The General Authority for Financial Supervision

Decision No. 84 of 2019

Dated 16/07/2019

Reorganizing the Conditions for Registration, Continuation of Registration, and Removal from the Register of Accountants with the Authority

The Board of Directors of the General Authority for Financial Supervision

Having reviewed the Law on Supervision and Control of Insurance in Egypt issued by Law No. 10 of 1981 and its Executive Regulations:

And the Law on Joint Stock Companies, Limited Partnerships by Shares, Limited Liability Companies, and Single-Person Companies issued by Law No. 159 of 1981 and its Executive Regulations:

And the Capital Market Law issued by Law No. 95 of 1992 and its Executive Regulations:

And Law No. 148 of 2001 issuing the Real Estate Financing Law and its Executive Regulations:

And Law No. 10 of 2009 regulating supervision over non-Egyptian markets and financial instruments:

And Law No. 141 of 2014 regulating microfinance activities:

And the Law regulating leasing and factoring activities issued by Law No. 176 of 2018:

And Decision No. 33 of 2009 of the Board of Directors of the General Authority for the Capital Market regarding registration conditions in the register of accountants:

And Decisions No. 22 and 23 of 2009 of the Board of Directors regarding the register of accountants registered with the General Authority for Financial Supervision:

And Decision No. 50 of 2014 regarding the organization of the work of the Quality Control Unit for Auditors' Work:

And Decision No. 161 of 2014 regarding registration and continuation conditions for microfinance companies, associations, and non-profit institutions:

And the approval of the Board of Directors in its meeting held on 16/07/2019

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Decided:

(Article One)

Accountants registered in the Authority's register of accountants shall exclusively audit companies listed on any of the Egyptian stock exchanges, public offering companies, and companies and entities licensed to conduct non-Egyptian financial activities, without prejudice to the provisions of Decision No. 161 of 2014 regarding registration and continuation conditions for microfinance companies, associations, and non-profit institutions licensed to conduct this activity with the Authority.

No one other than accountants registered in the register shall perform the following:

(a) Auditing financial statements and issuing reports thereon for companies listed on any of the Egyptian stock exchanges, public offering companies, and companies and entities conducting non-Egyptian financial activities.

(b) Performing financial statement audits for any of the companies or entities mentioned in the preceding paragraph, or for any companies in which such companies or entities own 25% or more of voting rights, whether directly or indirectly.

(Article Two)

Applicants for registration in the register must meet the following conditions:

1. Be a member of the Free Professions Chamber for Accounting and Auditing at the Chamber of Commerce.

2. At least five years must have passed since the accountant's registration in the General Register of Accountants and Auditors at the Ministry of Finance among those entitled to audit and certify financial statements for joint stock companies ("Table of Accountants and Auditors").

3. Have audited joint stock companies during the five years preceding the registration request. It is required that they have audited at least three joint stock companies per year in accordance with Egyptian Auditing and Review Standards and other assurance engagements.

4. Be registered in the register maintained by the Central Auditing Organization for practitioners outside the government sector.

5. Meet at least one of the following: (a) Membership in the Egyptian Society of Accountants and Auditors, or holding an equivalent foreign professional certification, or obtaining a PhD in Accounting from a recognized university in Egypt. (b) Registration in the Bank Auditors Register with the Central Bank of Egypt.

6. Meet the professional competence and capability condition by providing evidence of the following: (a) Work documentation including at least three experts in accounting and auditing for joint stock companies for a period of no less than five years. (b) A summary of the office's quality control system and verification of professional independence. (c) The office's system for compliance with continuing professional education.

7. No final criminal judgments have been issued against them.

8. No disciplinary judgments have been issued against them.

9. Payment of the prescribed service fees.

(Article Three)

The registration request shall be submitted on the form prepared by the Authority for this purpose, and the Authority shall rule on the request within sixty days from the date of submission with supporting documents. Failure to rule within this period shall be considered a rejection.

The applicant has the right to appeal the rejection decision before the Authority's appeal committees.

(Article Four)

Registered accountants are obligated to update their registered data with the Authority according to the form prepared for this purpose, accompanied by the Quality Control Unit for Auditors' Work, by no later than the end of June each year. If an accountant fails to comply for two consecutive years, the matter shall be referred to the Unit's Board of Directors to consider renewing the accountant's registration after notifying them.

The following conditions are required for the continuation of an accountant's registration in the register:

1. Completion of the data update form.

2. Meeting the professional competence and capability condition stipulated in this decision.

3. Payment of the prescribed service fees.

(Article Five)

Registered accountants must comply with Egyptian Auditing and Review Standards and other assurance engagements, and the controls set by the Authority, to ensure the robustness and accuracy of data and information produced for users of non-Egyptian financial activities.

The Quality Control Unit for Auditors' Work shall examine the quality of work performed by registered accountants to verify compliance with Egyptian Auditing and Review Standards and other assurance engagements, as well as professional conduct rules, and to ensure the continued fulfillment of the professional competence and capability condition stipulated in this decision.

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

(Article Six)

Without prejudice to the Board of Directors' decisions regarding the obligations of accountants for companies and entities licensed to conduct non-Egyptian financial activities, accountants and those in a professional working relationship with them must avoid any conflict of interest with the companies and entities they audit, and all obligations stipulated in Article (104) of the Law on Joint Stock Companies, Limited Partnerships by Shares, Limited Liability Companies, and Single-Person Companies issued by Law No. 159 of 1981.

(Article Seven)

The following violations require inspection and the proposal of appropriate measures and actions to address:

1. Recording incomplete or false data in any forms, data, or reports submitted by accountants to the Authority or the Quality Control Unit.

2. Violation of professional practice standards and rules, including in particular: (a) Egyptian Auditing Standards, including quality and professional independence standards. (b) Failure to verify that the client follows Egyptian Accounting Standards in preparing the audited financial statements. (c) Non-compliance with professional practice rules and conduct issued by the Authority.

3. Non-compliance with continuing professional education requirements.

4. Failure to provide all required information during registration and/or inspection processes.

5. Failure to provide required information during inspections and/or investigations of reported violations.

6. Material and significant errors or inadequate disclosure data in any financial statements issued by the companies or entities mentioned in this decision, and the accountant's failure to qualify these errors.

7. Non-compliance with procedures and measures prescribed by the Quality Control Unit for Auditors' Work.

(Article Eight)

The Board of Directors of the Quality Control Unit for Auditors' Work shall, in cases where an accountant is found to have violated any professional performance standards, professional conduct, or Egyptian Auditing Standards, or fails to meet any registration condition, propose one or more of the following measures:

1. Issuing a warning to the accountant regarding the alleged violation, specifying the time period required to rectify it and prevent recurrence.

2. Requiring an increase in professional capability by adding team members, or by meeting qualification or training standards.

3. Requiring the appointment of a quality auditor or supervisor for the accountant's financial engagements.

4. Prohibiting the accountant from accepting new work falling within the scope of Article One of this decision, until the alleged violations are rectified.

5. Temporary suspension of registration in the register for a period not exceeding one year.

6. Removal from the register.

The Unit's Board of Directors shall issue decisions proposing the measures mentioned in this article by a simple majority of attending voting members, except for the measures stipulated in paragraphs (4, 5, 6), which require the approval of two-thirds of attending voting members.

The accountant shall be notified of the proposed measures regarding them, and they shall have the right to respond to the alleged violations before submission to the Board of Directors for approval, for a period of no less than thirty days.

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

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

(Article Nine)

An accountant may submit a request to the Quality Control Unit for Auditors' Work to be removed from the register, and the request shall be ruled upon after confirming the accountant has paid all financial obligations due to the Authority.

(Article Ten)

Registered accountants are entitled to audit the accounts of companies, associations, and non-profit institutions licensed to conduct microfinance activities, without taking any further action.

(Article Eleven)

Decision No. 33 of 2009 of the Board of Directors of the General Authority for the Capital Market regarding registration conditions in the register of accountants with the Authority is hereby repealed, as is the aforementioned Decision No. 33 of 2009.

(Article Twelve)

This decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the day following its publication in the Egyptian Gazette.

Chairman of the Board of Directors Dr. Mohamed Omran