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THE AUDIT COMMITTEE THE RELATIONSHIP WITH THE STATUTORY AUDITOR THE COUNCIL FOR PUBLIC SUPERVISION OF THE ACCOUNTING PROFESSION ("CSIPPC") President: LAZĂR BALAJ 6 June 2013, BUCHAREST 1
THE AUDIT COMMITTEE
THE RELATIONSHIP WITH
THE STATUTORY AUDITOR
THE COUNCIL FOR PUBLIC SUPERVISION
OF THE ACCOUNTING PROFESSION ("CSIPPC")
President: LAZĂR BALAJ
6 June 2013, BUCHAREST 1
STRUCTURE OF THIS
PRESENTATION
1. About CSIPPC
2. Responsibilities of the Audit Committee
3. The relationship between the Audit Committee and the Statutory Auditor.
4. The role of the professional body in defining the attributions of the Audit Committees in Romania.
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1. About CSIPPC
The Council For Public Supervision of the Accounting Profession ("CSIPPC"), formerly known as Council for Public Supervision of the Statutory Audit Activities, is the main operational structure which is part of the national public system that supervises the statutory audit activity the aim of which is to support the improvement of the audit activity and to make a significant contribution to increasing the credibility of the financial statements that are subject to the audit.
The main strategic objective of the CSIPPC is to promote and support the enhanced credibility of the accounting profession and, implicitly,
the activity of the statutory auditor.
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1. About CSIPPC The legislation that governs the activity of the CSIPPC has been amended significantly over the past year. Here are some of the most relevant changes: CSIPPC covers now a much wider scope (expanding from the supervision of the statutory audit activity to the supervision of the accounting profession), and the financing structure and the membership of the Superior Council of the CSIPPC have changed too.
Here are some of the significant progresses that have been made over the past 12 months:
• new HR (staffing grew from 1 to 13 in-house employees); • new assets (including proper offices); • continued surveillance of the updating process of the information specified in the Public Register of the Financial Auditors and Audit companies; • start of the supervision of the CAFR by means of questionnaires; • adopting most of the procedures that are necessary for the supervision of the CAFR; • moving to the preparation of procedures that are necessary for CECCAR supervision;
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2. RESPONSIBILITIES OF THE AUDIT COMMITTEE
The Romanian Company Law is the source of the legislation based on which the Audit Committee was created
Relevant provisions: The board of directors may establish consultative committees formed of at least two members of the board with assignments such the performance of investigations and preparation of recommendations for the board in fields like audit, remuneration of the administrators, directors, censors and personnel or the proposal of candidates for different management positions. The committees shall submit periodically to the board reports on their activity. The audit committee shall be composed only of non-executive administrators. At least one member of the audit committee shall be experienced in accounting or financial audit matters.
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2. RESPONSIBILITIES OF THE AUDIT
COMMITTEE
The main responsibilities of the Audit Committee, according to the Corporate Governance Guide of the Bucharest Stock Exchange are the following:
•the Audit Committee assists the BoD in performing its responsibilities in the field of financial reporting, statutory control and the risk management.
•the Audit Committee, as applicable, shall scrutinize on a regular basis the efficiency of the financial reporting, statutory audit and risk management system that the company uses; shall make sure that the audit analyses and the audit reports are compliant with the audit plan approved by the BoD or the Audit Committee.
•the audit committee shall support the BoD in monitoring the credibility and integrity of the financial information that the company provides, especially by reviewing the relevance and consistency of the accounting standards that the company applies.
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2. RESPONSIBILITIES OF THE AUDIT
COMMITTEE
The main responsibilities of the Audit Committee, according to Article 47 of the Government Emergency Ordinance 90/2008 are the following:
The Audit Committee has, inter alia, the following attributions:
a) monitors the financial reporting process;
b) monitors the efficiency of the internal control system and the statutory audit, as applicable, as well as the efficiency of the risk management system that the company uses;
c) monitors the statutory audit of the annual financial statements and the consolidated annual financial statements;
d) checks and monitors the independence of the statutory auditor and that of the audit company and especially the way in which additional services have been supplied to the audited entity. 6 June 2013, BUCHAREST 7
2. RESPONSIBILITIES OF THE AUDIT
COMMITTEE
The main responsibilities of the Audit Committee, according to Article 47 of the Government Emergency Ordinance 90/2008 are the
following (continued):
•In the case of entities of public interest, the proposal coming from the management body or the surveillance body to assign one statutory auditor or audit firm or another must rely on a recommendation that the audit committee makes.
•The statutory auditor or the audit company shall report to the audit committee about the essential issues that result from the statutory audit and, especially, about the significant deficiencies of the internal control in what concerns the financial reporting process.
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3. The relationship between the Audit Committee and the Statutory Auditor.
The main responsibilities that the Audit Committee has to the statutory auditors (according to the Corporate Governance Guide of the Bucharest Stock Exchange) are the following:
• will provide information about the activity programme of the financial auditor and will get a report from the latter that will describe all of the relationships existing between the latter, on one hand, and the company and the parent group, if any, on the other hand.
• will recommend to the BoD to select, assign, re-assign and replace the financial auditor, as well as the terms and conditions based on which such auditor shall be paid.
• will monitor the independence and the objectivity of the financial auditor, especially by monitoring the rotation of the partner devoted to the Issuer, inside the audit company.
The provisions are detailed and explained in the Corporate Governance Guide of the Bucharest Stock Exchange, especially by means of the recommendations Nos. 27-32.
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4. The role of the professional body in defining the attributions of the Audit Committees in Romania.
CAFR actively involves itself defining the responsibilities of the Audit Committee, especially by:
•Publish specialty articles devoted to this topic in own magazines (some articles indicate circumstances where the Audit Committees belonging to companies listed on the Bucharest Stock Exchange rather were created in response to some legal compliance obligation, without playing an active role);
•Participate in events that are fully or partially devoted to this topic (such as this conference too);
CAFR has the responsibility of recommending measures based on which to implement the provisions governing audit committees as per Article 47 of Government Emergency Ordinance No. 90/2008. These measures need to be cleared by CSIPPC.
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THANK YOU FOR YOUR ATTENTION!
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