• PART 35 PART 35 AUDITORS

    • CHAPTER 1 CHAPTER 1 INTRODUCTORY

      • 1030. Main purposes of Part

        The main purposes of this Part are—

        (a) to secure that only persons who are properly supervised and appropriately qualified are appointed as auditors, and
        (b) to secure that audits by persons so appointed are carried out properly, with integrity and with a proper degree of independence.

      • 1031. Meaning of "auditor" etc.

        (1) In this Part "auditor" means a person appointed as auditor under Part 15 of these Regulations and the expressions "audit" and "audit work" are to be construed accordingly.
        (2) In this Part "audited person" means the person in respect of whom an audit is conducted.

    • CHAPTER 2 CHAPTER 2 INDIVIDUALS AND FIRMS

      • 1032. Eligibility for appointment as an auditor

        (1) An individual or firm is eligible for appointment as an auditor if the individual or firm—
        (a) is recognised for the purposes of this section by the Registrar, and
        (b) is a member of a recognised professional body and satisfies any additional requirements prescribed by rules made by the Board for the purposes of this section.
        (2) In this Part a "recognised professional body" means a body which offers a professional qualification in accountancy and is recognised and approved pursuant to rules made by the Board.

      • 1033. Effect of ineligibility

        (1) No person may act as an auditor of an audited person if he is ineligible for appointment as an auditor.
        (2) If at any time during his term of office an auditor becomes ineligible for appointment as an auditor, he must immediately—
        (a) resign his office (with immediate effect), and
        (b) give notice in writing to the audited person that he has resigned by reason of his
        becoming ineligible for appointment.
        (3) A person will commit a contravention of these Regulations if—
        (a) he acts as an auditor in contravention of subsection (1), or
        (b) he fails to give the notice mentioned in paragraph (b) of subsection (2) in accordance with that subsection.
        (4) A person who commits the contravention referred to in subsection (3) shall be liable to up to a level 6 fine.
        (5) In proceedings against a person for any contravention under this section it is a defence for him to show that he did not know and had no reason to believe that he was, or had become, ineligible for appointment as an auditor.

      • 1034. Independence requirement

        (1) A person may not act as an auditor of an audited person if one (1) or more of subsections (2), (3) and (4) apply to him.
        (2) This subsection applies if the person is—
        (a) an officer or employee of the audited person, or
        (b) a partner or employee of such a person, or a partnership of which such a person is a partner.
        (3) This subsection applies if the person is—
        (a) an officer or employee of an associated undertaking of the audited person, or
        (b) a partner or employee of such a person, or a partnership of which such a person is a partner.
        (4) This subsection applies if there exists, between—
        (a) the person or an associate of his, and
        (b) the audited person or an associated undertaking of the audited person,
        a connection of any such description as may be specified by rules made by the Board.
        (5) An auditor of an audited person is not to be regarded as an officer or employee of the person for the purposes of subsections (2) and (3).
        (6) In this section "associated undertaking", in relation to an audited person, means—
        (a) a parent undertaking or subsidiary undertaking of the audited person, or
        (b) a subsidiary undertaking of a parent undertaking of the audited person.

      • 1035. Effect of lack of independence

        (1) If at any time during his term of office an auditor becomes prohibited from acting by section 1034(1), he must immediately—
        (a) resign his office (with immediate effect), and
        (b) give notice in writing to the audited person that he has resigned by reason of his lack of independence.
        (2) A person will commit a contravention of these Regulations if—
        (a) he acts as an auditor in contravention of section 1034(1), or
        (b) he fails to give the notice mentioned in paragraph (b) of subsection (1) in accordance with that subsection.
        (3) A person who commits the contravention referred to in subsection (2)(a) shall be liable to up to a level 4 fine.
        (4) A person who commits the contravention referred to in subsection (2)(b) shall be liable to a level 3 fine.
        (5) In proceedings against a person for any contravention under this section it is a defence for him to show that he did not know and had no reason to believe that he was, or had become, prohibited from acting as auditor of the audited person by section 1034(1).

      • 1036. Effect of appointment of a partnership

        (1) This section applies where a partnership constituted under the laws of—
        (a) the Abu Dhabi Global Market, or
        (b) any other country or territory in which a partnership is not a legal person,
        is by virtue of this Chapter appointed as auditor of an audited person.
        (2) Unless a contrary intention appears, the appointment is an appointment of the partnership as such and not of the partners.
        (3) Where the partnership ceases, the appointment is to be treated as extending to—
        (a) any appropriate partnership which succeeds to the practice of that partnership, or
        (b) any other appropriate person who succeeds to that practice having previously carried it on in partnership.
        (4) For the purposes of subsection (3)—
        (a) a partnership is to be regarded as succeeding to the practice of another partnership only if the members of the successor partnership are substantially the same as those of the former partnership, and
        (b) a partnership or other person is to be regarded as succeeding to the practice of a partnership only if it or he succeeds to the whole or substantially the whole of the business of the former partnership.
        (5) Where the partnership ceases and the appointment is not treated under subsection (3) as extending to any partnership or other person, the appointment may with the consent of the audited person be treated as extending to an appropriate partnership, or other appropriate person, who succeeds to—
        (a) the business of the former partnership, or
        (b) such part of it as is agreed by the audited person is to be treated as comprising the appointment.
        (6) For the purposes of this section, a partnership or other person is "appropriate" if it or he—
        (a) is eligible for appointment as an auditor by virtue of this Chapter, and
        (b) is not prohibited by section 1034(1) from acting as auditor of the audited person.

      • 1037. Matters to be notified to the Registrar

        (1) The Registrar may require a recognised professional body—
        (a) to notify it immediately of the occurrence of such events as it may specify in writing and to give it such information in respect of those events as is so specified,
        (b) to give him, at such times or in respect of such periods as he may specify in writing, such information as is so specified.
        (2) The notices and information required to be given must be such as the Registrar may reasonably require for the exercise of its functions under these Regulations.
        (3) The Registrar may require information given under this section to be given in a specified form or verified in a specified manner.
        (4) Any notice or information required to be given under this section must be given in writing unless the Registrar specifies or approves some other manner.

      • 1038. The Registrar's power to call for information

        (1) The Registrar may by notice in writing require any person eligible for appointment as an auditor by virtue of this Chapter to give him such information as he may reasonably require for the exercise of his functions under this Part.
        (2) The Registrar may require that any information which he requires under this section is to be given within such reasonable time and verified in such manner as he may specify.

    • CHAPTER 3 CHAPTER 3 THE REGISTER OF AUDITORS ETC

      • 1039. The register of auditors

        (1) The Registrar may make rules which require a register of the persons eligible for appointment as an auditor to be kept.
        (2) The rules may require each person's entry in the register to contain—
        (a) his name and address,
        (b) in the case of an individual eligible for appointment as an auditor, the specified information relating to any firm on whose behalf he is responsible for audit work,
        (c) in the case of a firm eligible for appointment as an auditor, the specified information relating to the individuals responsible for audit work on its behalf,
        (d) in the case of a firm eligible for appointment as an auditor by virtue of Chapter 2, the information mentioned in subsection (3).
        (3) The information referred to in subsection (2)(d) is—
        (a) in relation to a body corporate, the name and address of each person who is a director of the body or holds any shares in it,
        (b) in relation to a partnership, the name and address of each partner.
        (4) The rules may provide that different parts of the register are to be kept by different persons.
        (5) The rules may impose such obligations as the Registrar thinks fit on—
        (a) recognised professional bodies, and
        (b) persons eligible for appointment as an auditor.
        (6) The rules may include—
        (a) provision requiring that specified entries in the register be open to inspection at times and places specified or determined in accordance with the rules,
        (b) provision enabling a person to require a certified copy of specified entries in the register.
        (7) In this section "specified" means specified by rules made under this section.
        (8) The Board may make rules which make provision for the charging of fees for inspection, or the provision of copies of the register maintained under this section, such fees to be of such reasonable amount as may be specified or determined in accordance with those rules.

      • 1040. Information to be made available to public

        (1) The Registrar may make rules requiring a person eligible for appointment as an auditor, or a member of a specified class of such persons, to keep and make available to the public specified information, including information regarding—
        (a) the person's ownership and governance,
        (b) the person's internal controls with respect to the quality and independence of its audit work,
        (c) the person's turnover, and
        (d) the audited persons of whom the person has acted as auditor.
        (2) Rules under this section may—
        (a) impose such obligations as the Registrar thinks fit on persons eligible for appointment as an auditor,
        (b) require the information to be made available to the public in a specified manner.
        (3) In this section "specified" means specified by rules made under this section.

    • CHAPTER 4 CHAPTER 4 SUPPLEMENTARY AND GENERAL

      • 1041. Registrar's power to require second audit of a company

        (1) This section applies where a person appointed as auditor of a company was not an appropriate person for any part of the period during which the audit was conducted.
        (2) The Registrar may direct the company concerned to retain an appropriate person—
        (a) to conduct a second audit of the relevant accounts, or
        (b) to review the first audit and to report (giving his reasons) whether a second audit is needed.
        (3) For the purposes of subsections (1) and (2) a person is "appropriate" if he—
        (a) is eligible for appointment as an auditor, and
        (b) is not prohibited by section 1034(1) (independence requirement) from acting as auditor of the company.
        (4) The company will commit a contravention of these Regulations if—
        (a) it fails to comply with a direction under subsection (2) within the period of 21 days beginning with the date on which it is given, or
        (b) it has previously committed a contravention under this subsection and the failure to comply with the direction which led to the contravention continues after the contravention.
        (5) The company must—
        (a) send a copy of a report under subsection (2)(b) to the Registrar of companies, and
        (b) if the report states that a second audit is needed, take such steps as are necessary for the carrying out of that audit.
        (6) The company will commit a contravention of these Regulations if—
        (a) it fails to send a copy of a report under subsection (2)(b) to the Registrar within the period of 21 days beginning with the date on which it receives it,
        (b) in a case within subsection (5)(b), it fails to take the steps mentioned immediately it receives the report, or
        (c) it has previously committed a contravention under this subsection and the failure to send a copy of the report, or take the steps, which led to the contravention continues after the contravention.
        (7) A company who commits a contravention under this section shall be liable to up to a level 4 fine.

      • 1042. Supplementary provision about second audits

        (1) If a person accepts an appointment, or continues to act, as auditor of a company at a time when he knows he is not an appropriate person, the company may recover from him any costs incurred by it in complying with the requirements of section 1041.

        For this purpose "appropriate" is to be construed in accordance with subsection (3) of that section.
        (2) Where a second audit is carried out under section 1041, any provision of these Regulations applying in relation to the first audit applies also, in so far as practicable, in relation to the second audit.
        (3) A direction under section 1041(2) is, on the application of the Board, enforceable by injunction.

      • 1043. Misleading, false and deceptive statements

        (1) A person will commit a contravention of these Regulations if—
        (a) for the purposes of or in connection with any application under this Part, or
        (b) in purported compliance with any requirement imposed on him by or by virtue of this Part, he knowingly or recklessly furnishes information which is misleading, false or deceptive in a material particular.
        (2) It is a contravention of these Regulations for a person whose name does not appear on the register of auditors kept under Resolutions under section 1039 to describe himself as a registered auditor or so to hold himself out as to indicate, or be reasonably understood to indicate, that he is a registered auditor.
        (3) It is a contravention of these Regulations for a body which is not a recognised professional body to describe itself as so recognised or so to describe itself or hold itself out as to indicate, or be reasonably understood to indicate, that it is so recognised.
        (4) A person who commits the contravention referred to under subsection (1) shall be liable to up to a level 6 fine.
        (5) A person who commits the contravention referred to under subsection (2) or (3) shall be liable to up to a level 6 fine.
        (6) It is a defence for a person charged with an offence under subsection (2) and (3) to show that he took all reasonable precautions and exercised all due diligence to avoid the commission of the contravention.

      • 1044. Delegation of the Registrar's functions

        (1) The Registrar may make an order under this section (a "delegation order") for the purpose of enabling functions of the Registrar under this Part to be exercised by another public authority in the Abu Dhabi Global Market.
        (2) A delegation order has the effect of transferring to the body designated by it all functions of the Registrar under this Part—
        (a) subject to such exceptions and reservations as may be specified in the order, and
        (b) except his functions in relation to the body itself.
        (3) A delegation order may confer on the body designated by it such other functions supplementary or incidental to those transferred as appear to the Registrar to be appropriate.
        (4) A delegation order may be amended or, if it appears to the Registrar that it is no longer in the public interest that the order should remain in force, revoked by a further order under this section.
        (5) Where functions are transferred or resumed, the Registrar may by order confer or, as the case may be, take away such other functions supplementary or incidental to those transferred or resumed as appear to him to be appropriate.

      • Interpretation

        • 1045. Meaning of "associate"

          (1) In this Part "associate", in relation to a person, is to be construed as follows.
          (2) In relation to an individual, "associate" means—
          (a) that individual's spouse or minor child or step-child,
          (b) any body corporate of which that individual is a director, and
          (c) any employee or partner of that individual.
          (3) In relation to a body corporate, "associate" means—
          (a) any body corporate of which that body is a director,
          (b) any body corporate in the same group as that body, and
          (c) any employee or partner of that body or of any body corporate in the same group.
          (4) In relation to a partnership constituted under the laws of the Abu Dhabi Global Market, or the law of any other country or territory in which a partnership is not a legal person, "associate" means any person who is an associate of any of the partners.

        • 1046. Minor definitions

          (1) In this Part, unless a contrary intention appears—

          "address" means—
          (a) in relation to an individual, his usual residential or business address,
          (b) in relation to a firm, its registered or principal office in the Abu Dhabi Global Market,
          "company" means any company or other body the accounts of which must be audited in accordance with Part 15,

          "director", in relation to a body corporate, includes any person occupying in relation to it the position of a director (by whatever name called) and any person in accordance with whose directions or instructions (not being advice given in a professional capacity) the directors of the body are accustomed to act,

          "firm" means any entity, whether or not a legal person, which is not an individual,

          "group", in relation to a body corporate, means the body corporate, any other body corporate which is its holding company or subsidiary and any other body corporate which is a subsidiary of that holding company,

          "holding company" and "subsidiary" are to be read in accordance with section 1015 and Schedule 6,

          "officer", in relation to a body corporate, includes a director, a manager, a secretary or, where the affairs of the body are managed by its members, a member,

          "parent undertaking" and "subsidiary undertaking" are to be read in accordance with section 1018 and Schedule 7.
          (2) The Board may make such modifications of this Part as appear to it to be necessary or appropriate for the purposes of its application in relation to any firm, or description of firm, which is not a body corporate or a partnership.