Board of Directors Decision of the Authority

No. (33) of 2009
Dated 29/4/2009

Regarding the Rules for Registration, Continuation of Registration, and Deregistration in the Authority's Register of Auditors

Board of Directors of the Capital Market Authority

Having reviewed the Law on Joint Stock Companies, Companies Limited by Shares, and Limited Liability Companies issued by Law No. 159 of 1981 and its Executive Regulations; Having reviewed the Capital Market Law issued by Law No. 95 of 1997 and its Executive Regulations; Having reviewed Presidential Decision No. 51 of 1997 regarding the regulations governing the management of the Cairo and Alexandria Stock Exchanges and their financial affairs; Having reviewed the Chairman of the Board of Directors Decision No. 96 of 2006 issued on 27/8/2006 regarding the rules for registration in the Authority's register of auditors; Having reviewed the Board of Directors Decision No. 84 of 2008 regarding the establishment of a Quality Control Unit for auditors' work in the Authority's registers; And having approved the Board of Directors Decision at its meeting No. 6 of 2009 dated 29 April 2009.

CHAPTER

Article (1)

A special register shall be established at the Capital Market Authority for the registration of auditors permitted to audit companies whose securities are listed on securities exchanges, public offering companies, companies operating in the securities sector, investment funds established by banks, and insurance companies.

Article (2)

Only auditors registered in the Register may perform the following works:

a. Auditing financial statements and issuing auditor reports thereon for companies listed on securities exchanges, public offering companies, companies operating in the securities sector, investment funds established by banks, and insurance companies.

b. Performing financial statement audits for any of the legal entities mentioned in the preceding paragraph, or for any company that directly or indirectly owns 20% or more of the voting rights in such entities.

Article (3)

The following conditions must be met for registration in the Register:

a. Submission of evidence confirming that at least five years have passed since the auditor's registration in the General Register of Accountants and Auditors at the Ministry of Finance ("Registered Accountants and Auditors").

b. Submission of the original and a copy of the auditor's membership card issued by the Freelance Accounting and Auditing Practice Branch of the Chamber of Commerce.

c. Submission of evidence confirming that the auditor has audited joint stock companies for at least five years, provided that they have audited at least five joint stock companies each year, in compliance with Egyptian Auditing Standards.

d. The applicant must meet only one of the following criteria:

Membership in the Egyptian Society of Accountants and Auditors, or holding an equivalent foreign professional certification, or holding a PhD in Accounting from a university recognized in Egypt.

Article (4)

Registration in the Egyptian Central Bank's register of bank auditors, provided that the applicant has audited the accounts of a bank for at least one year in compliance with Egyptian Auditing Standards.

Registration in the General Authority for Real Estate Financing Affairs' register of real estate financing companies' auditors, provided that the applicant has audited a real estate financing company for at least two years in compliance with Egyptian Auditing Standards.
Registration in the Egyptian Insurance Authority's register of insurance, reinsurance, and cooperative insurance associations' auditors, provided that the applicant has audited an insurance company for at least two years in compliance with Egyptian Auditing Standards.

e. Submission of evidence confirming that no final criminal judgments have been issued against the auditor or any of their executive companies.

f. Submission of a certificate from the Freelance Accounting and Auditing Practice Branch of the Chamber of Commerce stating that no disciplinary rulings have been issued against the applicant.

g. Meeting the professional competence and fitness conditions by submitting the following:

A team comprising at least three individuals with at least five years of experience in accounting and auditing for joint stock companies.
An implemented system within the establishment for quality control and verification of professional independence.
An implemented system within the establishment for compliance with continuing professional education, aimed at raising the team's awareness of various issues related to new updates and developments in Egyptian accounting and auditing standards, particularly concerning specialized financial industries such as the banking sector, insurance, companies operating in the securities sector, structured financial instruments, contracts, and derivatives.

Article (5)

Auditors registered in the Register shall comply with Egyptian Auditing Standards and the controls set by the Capital Market Authority to ensure the integrity and accuracy of data and information that must be produced for the capital market participants.

Auditors (including team members) are prohibited from having any direct or indirect interests in the companies or funds they audit, in accordance with the ruling of Article (104) of Law No. 159 of 1981 mentioned above. They are also prohibited from participating in the management of these companies, investing in them, or holding documents in such funds.

Article (6)

Applications for registration in the Register of Auditors shall follow the procedures and form approved by the Authority. The Authority shall rule on registration applications within sixty days from the date of submission.

Article (7)

The Quality Control Unit for Auditors' Work shall examine the quality of work performed by auditors registered in the Register to verify compliance with the application of Egyptian Auditing Standards, specifically regarding listed companies, public offering companies, companies operating in the securities sector, and investment funds.

The Unit shall prepare an independent report for each auditor, documenting and recording the results of periodic and non-periodic inspections of their work.

Article (8)

The following violations constitute offenses requiring inspection and the proposal of appropriate measures and actions to address them:

To address them:

a. Committing errors in recording incomplete or incorrect data, whether intentional or unintentional, in any forms, data, or reports submitted by auditors to the Quality Control Unit for Auditors' Work or the Capital Market Authority.

b. Violating professional standards and practices, including but not limited to:

Egyptian Auditing Standards, including quality standards and professional independence standards.
Failure to verify that the client follows Egyptian Accounting Standards in preparing the financial statements being audited.
Failure to comply with the rules and professional conduct issued by the Capital Market Authority.
Failure to comply with continuing professional development requirements stipulated in the registration policies and procedures of the Register of Auditors.
Failure to provide all required information during the registration and/or inspection processes for auditors.
Failure to cooperate in providing required information during inspection and/or investigation processes regarding reported violations.
Material errors and/or insufficient disclosure data in any financial statements issued by companies listed on securities exchanges, public offering companies, companies operating in the securities sector, and investment funds established by banks and insurance companies, and the auditor's failure to qualify their opinion on these errors.

Article (9)

Failure to comply with the disciplinary procedures and measures established by the Quality Control Unit for Auditors' Work.

The Unit's Board of Directors may propose administrative measures against any auditor found to have violated professional performance standards, professional conduct, Egyptian Auditing Standards, or who lacks any of the registration conditions in the Register. Specifically, it may propose one or more of the following measures:

The following measures:

a. Issuing a warning to the auditor regarding the alleged violations, specifying the time required to rectify them and prevent recurrence.

b. Mandating an increase in professional fitness by adding team members or enhancing their qualifications or training.

c. Requiring the appointment of a supervisor or monitor for the quality of the auditor's current engagements.

d. Prohibiting the auditor from accepting new work falling within the scope of works stipulated in Article Two of this Decision, until the alleged violations are rectified and corrected.

e. Temporary suspension of registration in the Register for a period not exceeding twelve months.

f. Deregistration from the Register.

g. The Board's decisions on proposing measures shall be adopted by a majority of those present, except for the measures stipulated in items (d), (e), and (f), which require the approval of at least five members.

Article (10)

The Unit's Board of Directors shall notify the auditor subject to the measures of the proposals regarding the measures and procedures mentioned in the preceding article, to prepare a response to the alleged violations, prior to submission to the Authority's Board of Directors for approval, with a period of no less than thirty days.

Article (11)

The Authority's Board of Directors may request a technical re-inspection of the violation subject to the measures.

In all cases, measures shall not take effect until approved by the Authority's Board of Directors.

The Decision No. 96 of 2006 mentioned above is hereby repealed. This Decision shall take effect from the day following its issuance. The registration of auditors currently in the Register shall be transferred to the new Register, provided that the data update form is completed within thirty days from the date of notification to the auditor, and provided that the professional competence and fitness conditions stipulated in paragraph (g) of Article (3) of this Decision are met within a maximum period of six months from the date of notification.

Ahmed Saad Abdel Latif
Chairman of the Board of Directors

Board of Directors Decision No. (33) of 2009 Concerning Registration, Continuation of Registration, and Deregistration Rules for Auditors in the Authority's Register