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Financial Reporting Council The independent regulator for promoting confidence in corporate reporting and governance

Guidance Notes


Application for an Auditor’s Licence Guidance Rules

1. Extracts from the Financial Reporting Act 2004 relating to Auditor Licensing Process:-
 
A. 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.
 
B. 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.
 
 
C. 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.
 
D. 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.
 
E. Section 52 - Registration of public accountants
 
(1) Every professional accountant who intends to practise as a public accountant shall apply in writing to the Mauritius Institute of Professional Accountants in such form and manner as the Mauritius Institute of Professional Accountants may require.

(2) An application made under subsection (1) shall be accompanied by such fees and such information as the Mauritius Institute of Professional Accountants may require.

(3) The Mauritius Institute of Professional Accountants shall register an applicant under subsection (1) as a public accountant and enter his name and such particulars as the Mauritius Institute of Professional Accountants considers relevant in the Register of Public Accountants, where it is satisfied that the applicant –
(a) meets the requirements laid down in the rules of the Mauritius Institute of Professional Accountants;
(b) has made such arrangements as may be provided in the rules of the Mauritius Institute of Professional Accountants, for continuing professional education;
(c) is a fit and proper person;
(d) has the necessary competence to practise as a public accountant and a period of more than 2 years has elapsed between the date he has undertaken any education and training as provided by the rules of the Mauritius Institute of Professional Accountants and the date of the application.

(4) The Mauritius Institute of Professional Accountants may require, as a condition for a public accountant to be allowed to remain in practice, that the public accountant comply with any continuing educational and professional requirements as may be specified in the rules of the Mauritius Institute of Professional Accountants.

2. Rules
 
Rules relating to Licensing of Auditors were made by the Financial Reporting Council under section 24 and section 33 of the Financial Reporting Act 2004 on 9 December 2005 and published in the Government Gazette No. 134 of 24 December 2005 (Government Notice No. 204) and to the Reprint of the Financial Reporting Council (Licensing of Auditors) (Amendment) Rules 2012 (Government Notice No. 165 of 2012 published in the Government Gazette No. 99 of 11 October 2012).

1. These rules may be cited as the Financial Reporting Council (Licensing of Auditors) Rules 2005 and 2012.

2. In these rules - “Act” means the Financial Reporting Act 2004; “applicant” means an applicant for an auditor’s licence; “Council” means the Financial Reporting Council established under section 3 of the Act; “licence” means an auditor’s licence; “statutory audit work” means audit work expressly required to be done under an enactment.

3. Any person who wishes to apply for an auditor’s licence under section 33 of the Act shall make an application to the Council in such manner and in such form as may be approved by the Council.

4. Every application shall be accompanied by documentary evidence showing that the applicant has –
(a) passed examinations held by a professional accountancy body with auditing as one of the subjects;
(b) at least 48 weeks’ (240 days’) experience in effective audit work performed either before or after becoming a member of a professional accountancy body, provided that at least 12 weeks therefrom would have been spent on statutory audit work or on work in a technical capacity similar to statutory audit work;
(c) completed 2 years’ work experience after becoming a member of a professional accountancy body, with at least 24 weeks spent on effective statutory audit work.
(d) satisfactory experience in –
(i) practice management;
(ii) audit quality and control of audit work;
(iii) documenting and maintaining quality assurance procedures.

5. The Council may require the applicant to submit such other documentary evidence as it may deem necessary for the purpose of processing the application.

6. The applicant shall pay –
(a) a non-refundable processing fee of 2,000 rupees at the time he submits his application; and
(b) a licence fee of 10,000 rupees in respect of the issue or of each renewal of a licence.

7. The licence shall be valid from the date of issue or renewal to the end of the calendar year in which it is issued or renewed.

8. Without prejudice to any conditions specified in a licence issued by the Council, every licenced auditor shall –
(a) continue to meet the requirements for the issue of his licence;
(b) maintain his professional competence through continuing professional development;
(c) maintain such professional indemnity insurance as may be determined by the Mauritius Institute of Professional Accountants;
(d) make arrangements for the continuity of his practice in the event of his death or incapacity; and
(e) document, maintain and apply a complaints handling procedure.

9. A licensed auditor who does not comply with the rules and regulations of the professional accountancy body of which he is a member shall be deemed to be in breach of the rules of the Council.

3. Licensing process
 
In order to apply for an auditor’s licence, the applicant must:

(1) be a member of the MIPA (registered as a professional accountant);
(2) hold a practising certificate from the MIPA (to practise as a public accountant);
(3) meet such requirements as may be specified in the Financial Reporting Council (Licensing of Auditors) Rules 2005.

4. Processing of the application for an auditor’s licence
 
The application process involves:-

(1) Completion of the application form;
(2) Provision of the necessary documentary evidence;
(3) Payment of a processing fee which is non-refundable (fee will not be refundable even if application is rejected and application will not be processed if fee is not paid) and
(4) Payment of the licence fee (An invoice for the licence fee will be sent to the applicant when he is registered as a licensed auditor. If the application is not successful, the licence fee will be refunded).

The licence shall be valid until the last day of the calendar year in which it is granted.

The process usually takes 3 to 4 weeks. Applications are processed by the Staff of the Financial Reporting Council and approved by the Council. Applicants are advised to provide for a period of 6 weeks when submitting an application for a licence.

The applicant may withdraw the application within 21 days in which case the outcome of the application will not be treated as a refusal.

5. Information on capacity to perform the audit function
 
To determine whether the applicant has the capacity to perform the audit functions, the following four areas are considered:

(1) Education;
(2) Practical experience;
(3) Fit and proper person; and
(4) Audit work experience.

The applicant must:

• have at least 48 weeks’ (240 days’) experience in audit work;
• have at least 12 of the 48 weeks’ audit experience in statutory audit work in Mauritius (work similar to statutory audit includes work done in a technical capacity similar to statutory audit work – acceptable to the Council);
• have completed 2 years’ post qualification work experience; and
• have at least 24 weeks’ post qualification statutory audit work experience.
 
6. Information to be provided by an auditor for the renewal of his licence
 
The applicant has to provide to the Council information about his practice management, maintenance of audit quality and control of audit work. Such information is required in order for the FRC to assess whether the applicant

• has not committed a breach of this Act or any rule made by the Council;
• continues to meet the requirements for the issue of a licence;
• has complied with the requirements of section 39 of the Act regarding the reports on the financial statements of entities which he has audited;
• carries out his functions (as per section 41 of the Act) in full independence and does not-

a) act in any manner contrary to the Code of Professional Conduct and Ethics of MIPA; or
b) engage in any activity which is likely to impair his independence as an auditor.

The FRC will conduct an Audit Practice Review of the applicant.
 
7. Quality assurance procedures and technical standards and guidelines.
 
As per section 73 of the Act, the Council shall develop, issue and keep up-to-date auditing standards, and ensure consistency between the standards issued and the auditing standards and pronouncements of the International Auditing and Assurance Standards Board (IAASB).

According to section 205 (3) of the Companies Act 2001, the audit of the financial statements shall, in the case of a public company or a private company, other than a small private company, be carried out in accordance with the International Standards on Auditing.

When promoting the highest standards among licensed auditors and the quality of audit services, the generally accepted standards for use are the International Standards, i.e. the IAASB’s pronouncements, which are issued under the auspices of IFAC and which govern audit, assurance and related services engagements. These include ISAs, ISREs, ISAEs and ISRSs which are collectively referred to as the IAASB’s Engagement Standards and ISQCs which are to be applied for all services falling under the IAASB’s Engagement Standards.

A professional accountant shall not state that he has complied with the IAASB’s Engagement Standards unless he has complied fully with all those relevant to the engagement.

The Audit firm should establish a system of quality control designed to provide it with reasonable assurance that the firm and its personnel comply with professional standards and regulatory and legal requirements, and that reports issued by the firm or engagement partners are appropriate in the circumstances.
 
8. Abbreviations
 
ACCA Association of Chartered Certified Accountants
CIMA Chartered Institute of Management Accountants
FRC Financial Reporting Council
IAASB International Auditing and Assurance Standards Board
ICA India Institute of Chartered Accountants of India
ICAEW Institute of Chartered Accountants in England and Wales
ICAI Institute of Chartered Accountants of Ireland
ICAS Institute of Chartered Accountants of Scotland
IFAC International Federation of Accountants
ISA International Standards on Auditing
ISAE International Standards on Assurance Engagement
ISQC International Standards on Quality Control
ISRE International Standards on Review Engagement
ISRS International Standards on Related Services
MIPA Mauritius Institute of Professional Accountants
SAICA South African Institute of Chartered Accountants
 
9.
 
The Financial Reporting Council reserves the right to use, verify and make any enquiries relating to the information provided on the application form and in relation to any other matter concerning this application. The FRC may seek confirmation with the MIPA, the Accountancy body with which the applicant has qualified, firms, organisations and referees named in the application.
 
10. Please return the application form to the Financial Reporting Council (Licensing Section), 3rd Floor, Anglo Mauritius House, Intendance Street, Port Louis.