excluding

any reports on financial statements prepared for

internal purposes; and

(e) any other service which may be prescribed by the

Minister or by any other law.

(3) Any person who acts in contravention of the provisions of

this regulation shall be guilty of an offence and shall on conviction

be liable to a fine (multa) of not more than six thousand euro

(6,000.00).

(1) Audits and review engagements, or any other matter

reserved to an auditor in terms of any other law, may only be

carried out by an individual, in that individual’s name or on behalf

of an audit firm, holding a practicing certificate in the field of

auditing issued in terms of article 4 of the Act, to an individual

who

(a) holds a warrant issued in terms of article 4(1) of the

Act and satisfies the Board that

(i)

he has adequate qualifications in auditing at an

advanced level;

(ii) satisfies the conditions referred to in article

3(2)(d) of the Act; and

(iii) has gained the equivalent of three years full time

practical training in inter alia auditing of

financial statements, at least two-thirds of which

shall be with an auditor approved in any Member

State

Provided that at least eighteen months of this

practical training were gained after obtaining the

degree or academic qualification relating to the

accountancy profession prescribed in article

3(2)(c) of the Act; or

(b) he satisfies the conditions laid down by article 4(3) or

4(6) of the Act

Provided that a person shall, for all intents and purposes of

law, be deemed to be a holder of a practising certificate upon

receipt of a letter by the Chairman of the Board containing a

declaration that such person has satisfied the requirements of this

subregulation and that he may carry out audits.

(2) The person providing the practical training in accordance

with the provisions of this regulation shall provide the Board with a

written declaration that inter alia it has the ability to provide

adequate practical training in accordance with the provisions of the

Act and the regulations and directives issued under it, on such form

prescribed by the Board for that purpose and any person making a

false declaration shall be guilty of an offence and shall be liable on

conviction to a fine (multa) not exceeding six thousand euro

(€6,000) and, where the person making a false declaration is a

warrant holder or a practising certificate holder, the Board may

institute disciplinary proceedings against such warrant holder or

practising certificate holder

Provided that any decision taken pursuant to the institution

of disciplinary proceedings shall be notified by registered mail to

any person to whom such decision applies and shall be subject to

appeal in terms of article 15B of the Act.

(3) An authorisation to act as auditor issued prior to the 25th

July, 1978, under the provisions of article 141 of the Commercial

Partnerships Ordinance as in force at the time of the issue of the

authorization, in favour of a person who was then a member of a

body of accountants recognized for the purposes of that article, or

th e h old in g of a warrant to ac t as au dit or i ssued u nd er th e

provisions of article 4(1) of the Act, prior to the date of entry into

force of the Accountancy Profession Regulations, 1987 ("the 1987

Regulations") or practising certificates issued in terms of the 1987

Regulations, shall for all purposes have the same effect of a

practising certificate issued under this regulation and be deemed to

have been so issued.

(4) The holder of a practising certificate issued under this

regulation may bring this fact to the notice of the public, so

however that holders of the warrant of certified public accountant

and auditor immediately before the date with effect from which

such person shall be deemed to have been issued with a practising

certificate under the immediately preceding subregulation, shall

cease to use the designation "certified public accountant and

auditor" and the corresponding abbreviation "CPAA".

(5) A firm registered under article 10 of the Act shall be

entitled to apply for a practising certificate to act as auditor

Provided that the provisions of subregulation (3) shall

apply mutatis mutandis in respect of firms registered under article

10 of the Act prior to the date of entry into force of the 1987

Regulations.

(6) The individuals who carry out a statutory audit on behalf of

an audit firm must be principals holding a practising certificate in

the field of auditing.

(7) Agreements or other arrangements purporting to exempt

persons required to hold a practising certificate issued under this

regulation from any liability, responsibility or duty relative to the

statutory audit, or to relieve him therefrom, or, except under a

policy of insurance made out under article 11 of the Act, to

indemnify him against any such liability or responsibility, shall be

null and void.

(8) The partners or shareholders of an audit firm as well as the

members of the administrative and management bodies of such a

firm, or of an affiliate shall not intervene in the execution of an

audit in any way which jeopardises the independence and

objectivity of the principals carrying out the audit on behalf of the

firm.

(1) Every person seeking to obtain a warrant or a

practising certificate.issued by the Board as the case may be,

(hereinafter referred to as the "applicant"), shall submit to

the.Board an application form in such form as may be determined

by the Board from time to time and made.publicly available on the

official website of the Board.together with such other

documentation as may be set out in the application form

Provided that the Board may, in ensuring whether an

applicant satisfies the requirement mentioned in article 3(2)(a) of

the Act, request and conduct an interview with such applicant.

(2) Every applicant shall, together with the application form

submitted to the Board make a payment of an application fee of

twenty-five euro (€25.00) payable to the Board.

(3) The Board shall, without delay, acknowledge receipt of the

application form and the application fee by letter to the applicant

and shall specify

(a) the periods mentioned in subregulations (4) and (5)

within which the Board shall determine the

application;

(b) the procedure under which a refusal by the Board to

issue a warrant, or the refusal by the Board to issue a

practising certificate, may be appealed in terms of

article 15B of the Act; and

(c) that an applicant shall be deemed to be a warrant

holder, or a holder of a practising certificate, where

the Board does not determine an application form

within the periods mentioned in sub-regulations (7)

and (8).

(4) In the case of an incomplete application form, the Board

shall, without delay, inform the applicant of the need to supply any

additional information or documentation, and that the Board shall

not commence processing the application form unless it receives a

complete application form

Provided that an application form shall not be deemed to be

complete unless the Board is in receipt of all the documentation

required to be submitted together with the application form, as set

out in the same application form.

(5) The Board shall determine whether to issue a practising

certificate, or to issue a warrant, as the case may be, to an

applicant, within sixty days from the date of receipt of a complete

application form.

(6) The periods mentioned in sub-regulation (5) may, prior to

the expiry of the relevant period, be extended by the Board for one

period of not more than thirty days. Such extension and the reasons

thereof shall be notified to the applicant without delay.

(7) Where the Board has not determined whether to issue a

practising certificate, or to to issue a warrant, to an applicant,

within the periods mentioned in sub-regulation (5), or within the

extended period mentioned in sub-regulation (6), such applicant

shall, subject to sub-regulation (8), be deemed to be, for all intents

and purposes of law, a warrant holder or a practising certificate

holder.

(8) A person shall be deemed to be a warrant holder, or a

practising certificate holder in terms of sub-regulation (7), only in

the event that, following the expiration of the periods referred to in

sub-regulation (5) and, if applicable, sub-regulation (6), the

applicant notifies the Board by means of a registered letter that it

has not determined his application in terms of this regulation, and

the Board fails, within a period of forty-five days from the date of

receipt of the said registered letter, to determine the applicant’s

application.

(9) Where a warrant or a practising certificate is not issued to

the applicant by the Board, the applicant shall be informed without

delay. Such a decision shall be notified by registered mail to any

person to whom such decision applies and shall be subject to

appeal in terms of article 15B of the Act.

(1) Every person who, and every firm under article 10 of

the Act which, is required to be covered by an indemnity insurance

policy in terms of article 11 of the Act shall be adequately covered

throughout the currency of the insurance policy to the extent

reasonably necessary according to the particular circumstances of

such person or firm, and in particular by reference to the size and

type of practice and clients

Provided that the insurance cover shall be inclusive of costs

to defend the claim but exclusive of the amount that may be

deducted by the insurance company on each and every claim under

the terms of the policy.

(2) Without prejudice to sub-regulation (1), with effect from 1

January 2010, if the aggregate limit of liability in an indemnity

insurance policy is less than the lower of the limits set out in

paragraphs (a) and (b), as calculated in sub-paragraphs (i) or (ii),

including the proviso after paragraph (b), then the cover shall be

deemed inadequate

(a) in the case of a sole practitioner and any connected

undertakings

(i)

one hundred thousand euro (€100,000) for the

sole practitioner and any principal other than the

sole practitioner of any connected undertaking;

and

(ii) the amount arrived at by multiplying the total

annual fees charged by a sole practitioner and

any connected undertaking in the course of his

or its practice, by three;

(b) in the case of a firm and any connected undertaking

(i)

the said amount shall be equivalent of one

hundred thousand euro (€100,000) multiplied by

the number of principals in the said firm and any

connected undertakings; and

(ii) the amount arrived at by multiplying the total

annual fees charged by a firm and any connected

undertaking in the course of its practice, by

three

Provided that in the case of a firm structured in a manner

such that the liability of its owners for statutory audit work is

directly or indirectly limited, the appropriate limit of liability shall

be

(a)

(i)

five hundred thousand euro (€500,000)

multiplied by the number of principals in the

said firm and connected undertakings who

(aa) hold a practicing certificate in auditing;

and

(bb) are principals which are audit firms;

(ii) one hundred thousand euro (€100,000)

multiplied by the remaining principals in the

said firm and any connected undertakings; and

(b) the total annual fees charged by the audit firm and any

connected undertaking in the course of its practice,

multiplied by five.

(3) For the period commencing on the date of the coming into

force of these regulations, and ending on the 31 December 2009,

every person who, and every firm under article 10 of the Act which,

is required to be covered by an indemnity insurance policy in terms

of article 11 of the Act, shall be adequately covered throughout the

currency of the insurance policy in respect of each

(a) sole practitioner, for a minimum of fifty-eight

thousand and two hundred and thirty-four euro

(€58,234), inclusive of costs to defend the claim; and

(b) principal in a firm, for a minimum of fifty-eight

thousand and two hundred and thirty-four euro

(€58,234), inclusive of costs to defend the claim.

Provided that in the case of a firm structured in a manner

such that the liability of its owners for statutory audit work is

directly or indirectly limited, the appropriate limit of liability in an

indemnity insurance policy shall not be less than the lower of the

amount arrived at by multiplying

(a) the number of principals in the said audit firm and any

connected undertakings by five hundred thousand euro

(€500,000); and

(b) the total annual fees charged by the said audit firm and

any connected undertakings in the course of its

practice by five.

(4) In the event of reasonable doubt as to whether a person or a

firm and any connected undertakings are adequately covered by an

indemnity insurance policy, the matter shall be conclusively

determined by the committee appointed by the Board for the

operation of a system of quality assurance in terms of article 7(2) of

the Act.

(1) The register of warrant holders and practising

certificate holders to be kept by the Board in terms of article 7(4) of

the Act shall include for each warrant holder or practising

certificate holder, including a third-country auditor registered in

terms of article 7(6) of the Act

(a) the name, address and registration number;

(b) a clear indication as to whether the warrant holder has

been issued with a practising certificate to carry out

audits together with the date of issue of such practising

certificate;

(c) if applicable, the name, address, website address and

registration number of the audit firm by which the

statutory auditor is employed or with whom he is

associated as a partner or otherwise;

(d) if applicable, the details of any subsidiaries, branches,

offices or agencies of the warrant holder or practising

certificate holder; and

(e) all other registrations as statutory auditor with the

competent authorities of another Member State and as

auditor with a third country, including the name of the

registration authority, and if applicable, the

registration number.

(2) The register of registered firms to be kept by the Board in

terms of article 7(4) of the Act shall include for each registered

firm, and any connected undertakings, including a third-country

audit-entity

(a) the name, address and registration number;

(b) the legal form;

(c) contact information, the primary contact person and

where applicable the website address;

(d) details, including the address, of any subsidiary,

branch, office or agency in the Member State;

(e) name and registration number of all statutory auditors

employed by or associated as partner or otherwise with

the audit firm and indicating in each case whether the

statutory auditor is authorised to sign audit reports on

behalf of the firm;

(f)

names and business addresses of all owners and

shareholders;

(g) names and business addresses of all members of the

administrative or management body;

(h) if applicable, the membership of a network and a list

of the names and addresses of member firms and

affiliates of the network or an indication of the place

where such information is publicly available; and

(i)

all other registrations as audit firm with the competent

authorities of another Member State as an audit entity

with third countries including the name of the

registration authority, and if applicable, the

registration number;

(j)

where applicable, whether the audit firm is registered

pursuant to article 10A(3) of the Act.

(3) The Board shall assign for each registered auditor, third-

country auditor and third-country audit entity a unique registration

number.

(4) The register referred to in this regulation shall indicate

clearly the contact details of the Board and such other information

as may be reasonably necessary to indicate that the Board is the

ultimate competent authority with ultimate responsibilities for

public oversight, the approval of warrants and practising

certificates, the operation of the quality assurance process and for

investigation and disciplinary measures.

(5) The register of suspended, revoked and withdrawn warrants

and practising certificates to be kept by the Board in terms of

article 7(4) of the Act shall include for each warrant holder or

practising certificate holder, including a third-country auditor

registered in terms of article 7(6) of the Act, the individual’s name,

address and registration number.

(6) The register of suspended, revoked and withdrawn firm

registrations, to be kept by the Board in terms of article 7(4) of the

Act shall include for each registered firm, the firms’ name, address,

registration number and legal form.

(7) The register of defaulter warrant holders and holders of a

practising certificate, to be kept by the Board in terms of article

7(4) of the Act shall include for each warrant holder or practising

certificate holder, including a third-country auditor registered in

terms of article 7(6) of the Act

(a) the name, address and registration number; and

(b) the breach(es) of statutory requirements.

(8) The register of defaulter firm registrations to be kept by the

Board in terms of article 7(4) of the Act shall include for each

registered firm

(a) the name, address, registration number;

(b) the legal form; and

(c) the breach(es) of statutory requirements.

(9) The register of warrant holders and holders of a practising

certificate who have obtained an exemption from Continued

Professional Education in terms of Directive 1 made under the Act

and are temporarily not in practice, to be kept by the Board in terms

of article 7(4) of the Act, shall include for each warrant holder or

practising certificate holder, including a third-country auditor

registered in terms of article 7(6) of the Act, the individual’s name,

address and registration number.

(1) The course of theoretical instruction referred to in

article 3(2)(c) of the Act shall cover the following subjects in

particular

(a) general accounting theory and principles;

(b) legal requirements and standards relating to the

preparation of annual and consolidated accounts;

(c) international accounting standards;

(d) financial analysis;

(e) cost and management accounting;

(f)

risk management and internal control;

(g) tax law;

(h) auditing and professional skills;

(i)

legal requirements and professional standards relating

to accountants, auditors and the statutory audit;

(j)

international auditing standards as referred to in article

179(2) of the Companies Act and regulation 4 of the

Accountancy Profession (Accounting and Auditing

Standards) Regulations; and

(k) professional ethics and independence.

(2) Such course shall also cover at least the following subjects

insofar as they are relevant to auditing and accounting

(a) company law and corporate governance;

(b) the law of insolvency and similar procedures;

(c) tax law;

(d) civil and commercial law;

(e) social security law and employment law;

(f)

information technology and computer systems;

(g) business, general and financial economics;

(h) mathematics and statistics; and

(i)

basic principles of the financial management of

undertakings.

(1) The Board shall cooperate with the competent

authorities of other Member States and the relevant European

Supervisory Authorities wherever necessary to carry out the

responsibilities and tasks arising from the Directive and the Audit

Regulation.

(2) The Board shall render assistance to competent authorities

in other Member States and to the relevant European Supervisory

Authorities, in particular by exchanging information and

cooperating in investigations related to the carrying out of statutory

audits.

(3) The Board shall, on request, and without undue delay

supply any information required for the purpose referred to in

subregulation (1) and where necessary the Board shall without

undue delay, take the necessary measures to gather the required

information

Provided that at all times the information so supplied shall

be covered by the obligation of professional secrecy

Provided further that the obligation of professional secrecy

shall also apply to any other person to whom the Board has

delegated tasks in relation to the purposes set out in the Directive.

(4) If the Board is not able to supply the required information

without undue delay it shall notify the requesting competent

authority of the reasons thereof.

(5) The Board may refuse to act on a request of information,

after consulting the Minister, where

(a) supplying information might adversely affect the

sovereignty, security or public order of Malta or

breach its national security rules;

(b) judicial proceedings have already been initiated in

respect of the same actions and against the same

persons before the Maltese authorities; and

(c) final judgment has already been passed in respect of

the same actions and on the same persons by the

competent authorities in Malta.

(6) Where the Board concludes that activities contrary to the

provisions of the Directive are being or have been carried out on

the territory of another Member State, it shall notify the competent

authority of the other Member State of that conclusion in a specific

manner.

(7) Where the competent authorities of another Member State

notify the Board that activities contrary to the provisions of the

Directive are or have been carried out in Malta, the Board shall

investigate the matter without undue delay and shall inform the

notifying competent authority of the outcome and, to the extent

possible, of significant interim developments.

(8) A competent authority of another Member State may

request that an investigation be carried out by the Board on the

Maltese territory. The competent authority of another Member State

may also request some of its own personnel to be allowed to

accompany the personnel of the Board in the course of the

investigation

Provided that the investigation shall at all times be subject

to the overall control of the Board.

(9) The Board may refuse to act on a request for an

investigation to be carried out as provided in subregulation (8) or

on a request for the Board’s personnel to be accompanied by the

personnel of a competent authority of another Member Sate where

(a) such an investigation might adversely affect the

sovereignty, security or public order of Malta or

breach national security rules; or

(b) judicial proceedings have already been initiated in

respect of the same actions and against the same

person before the authorities of Malta; or

(c) final judgment has already been passed in respect of

the same actions on such persons by the authorities of

Malta.

(10) Any information received by the competent authorities of

other Member States or European Supervisory Authorities pursuant

to the provisions of this regulation shall only be used by the

competent authorities of the other Member States or the European

Supervisory Authorities for the exercise of their functions within

the scope of the Directive or the Audit Regulation and in the

context of administrative or judicial proceedings specifically

related the exercise of these functions.

(11) The Board may transmit to the competent authorities of

other Member States responsible for supervising public-interest

entities, to central banks, to the European System of Central Banks

and to the European Central Bank, in their capacity as monetary

authorities, and to the European Systemic Risk Board, confidential

information intended for the performance of their tasks. Such

authorities or bodies shall not be prevented from communicating to

the Board information that the Board may need in order to carry out

their duties under the Audit Regulation.

(12) In fulfilling its tasks under the Audit Regulation, the Board

may delegate its tasks to the competent authorities of another

Member State subject to the agreement of that authority. Delegation

of tasks shall not affect the responsibility of the Board.

(13) The Board shall take the necessary measures with regard to

an audit firm or an accountancy firm regulated under the Act

conducive to preventing criminals convicted in relevant areas or

their associates from holding a management function in or being

the beneficial owners of such audit firm or accountancy firm.

(14) The Board shall also take the necessary measures with regard

to a holder of a practising certificate in auditing or a certified public

accountant in public practice regulated under the Act conducive to

preventing criminals convicted in relevant areas or their associates

from holding a management function in their practice.

(1) The Board shall respect the principle of home-country

regulation and oversight by the Member State in which the

statutory auditor or audit firm is approved and the audited entity

has its registered office

Provided that audit firms approved in another Member State

that perform audit services in another Member State pursuant to

article 10A of the Act shall be subject to quality assurance review

in Malta and oversight by the Board of any audit carried out in

Malta.

(2) In the case of a statutory audit of consolidated financial

statements, the Board may not impose additional requirements in

relation to the statutory audit concerning registration, quality

assurance review, auditing standards, professional ethics and

independence on a statutory auditor or an audit firm carrying out a

statutory audit of a subsidiary established in another Member State.

(3) In the case of a company whose securities are traded on a

regulated market in a Member State other than that in which that

company has its registered office, the Board may not impose any

additional requirements in relation to the statutory audit concerning

r e g i s t r a t i o n , q u a l i t y a s s u r a n c e r e v i e w, a u d i t i n g s t a n d a r d s ,

professional ethics and independence on a statutory auditor or an

audit firm carrying out the statutory audit of the annual or

consolidated financial statements of that company.

(4) Where a statutory auditor or an audit firm is registered in

any Member State as a consequence of approval in accordance with

articles 4 and 10 of the Act and of regulation 4 and that statutory

auditor or audit firm provides audit reports concerning annual

financial statements or consolidated financial statements as

referred to in article 7(6) of the Act, the Board shall subject that

statutory auditor or audit firm to its systems of oversight, its quality

assurance systems and its systems of investigations and sanctions.

(1) The Board shall take measures to ensure effective

cooperation at European Level in respect of quality assurance

reviews.

(2) The competent authority of one Member State may request

the assistance of the competent authority of another Member State

with regard to the quality assurance reviews of auditors or audit

firms belonging to a network carrying out significant activities in

the requested Member State.

(3)

(a) Where a competent authority receives a request from a

competent authority of another Member State to assist

in the quality assurance review of a statutory auditor or

an audit firm belonging to a network carrying out

significant activities in that Member State, it shall

allow the requesting competent authority to assist in

such quality assurance review.

(b) The requesting competent authority shall not have the

right to access information which might breach

national security rules or adversely affect the

sovereignty, security or public order of the requested

Member State.

(4) Where a competent authority concludes that activities

contrary to the provisions of the Audit Regulation are being carried

out or have been carried out on the territory of another Member

State, it shall notify the competent authority of the other Member

State of that conclusion in as specific a manner as possible. The

c o m p e t e n t a u t h o r i t y o f t h e o t h e r M e m b e r St a t e s h a l l t a k e

appropriate action. It shall inform the notif ying com petent

authority of the outcome of the action and, to the extent possible, of

significant interim developments.

(5)

(a) A competent authority of one Member State may

request that an investigation be carried out by the

competent authority of another Member State on the

latter’s territory.

(b) It may also request that some of its own personnel be

allowed to accompany the personnel of the competent

authority of that Member State in the course of the

investigation, including with regard to on-site

inspections.

(c) The investigation or inspection shall be subject

throughout to the overall control of the Member State

on whose territory it is carried out.

(6) The requested competent authority may refuse to act on a

request for an investigation to be carried out as provided for in sub-

regulation (5)( a ), or on a request for its personnel to be

accompanied by personnel of a competent authority of another

Member State as provided for in sub-regulation (5)(b), in the

following cases

(a) where such an investigation or on-site inspection

might breach national security rules or adversely affect

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the sovereignty, security or public order of the

requested Member State;

(b) where judicial proceedings have already been initiated

in respect of the same actions and against the same

person before the authorities of the requested Member

State;

(c) where a final judgment has already been delivered in

respect of the same actions and the same persons by

the authorities of the requested Member State.

(7) In the event of a quality assurance review or an

investigation with cross-border effects, the competent authorities of

the Member States concerned may address a joint request to the

CEAOB to coordinate the review or investigation.

(8) In this regulation the term "competent authority" shall

include the Board.

(1) Auditors registered in accordance with the Act may

transfer to the competent authorities of a third-country audit

working papers or other documents held by them, and of inspection

or investigation reports relating to the audits in question, provided

(a) those audit working papers or other documents relate

to audits of companies which have issued securities in

that third-country or which form part of a group

issuing statutory consolidated financial statements in

that third-country;

(b) the transfer takes place via the Board to the competent

authorities of that third-country at their request;

(c) the competent authorities of the third-country

concerned meet requirements which have been

declared adequate in accordance with paragraph 3 of

article 47 of the Directive;

(d) there are working arrangements on the basis of

reciprocity agreed between the competent authorities

concerned;

(e) the transfer of personal data to the third-country is in

accordance with Chapter IV of Directive 95/46/EC or

any amending legislation.

(2) The working arrangements referred to in sub-regulation

(1)(d) shall at all times ensure that

(a) justification as to the purpose of the request for audit

working papers and other documents is provided by

the competent authorities;

(b) the persons employed or formerly employed by the

competent authorities of the third-country that receive

the information are subject to obligations of

professional secrecy;

(c) the protection of the commercial interests of the

audited entity, including its industrial and intellectual

property, is not undermined;

(d) the competent authorities of the third-country may use

audit working papers and other documents only for the

exercise of their functions of public oversight, quality

assurance and investigation that meet requirements

equivalent to those of Articles 29, 30 and 32 of the

Directive;

(e) the request from a competent authority of a third-

country for audit working papers or other documents

held by a statutory auditor or audit firm can be

refused

(i)

where the provision of those working papers or

documents would adversely affect the

sovereignty, security or public order of the

European Community or of the requested

Member State; or

(ii) where judicial proceedings have already been

initiated in respect of the same actions and

against the same persons before the authorities

of the requested Member State; or

(iii) where final judgment has already been passed in

respect of the same actions and on the same

statutory auditor or audit firms by the competent

authorities of the requested Member State.

(3) In exceptional cases, the Board may allow auditors to

transfer audit working papers and other documents directly to the

competent authorities of a third-country, if the following conditions

are satisified

(a) investigations have been initiated by the competent

authorities in that third-country;

(b) the transfer does not conflict with the obligations with

which auditors are required to comply in relation to the

transfer of audit working papers and other documents

to their home competent authority;

(c) there are working arrangements with the competent

authorities of that third-country that allow the Board

reciprocal direct access to audit working papers and

other documents of that third-country’s audit entities;

(d) the requesting competent authority of the third-country

informs in advance the home competent authority of

the auditor of each direct request for information

including the reasons therefor; and

(e) the conditions laid down in subregulation (2) are

respected.

(4) The Board shall be empowered to issue directives on the

applicability and proper interpretation of this regulation and shall

also be empowered to lay down the general adequacy criteria in

accordance with which the Board is to assess whether the

competent authorities of third countries may be recognised as

adequate to co-operate with it on the exchange of audit working

papers or other documents held by statutory auditors and audit

firms. T he g eneral adequa cy c riteria sha ll be b ase d o n the

requirements of article 8 of the Act or essentially equivalent

functional results relating to a direct exchange of audit working

papers or other documents held by statutory auditors or audit firms.

In the case of a statutory audit of the consolidated financial

statements of a group of undertakings

(a) in relation to the consolidated financial statements, the

group auditor bears the full responsibility for the audit

report referred to in article 179A of the Companies Act

and, where applicable, article 179B of the Companies

Act and for, where applicable, the additional report to

the audit committee as referred to in Article 11 of the

Audit Regulation;

(b) the group auditor evaluates the audit work performed

by any third-country auditor(s) or statutory auditor(s)

and third-country audit entity(ies), or audit firm(s) for

the purpose of the group audit, and documents the

nature, timing and extent of the work performed by

those auditors, including, where applicable, the group

auditor’s review of relevant parts of those auditors’

audit documentation;

(c) the group auditor reviews the audit work performed by

the third-country auditor(s) or statutory auditor(s) and

third-country audit entity(ies) or audit firm(s) for the

purpose of the group audit and documents it.

The documentation retained by the group auditor shall be

such as to enable the Board to review the work of the group auditor.

For the purposes of paragraph (c), the group auditor shall

request the agreement of the third-country auditor(s), statutory

auditor(s), third-country audit entity(ies) or audit firm(s) concerned

to the transfer of relevant documentation during the conduct of the

audit of consolidated financial statements, as a condition of the

reliance by the group auditor on the work of those third-country

auditor(s), statutory auditor(s), third-country audit entity(ies) or

audit firms(s).

(2)

(a) Where the group auditor is unable to comply with sub-

regulation (1)(c) he, she or it shall take appropriate

measures and inform the Board.

(b) Such measures shall, as appropriate, include carrying

out additional statutory audit work, either directly or

by outsourcing such tasks, in the relevant subsidiary.

(3)

(a) Where the group auditor is subject to a quality

assurance review or an investigation concerning the

statutory audit of the consolidated financial statements

of a group of undertakings, the group auditor shall,

when requested, make available to the Board the

relevant documentation he, she or it retain concerning

the audit work performed by the respective third-

country auditor(s), statutory auditor (s), third-country

audit entity(ies) or audit firm(s) for the purpose of the

group audit, including any working papers relevant to

the group audit.

(b) The Board may request additional documentation on

the audit work performed by any statutory auditor(s)

or audit firm(s) for the purpose of the group audit from

the relevant competent authorities pursuant to

regulation 8.

(c) Where a parent undertaking or a subsidiary

undertaking of a group of undertakings is audited by

an auditor or auditor(s) or an audit entity(ies) from a

third country, the Board may request additional

documentation on the audit work performed by any

third country auditor(s) or third country audit

entity(ies) from the relevant competent authorities

from third countries through the working arrangements

referred to in regulation 9.

(d) By way of a derogation from the paragraph (c), where

a parent undertaking or a subsidiary undertaking of a

group of undertakings is audited by an auditor or

auditors or an audit entity or entities from a third

country that has no working arrangements as referred

to in regulation 9(3)(c), the group auditor shall, when

requested, also be responsible for ensuring proper

delivery of the additional documentation of the audit

work performed by such third-country auditor(s) or

audit entity(ies), including the working papers relevant

to the group audit. In order to ensure such delivery, the

group auditor shall retain a copy of such

documentation, or alternatively agree with the third-

country auditor(s) or audit entity(ies) that he, she or it

is to be given unrestricted access to such

documentation upon request, or take any other

appropriate action

Provided that where audit working papers cannot, for legal

or other reasons, be passed from a third country to the group

auditor, the documentation retained by the group auditor shall

include evidence that he or she has undertaken the appropriate

procedures in order to gain access to the audit documentation, and

in the case of impediments other than legal ones arising from the

legislation of the third country concerned, evidence supporting the

existence of such impediments.

(1) In fulfilling its tasks under the Audit Regulation, the

Board may conclude cooperation agreements on exchange of

information with the competent authorities of third countries only

if the information disclosed is subject, in the third countries

concerned, to guarantees of professional secrecy which are at least

equivalent to those set out in Articles 22 and 34 of the Audit

Regulation. The Board shall immediately communicate such

agreements to the CEAOB and notify the Commission of them.

Information shall only be exchanged under this regulation

where such exchange of information is necessary for the

performance of the tasks of those competent authorities under the

Audit Regulation.

Where such exchange of information involves the transfer

of personal data to a third country, the Board shall comply with the

Data Protection Act and Directive 95/46/EC and the CEAOB shall

comply with Regulation (EC) No. 45/2001.

(2) The Board shall cooperate with the competent authorities or

other relevant bodies of third countries regarding the quality

assurance reviews and investigations of statutory auditors and audit

firms. Upon request by a competent authority, the CEAOB shall

contribute to such cooperation and to t he e st abl ishm en t o f

supervisory convergence with third countries.

(3) Where the cooperation or exchange of information relates

to audit working papers or other documents held by statutory

auditors or audit firms the provisions of regulation 9 shall apply.

(4) The CEAOB shall prepare guidelines on the content of the

cooperation agreements and exchange of information referred to in

this regulation.

In fulfilling its tasks under the Audit Regulation, the Board

may disclose the confidential information received from competent

authorities of the third countries where a cooperation agreement so

provides, only if it has obtained the express agreement of the

competent authority which has transmitted the information and,

where applicable, the information is disclosed only for the purposes

for which that competent authority has given its agreement, or

where such disclosure is required by European Union or Maltese

law.

In fulfilling its tasks under the Audit Regulation, the Board

shall require that confidential information communicated by it to a

competent authority of a third country may be disclosed by that

competent authority to third parties or authorities only with the

prior express agreement of the competent authority which has

transmitted the information, in accordance with its national law and

provided that the information is disclosed only for the purposes for

which that competent authority of the Member State has given its

agreement, or where such disclosure is required by European Union

or national law or is necessary for legal proceedings in that third

country.

In carrying out any of the following proceedings, the Board

or a disciplinary committee shall ensure compliance with the

provisions of the Schedule

(a) proceedings leading to the revocation, suspension or

subjection to other conditions of a practising

certificate;

(b) proceedings leading to the revocation, suspension or

subjection to other conditions of a warrant;

(c) proceedings leading to the imposition on a person of

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any administrative fine, reprimand or other measure;

and

(d) proceedings leading to the suspension, cancellation,

revocation or subjection to other conditions of the

registration of a firm.

ACCOUNTANCY PROFESSION