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  • AA-1.5 AA-1.5 Licensee/Auditor Restrictions

    • Financial Transactions with Auditors

      • AA-1.5.1

        Investment firm licensees must not provide regulated investment services to their auditors.

    • Outsourcing to Auditors

      • AA-1.5.2

        Investment firm licensees may not outsource their internal audit function to the same firm that acts as their external auditors.

        Amended: October 2009
        Amended: January 2007

      • AA-1.5.3

        Further Guidance on this issue is provided in the Risk Management Module.

        Amended: October 2009
        Amended: January 2007

    • Other Relationships

      • AA-1.5.4

        Investment firm licensees and their auditors must comply with the restrictions contained in Article 217(c) of the Commercial Companies Law (Legislative Decree No. (21) of 2001), as well as in Article 61(d) of the CBB Law.

        Amended: January 2007

      • AA-1.5.5

        Article 217(c) prohibits an auditor from (i) being the chairman or a member of the Board of Directors of the company he/she audits; (ii) holding any managerial position in the company he/she audits; and (iii) acquiring any shares in the company he/she audits, or selling any such shares he/she may already own, during the period of his audit. Furthermore, the auditor must not be a relative (up to the second degree) of a person assuming management or accounting duties in the company.

        Amended: January 2007

      • AA-1.5.6

        Article 61(d) prohibits an auditor from (i) being the chairman or a member of the Board of Directors of the company he/she audits; (ii) acting as a managing director, agent or representative of the company concerned; and (iii) taking up any administrative work in the company, or supervising its accounts, or having a next of kin in such a position.

        Added: January 2007

      • AA-1.5.7

        The restriction in Paragraph AA-1.5.4 applies to overseas investment firm licensees as well as Bahraini investment firm licensees.

      • AA-1.5.8

        A partner, Director or manager on the engagement team of auditing an investment firm licensee 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.

        Amended: January 2007

      • AA-1.5.9

        Chapter AU-1.2 sets out the CBB's "controlled functions" requirements.

        Amended: January 2007

    • Definition of 'Auditor'

      • AA-1.5.10

        For the purposes of Section AA-1.5, 'auditor' means the partners, Directors and managers on the engagement team responsible for the audit of the investment firm licensee.

        Amended: January 2007