Accountancy Profession Act (Cap. 281), article 7

7. (1) The Board shall regulate the accountancy profession in the public interest and shall have the following functions: (a) to decide on applications for the issue of warrants or practicing certificates; (b) to deal, through disciplinary committees appointed under article 7(16), with cases of professional misconduct and other disciplinary proceedings in respect of warrant holders or holders of a practising certificate including cases leading to the suspension or withdrawal of any warrant or practising certificate issued under this Act; (c) to take such measures as may be reasonably necessary to protect the public interest and the integrity of the profession including the placing of restrictions, the imposition of fines and other similar measures on warrant holders and holders of a practising certificate which in no case shall exceed twelve thousand euro (12,000.00) per warrant holder, practising certificate holder or firm; (d) to advise, or make recommendations or otherwise express its views to the Minister on any matter on which the Minister is to consult with the Board or on which the Board is to make recommendations to the Minister or on which the views of the Board are sought by the Minister; (e) to carry out all such things as may be necessary to meet the obligations arising from Directive 2006/43/ EC, Directive 2014/56/EU and Regulation (EU) No. 537/2014; (f) to establish procedures for the registration referred to in subarticle (4); (g) to operate an appropriate system of quality assurance; Cap. 500. (h) to carry out all such things as may be necessary to meet the obligations arising from the Services (Internal Market) Act, and to fulfill the powers, functions and responsibilities attributed to a competent authority in terms of the same Act, including the provision of assistance to competent authorities of other Member States in accordance with the provisions of the same Act; ACCOUNTANCY PROFESSION [CAP. 281. 9 Cap. 451. (i) to carry out all such things as may be necessary to meet the obligations arising from the Mutual Recognition of Qualifications Act; (j) to inform any authority that it deems appropriate of any sanctions or restrictions imposed by it or any other matters that the Board considers necessary to protect the public interest, on any warrant holder and holders of a practising certificate, audit firms and accounting firms; (k) to publish guidelines on the interpretation of this Act and the regulations and directives issued under it; (l) where necessary, to initiate and conduct investigations in relation to auditors and audit firms and the right to take appropriate action; (m) to regularly monitor the developments in the market for providing statutory audit services to public-interest entities and shall in particular assess the following: (i) the risks arising from high incidence of quality deficiencies of an auditor or an audit firm, including systematic deficiencies within an audit firm network, which may lead to the demise of any audit firm, the disruption in the provisions of statutory audit services whether in a specific sector or across sectors, the further accumulation of risk of audit deficiencies and the impact on the overall stability of the financial sector; (ii) the market concentration levels, including in specific sectors; (iii) the performance of audit committees; (iv) the need to adopt measures to mitigate the risks referred to in paragraph ( a); (n) to take measures in order to ensure that the application of auditing standards to the statutory audit of small undertakings is proportionate to the scale and complexity of such undertakings; and (o) such other functions as are or may be assigned to it by this or any other law or as may be delegated to it by the Minister. (2) In the exercise of its functions under subarticle (1), the Board may consult with such persons as it may deem appropriate, and may also appoint committees, of which the chairman shall be a member of the Board, for the carrying out of such studies or ot her work as the Board may assign to them, including but not limited to, the establishment and operation of a system of quality assuranc e. (3) In the exercise of its function under subarticle (1)( e), the Board shall be empowered to exchange confidential information with the competent authorities of other Member States. (4) The Board shall maintain an updated register, separately identifying the following: 10 CAP. 281.] ACCOUNTANCY PROFESSION (a) warrant holders and holders of practising certificates; (b) audit firms and accountancy firms; (c) third-country auditors and third-country audit entities; (d) suspended, revoked and withdrawn warrants and practising certificates; (e) suspended, revoked and withdrawn firm registrations; (f) defaulter warrant holders and holders of a practising certificate; (g) defaulter audit and accountancy firms; and (h) warrant holders and holders of a practising certificate who have obtained an exemption from Continued Professional Education in terms of Directive 1 and are temporarily not in practice. (5) The Minister may, upon recommendation of the Board, prescribe, by regulations made under this Act, the details to b e contained in the register. (6) The Board shall, in accordance with the provisions of this article, register every third-country auditor and third-country audit entity, where that third-count ry auditor or audit entity provid es an audit report concerning the annual or consolidated financial statements of an undertaking incorporated outside the European Union whose transferable securities are admitted to trading on the regulated market in Malta within the meaning of point 14 of Art icle 4(1) of Directive 2004/39/EC, except when the undertaking in question is an issuer exclusively of outstanding debt securitie s for which one of the following applies: (a) they have been admitted to trading on a regulated market in a Member State within the meaning of point (c) of Article 2(1) of Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 prior to 31 December 2010 and the denomination per unit of which is, at the date of issue, at least fifty thousand euro (€50,000) or, in the case of debt securities denominated in another currency, equivalent, at the date of issue, to at least fifty thousand euro (€50,000); (b) they are admitted to trading on a regulated market in a Member State within the meaning of point (c) of Article 2(1) of Directive 2004/109/EC from 31 December 2010 and the denomination per unit of which is, at the date of issue, at least one hundred thousand euro (€100,000) or, in the case of debt securities denominated in another currency, equivalent, at the date of issue, to at least one hundred thousand euro (€100,000). (7) The audit report, referred to in subarticle (6), shall have no legal effect until the third-country auditor or the third-count ry audit-entity have been registered in accordance with the provis ions of this article. ACCOUNTANCY PROFESSION [CAP. 281. 11 (8) Registered third-country auditors and third-country audit entities shall, mutatis mutandis , be subject to the rules, obligations, penalties and offences under this Act or the regulations or directives issued under it: Provided that a third-country auditor or a third-country audit entity may be exempt from being subject to the quality assurance system if another Member State’s or third country’s system of quality assurance that has been assessed as equivalent by the Board in accordance with subarticle (9) has carried out a q uality review of the third-country auditor or audit-entity concerned d uring the preceding three years. (9) The Board may, on the basis of reciprocity disapply or modify the requirements provided in subarticle (6) and (8) if t he third-country auditors or third-country audit entities are subj ect to systems of public oversight, quality assurance and investigatio ns and penalties in the third-country that are equivalent to those under this Act or the regulations and directives issued under it. (10) The equivalence referred to in subarticle (9) shall be assessed by the Board which may also rely on the assessments carried out by another Member State. (11) The Board may register a third-country auditor or a third- country audit entity only if: (a) he/she/it is of good repute; (b) in the case of a third-country audit entity, the majority of the members of the administrative or management body of the third-country audit entity meet the requirements which are equivalent to those laid down in article 10(6); (c) the third-country auditor or the third-country auditor carrying out the audit on behalf of the third-country audit entity meets requirements which are equivalent to those laid down in article 3(2); (d) the audit referred to in sub-article (6) is carried out in accordance with international auditing standards and complies with the requirements of independence, objectivity and audit fees set out in this Act or by the Board or with equivalent standards and requirements; (e) he/she/it publishes on his/her/its website an annual transparency report which includes the information referred to in article 18(1) or it complies with equivalent disclosure requirements. (12) The equivalence referred to in subarticle (11)( b), ( c), ( d) and ( e) shall be assessed by the Board. (13) All the persons registered in accordance with the provision s of this article shall notify the Board in writing of any change to the information contained in the register pertaining to them within fifteen days after the date on which the change occurs. The notification shall be signed by the warrant holder, practising certificate holder, third-country auditor, properly authorised 12 CAP. 281.] ACCOUNTANCY PROFESSION representative of the registered firm or the third-country audi t entity and delivered to the Board by not later than such term a s may be prescribed in directives issued by the Board for that purpos e under this Act: Provided that the Board shall establish procedures for the notification referred to in this subarticle to take place by el ectronic means. (14) The register shall be updated without undue delay and in any case not later than four weeks following notification refer red to in subarticle (13). (15) The register shall be made available electronically through the Board’s website. (16) The Board shall exercise its functions under subarticle (1)( b) or under any regulations made by the Minister in terms of article 8A, through disciplinary committees appointed in respec t of each particular proceeding and which shall in each case be composed of five members appointed by the Board as to two from a list of not less than ten persons submitted to the said Board e ach year by approved accountancy bodies and as to the remaining thr ee members, at least one shall be a person holding a warrant under article 4(1) who has practised his profession for such period as may be prescribed in directives issued by the Board under this Act. The Board shall appoint one of the said members being a warrant hol der or a person who had been a warrant holder to be the chairman of the disciplinary committee. (17) Without prejudice to any power granted to the disciplinary committee under the Act or the regulations or directives issued under it, the disciplinary committee shall have the power to impose administrative fines against any person in case of professional misconduct and other disciplinary proceedings which shall in each case not exceed twelve thousand euro (12,000.00). (18) The Board may with the agreement of the Minister delegate, under such terms and conditions as it may deem appropriate and subject to its overall supervision or control, any of its functions, other than those under subarticle (1)( b) or those under article 4, to an approved accountancy body. (19) The Board shall publish an annual report including details of its annual work programmes and activity reports, including i ts tasks under the Audit Regulation, a description of the work car ried out by the disciplinary committee, a summary of the works carri ed out in respect of quality assurance and the overall results of the quality assurance system, the aggregated information on the findings and conclusions of inspections referred to in Article 49 of Directive Number 4 of the Accountancy Profession (Quality Assurance) Directive and such other things which the Board deem s relevant. This report shall also include information on recommendations issued, follow-up on the recommendations, supervisory measures taken and sanctions imposed. It shall also include quantitative information and other key performance ACCOUNTANCY PROFESSION [CAP. 281. 13 information on financial resourc es and staffing, and the effici ency and effectiveness of the quality assurance system.. (20) The annual report shall be published by not later than the 31st March of every year. (21) The Board shall cooperate with competent authorities with a view to achieving a convergence of the requirements set out i n article 3(2)( c), (d) and ( e). When engaging in such cooperation, the Board and the other competent authorities shall take into accou nt developments in auditing and in the audit profession and, in particular, convergence that has already been achieved by the profession. They shall cooperate with the Committee of European Auditing Oversight Bodies (CEAOB) and the competent authorities referred to in Article 20 of the Audit Regulation in so far as such convergence relates to the statutory audit of public-interest e ntities. (22) The Board shall cooperate with other competent authorities within the framework of the CEAOB with a view to achieving a convergence of the requirements of the aptitude test mentioned in article 4(3). The competent authorities shall enhance the transparency and predictability of the requirements. They shall cooperate with the CEAOB and with the competent authorities referred to in Article 20 of the Audit Regulation in so far as such convergence relates to statutory audits of public-interest enti ties. Powers of the competent authority. Added by: XXXVI. 2016.6.