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  • AA-A AA-A Introduction

    • AA-A.1 AA-A.1 Purpose

      • Executive Summary

        • AA-A.1.1

          This Module presents requirements that have to be met by investment firm licensees with respect to the appointment of external auditors. This Module also sets out certain obligations that external auditors have to comply with, as a condition of their appointment by investment firm licensees.

        • AA-A.1.2

          This Module is issued under the powers given to the Central Bank of Bahrain (‘CBB’) under Decree No. (64) of 2006 with respect to promulgating the Central Bank of Bahrain and Financial Institutions Law 2006 (‘CBB Law’). It supplements Article 61 of the CBB Law, which requires licensees to appoint an external auditor acceptable to the CBB.

          Amended: January 2007

      • Legal Basis

        • AA-A.1.3

          This Module contains the CBB's Directive (as amended from time to time) relating to auditors and accounting standards used by investment firm licensees, and is issued under the powers available to the CBB under Article 38 of the CBB Law. The Directive in this Module is applicable to all investment firm licensees.

          Amended: January 2011
          Added: January 2007

        • AA-A.1.4

          For an explanation of the CBB’s rule-making powers and different regulatory instruments, see Section UG-1.1.

          Added: January 2007

    • AA-A.2 AA-A.2 Module History

      • Evolution of Module

        • AA-A.2.1

          This Module was first issued in April 2006 by the BMA, as part of the first phase of Volume 4 (Investment Business) to be released. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

          Amended: January 2007

        • AA-A.2.2

          When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 4 was updated in July 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued where the update necessitated changes to actual requirements.

          Added: January 2007

        • AA-A.2.3

          A list of recent changes made to this Module is provided below:

          Module Ref. Change Date Description of Changes
          AA-A.1 07/2007 New Rule AA-A.1.3 introduced, categorising this Module as a Directive.
          AA-1.2 07/2007 Rule AA-1.2.3 redrafted to clarify reporting obligation
          AA-1.5 07/2007 Paragraphs AA-1.5.4 and AA-1.5.6 updated to reflect CBB Law requirements on auditor independence.
          AA-3.1.1 04/2008 Clarified that auditor's review is to be attached to the QPR.
          AA-1.5 10/2009 Paragraphs AA-1.5.2 and AA-1.5.3 updated to clarify outsourcing of internal audit function.
          AA-3.1.1 10/2009 Updated to reflect requirement in Module BR.
          AA-5 07/2010 New Chapter added regarding Reporting Accountants.
          AA-A.1.3 01/2011 Clarified legal basis.
          AA-1.1.1A 01/2011 Added Guidance referring to the CBB's power to appoint an external auditor should the investment firm licensee fail to do so.
          AA-5 10/2011 Chapter amended and content moved to Section BR-3.5 and retitled as Role of External Auditor as Appointed Expert.
          AA-3.3 01/2012 Deleted Section on Compliance with Financial Crime Rules.
          AA-4.1 10/2014 Clarified the application of accounting standards for investment firms based on whether they undertake conventional and/or Shari'a compliant activities.
          AA-3.1 07/2016 Clarified that this requirement only applies to Category 1 and Category 2 investment firm licensees.
          AA-3.2.1 10/2017 Amended Paragraph to clarify that licensees are to formally declare in writing that they do not possess any Client assets.
          AA-3.2.2 04/2018 Amended Paragraph.

      • Superseded Requirements

        • AA-A.2.4

          This Module supersedes the following provisions contained in circulars or other regulatory instruments:

          Circular / other reference Provision Subject
          Standard Conditions and Licensing Criteria: investment advisers/brokers. Article 7 Auditors
          Standard Conditions and Licensing Criteria: broking company Article 6 Auditors
          Standard Conditions and Licensing Criteria: stockbrokerage Article 6 Auditors

        • AA-A.2.5

          Guidance on the implementation and transition to Volume 4 (Investment Business) is given in Module ES (Executive Summary).