Chapter Six: Guiding Controls for Auditors

Of Those Who Review Financial Statements

(Of Those Who Apply to Banks for Credit Facilities)

The Board of Directors of the Microfinance Bank approved, in its meeting held on the 18th of Rabi' al-Thani 1426 AH, the following guidelines regarding the auditors who review the financial statements of customers applying to the bank for credit facilities, to be taken into account when assessing their applications:

1. The external auditor must have the necessary qualifications and experience, and must not have been dismissed from the profession of auditor and accountant or have their license revoked due to professional misconduct.

2. The financial statements reviewed must be prepared by an auditor who is a member of the Egyptian Organization for Accountants and Auditors.

3. It is prohibited that the financial statements reviewed be prepared by an individual who is a partner in a firm of external auditors registered with the Egyptian Organization for Accountants and Auditors, or who is an employee of such a firm, unless three years have passed since the end of their employment with the firm. If the applicant is a partner or employee of such a firm, this must be disclosed.

4. It is required that the external auditor meet at least one of the following conditions:

   1. Hold the license issued by the Board of Directors of the Central Bank of Egypt on the 7th of Muharram 1426 AH (decision of the Board of Directors of the Microfinance Bank dated the 18th of Rabi' al-Thani 1426 AH).

      (a) Hold a license as an auditor;

      OR

      (b) Hold a degree in accounting and auditing or a foreign equivalent recognized by the competent authority (ACCA, CA, CPA), provided that the required experience period is at least two years;

      OR

      (c) Have worked as an external auditor for the Egyptian Organization for Accountants and Auditors for a period of at least five years.

   In the event that the most recent three conditions are not met, the external auditor must have at least five years of experience with the Egyptian Organization for Accountants and Auditors for a period of five years.

5. The external auditor must not have participated in the preparation of the financial statements or in the management of the company, nor be affected by the results of the preparation thereof, in accordance with Article 104 of the Companies Law No. 159 of 1981 and Article 146 of Decision No. 2004.

6. For foreign companies and foreign auditors, the international ethical code must be observed. It is noted that the credit facility is granted to a single nationality.

7. Regarding financial statements that do not comply with the external auditor's guidelines and the commitments mentioned in this chapter, they are permitted until June 30, 2005, after which the financial statements reviewed by an external auditor registered with the Egyptian Organization for Accountants and Auditors must be provided, as per the guidelines in this chapter.

The Bank requires the approval of the license issued by the Board of Directors of the Central Bank of Egypt for all external auditors appointed by customers, either initially or renewing their licenses, in accordance with the professional ethics of auditors and accountants and the regulations of the Egyptian Organization for Accountants and Auditors.

(2) The license is issued by the Board of Directors of the Central Bank of Egypt for this purpose.

2. License issued by the Board of Directors on the 7th of Muharram 2005.
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