Licensing of Auditors Charter
1.0 Licensing of Auditors
The Financial Reporting Council (FRC) is responsible for broad oversight of the process for setting accounting, auditing and corporate governance standards and codes as well as monitoring and developing the quality and integrity of financial reporting and disclosure of public interest entities (PIEs), of corporate governance and the quality and independence of the audit of PIEs in Mauritius. The FRC was established to strengthen the credibility and quality of financial reporting and audit in Mauritius.
Under the Financial Reporting Act 2004 (FRA / the Act), Sections 4 and 5 and Sections 33 to 43 inclusive, the Financial Reporting Council (FRC) has the responsibility to promote the highest standards among licensed auditors.
To fulfil this objective, the FRC is required by statute to ‘license auditors and to establish and maintain a register of auditors’.
2.0 Adoption of the Charter
This Charter is adopted by the Financial Reporting Council (FRC) with effect on and from the Effective Date.
3.0 Legal Requirements to be an Auditor in Mauritius
Section 33. Licensing of auditors
(1) No person shall hold any appointment or offer any services for remuneration, as an auditor, unless he holds a licence under this Act.
(2) Every person who wishes to obtain a licence shall make a written application to the Council.
(3) An application made under subsection (2) shall be accompanied by such fees and such information as the Council may require.
(4) Where, after consideration of an application, the Council is satisfied that the applicant:
(a) holds a practising certificate issued by the Mauritius Institute of Professional Accountants under section 55(2);
(b) is a fit and proper person; and
(c) meets such requirements as may be specified in the rules of the Council,
the Council shall issue a licence to the applicant authorising him to practise as an auditor.
(5) The Council shall enter the name of the licensed auditor and such particulars as it considers relevant, in the Register of Licensed Auditors.
(6) Any person who contravenes subsection (1) shall commit an offence and shall, on conviction, be liable to a fine not exceeding 500,000 rupees and to imprisonment for a term not exceeding 2 years.
Section 34. Duration of licence
(1) Every licence issued under section 33 shall be valid for such period as the Council may determine.
(2) Every licensed auditor who wishes to renew his licence shall, not later than 3 months before the expiry of the licence, make a written application to the Council in such form and manner as the Council may determine.
(3) Where the Council is satisfied that the applicant continues to meet the requirements for the issue of a licence, the Council shall renew the licence.
(4) Where the Council has not dealt with an application for the renewal of a licence under subsection (2) before the expiry of the licence, the licence shall continue to be in force until the application for renewal is dealt with and any renewal in such case shall be taken to have commenced from the day when the licence would have expired but for the renewal.
Section 35. Audit practice by a firm
(1) No licensed auditor shall practise as an auditor, on his own account, or in partnership with other persons, in the name of a firm unless the name of the firm has been approved by the Council.
(2) Any licensed auditor who wishes to practise in the name of a firm shall apply in writing to the Council in such form and manner as the Council may require, for the approval of the name of the firm.
(3) An application made under subsection (2) shall be accompanied by such fees as the Council may determine and such information as the Council may require.
(4) The Council shall not approve the proposed name or any proposed change in the name of an audit firm where the proposed name or proposed change in the name –
(a) is the same as a firm name already approved by the Council;
(b) so closely resembles a firm name that it is likely to cause confusion;
(c) is, in the opinion of the Council, misleading, offensive or otherwise contrary to public interest; or
(d) is in breach of the Business Registration Act 2002.
(5) Where a licensed auditor provides auditing services in partnership with other persons in a firm, the firm shall submit to the Council, at the end of each calendar year, a list of the names of the partners who are licensed auditors and those partners who are not licensed auditors.
(6) Where a licensed auditor or any other partner resigns or joins a firm, the firm shall forthwith inform the Council in writing of that fact.
Section 36. Change of name
(1) Every licensed auditor and audit firm shall, where there is a change in his name or the name of the firm as the case may be, or in any of his or its particulars recorded in the Register of Licensed Auditors, notify the Council of such change within 30 days of the change occurring, in such manner as the Council may require.
(2) Any person who fails, without reasonable excuse, to comply with subsection (1) shall commit an offence and shall, on conviction, be liable to a fine not exceeding 100,000 rupees.
Section 37. Unauthorised audit practice
No licensed auditor shall –
(a) employ a person who has been suspended from practising as a licensed auditor or a public accountant to carry out work in connection with his audit practice, unless the Council has consented to such employment;
(b) practise under the name of a firm, unless prior notification has been made to the Council –
(i) in the case of a partnership, of the first names and initials of the partners of the firm;
(ii) where a letterhead is used, of a copy of the letterhead;
(iii) where the name of the firm is similar to, or includes the name of a regional or international network, or where the name of the firm mentions that it is part of a network in its letterhead or any other document, the nature of such association or relationship with the regional or international network; and
(c) sign any account, statement, report or other document which purports to represent work performed by the licensed auditor, unless he is satisfied and is prepared to take full responsibility for the work done.
Section 38. Refusal to license auditors
Where the Council refuses to issue a licence to an applicant under section 33 or 35, it shall, by notice in writing, inform the applicant of its refusal as soon as practicable.
Section 39. Auditor’s report and opinion
(1) Where an auditor makes a report on the financial statements of an entity which he has audited, he shall express a clear written opinion in his report, giving details as to whether:
(a) the financial statements as a whole give a true and fair view of the matters to which they relate; and
(b) the financial statements comply with –
(i) this Act, or any other relevant enactment; and
(ii) the financial reporting and accounting standards.
(2) No licensed auditor shall, in his report, express an opinion unless he has complied with the auditing standards issued by the Council under section 73.
(3) Where, in the annual report of the entity, the directors disclose the extent of compliance with the Code of Corporate Governance, the auditor shall report whether the disclosure is consistent with the requirements of the Code.
Section 40. Material irregularity
(1) Where, during the course of the audit of a public interest entity, a licensed auditor is satisfied, or has reason to believe, that a material irregularity has taken or is taking place, he shall, without delay –
(a) notify in writing the officers and all the members of the Board of the public interest entity of the irregularity, by giving particulars of the irregularity; and
(b) request every person referred to in paragraph (a), either individually or collectively, to take such action as he may deem necessary, and to acknowledge receipt in writing of the notice.
(2) The licensed auditor shall, within 30 days of the issue of notice referred to under subsection (1), notify the Council and the Mauritius Institute of Professional Accountants of the material irregularity referred to in subsection (1), together with such other information as he deems fit, unless he is satisfied that the officers or the members of the Board of the public interest entity referred in subsection (1), have taken adequate steps to remedy the irregularity.
Section 41. Independence of auditor
An auditor shall carry out his functions in full independence and shall not –
(a) act in any manner contrary to the Code of Professional Conduct and Ethics; or
(b) engage in any activity which is likely to impair his independence as an auditor.
Section 42. Conflict of interest
Where an auditor considers that he may have a conflict of interest in relation to an entity for which he has been engaged as an auditor, he shall disclose to the entity the nature of the conflict of interest in order for the entity to determine the extent of the conflict and to decide whether to continue retaining the services of the auditor.
Section 43. Sanctions on licensed auditors
(1) The Council may either cancel or suspend a licence granted to an auditor under section 33 where the auditor –
(a) has obtained the licence by fraud or misrepresentation;
(b) no longer satisfies the requirements of section 33;
(c) has acted in breach of this Act or any rule made by the Council.
(2) Notwithstanding subsection (1), where a licensed auditor has committed a breach of this Act or any rule made by the Council, the Council may issue a warning to the licensed auditor.
4.0 Effective Date
This Charter is adopted by the FRC and is effective from [XXX].