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  • C4-2.2 C4-2.2 Auditor Requirements

    • Appointment of Auditors

      • C4-2.2.1

        Category 4 investment firms must obtain prior written approval from the CBB before appointing or re-appointing their auditors.

        Added: January 2022

      • C4-2.2.2

        Where a licensee fails to appoint an external auditor within four months from the beginning of the financial year, Article 61 (b) of the CBB Law provides the CBB with the power to appoint the external auditor.

        Added: January 2022

    • Resignation or Removal of Auditors

      • C4-2.2.3

        Category 4 investment firms must notify the CBB immediately if they intend to remove their auditors, with an explanation of their decision, or when their auditors resign. The licensee must appoint the replacement auditor as soon as practicable but no later than three months.

        Added: January 2022

      • C4-2.2.4

        In accordance Article 63 of the CBB Law, auditors of category 4 investment firms must inform the CBB in writing, if they resign or their appointment as auditor is terminated, within 30 calendar days, of the event occurring, setting out the reasons for the resignation or termination.

        Added: January 2022

    • Audit Partner Rotation

      • C4-2.2.5

        Unless otherwise exempted by the CBB, category 4 investment firms must ensure that the audit partner responsible for their audit does not undertake that function more than five years in succession. Licensees must notify the CBB of any change in audit partner.

        Added: January 2022

    • Auditor Independence

      • C4-2.2.6

        Before a category 4 investment firm appoints an auditor, it must take reasonable steps to ensure that the auditor has the required skill, resources and experience to carry out the audit properly, and is independent of the licensee. For an auditor to be considered independent, it must, among things, comply with the restrictions in this Section.

        Added: January 2022

      • C4-2.2.7

        If a category 4 investment firms becomes aware at any time that its auditor is not independent, it must take reasonable steps to remedy the matter and notify the CBB of the fact. The CBB may require the appointment of a new auditor if the issue is not resolved within a reasonable timeframe.

        Added: January 2022

      • C4-2.2.8

        Category 4 investment firms must not provide regulated services to their auditors or outsource their internal audit function to the same firm that acts as their external auditors.

        Added: January 2022

      • C4-2.2.9

        A partner, director or manager on the engagement team of auditing a category 4 investment firms may not serve on the Board or in a controlled function of the licensee, for two years following the end of their involvement in the audit, without prior authorisation of the CBB.

        Added: January 2022

      • C4-2.2.10

        The Bahrain Commercial Company’s Law and the CBB Law provide further requirements with regards to the licensee’s relationship with auditors.

        Added: January 2022

    • CBB Access to Auditors

      • C4-2.2.11

        Category 4 investment firms must waive any duty of confidentiality on the part of their auditors, such that their auditors may report to the CBB any concerns held regarding material failures by the licensee to comply with CBB requirements.

        Added: January 2022

      • C4-2.2.12

        In accordance with Articles 114 and 121 of the CBB Law, the CBB may appoint appointed experts to undertake on-site examinations or report by way of investigations on specific aspects of a category 4 investment firm’s business. External auditors may be called upon to be appointed experts and should be aware of their role in that capacity by referring to Section C4-5.3.

        Added: January 2022

    • Auditor Access to Outsourcing Providers

      • C4-2.2.13

        Outsourcing agreements between category 4 investment firms and outsourcing providers must ensure that the licensee’s internal and external auditors have timely access to any relevant information they may require to fulfil their responsibilities. Such access must allow them to conduct on-site examinations of the outsourcing provider, if required.

        Added: January 2022

    • Report on Compliance with Client Asset Rules

      • C4-2.2.14

        Category 4 investment firms that hold or control client assets must arrange for their external auditors to report on the licensee’s compliance with the requirements contained in Appendix CL – (i) at least once a year. The report must be in the form agreed by CBB and must be submitted to the CBB within three months of the licensee’s financial year-end.

        Added: January 2022