ORDER OF THE GOVERNMENT OF THE REPUBLIC OF MOLDOVA

of August 20, 2018 No. 807

About approval of the Regulations on activities of Council for public supervision of audit

For the purpose of realization of part (1) article 36 of the Law No. 271/2017 on financial records audit (The official monitor of the Republic of Moldova, 2018, Art. No. 7-17, 48) and the state supervision of audit DECIDES: the Government

1. Reorganize by transformation Council for supervision of auditor activities under the Ministry of Finance into Council for public supervision of audit which is successor of its rights and obligations.

2. Approve Regulations on activities of Council for public supervision of audit it (is applied).

3. Establish the extreme number of staff of Council for public supervision of audit in number of 10 units.

4. To the Ministry of Finance:

1) to provide Council for public supervision of audit by service premises for a period of up to June 30, 2019;

2) to request candidates for representatives of National Bank of Moldova, Audit Chamber and the National commission on the financial market for inclusion in staff of Committee on supervision of audit.

5. This resolution becomes effective on September 1, 2018, except for the Section V of the Regulations on activities of Council for public supervision of audit which will become effective on January 1, 2021.

6. Item 1 and parts second and third Item 2 of the Order of the Government No. 1450/2007 on some measures for accomplishment of the Law No. 61/2007 on auditor activities (The official monitor of the Republic of Moldova, 2007, as Art. No. 203-206, 1493) to recognize invalid.

7. The first tender on selection of the representative of the academic circle specialized in audit area, and representatives of business environment will be organized by the Ministry of Finance according to the criteria established in Item 10 of the Regulations on activities of Council for public supervision of audit.

Prime Minister

Paweê Phillip

Countersigns: Minister of Finance

Octavian to Armash

Approved by the Order of the Government of the Republic of Moldova of August 20, 2018 No. 807

Regulations on activities of Council for public supervision of audit

I. General provisions

This Provision shifts Articles 29, 30s and 32 Directives 2006/43/EU of the European Parliament and Council of May 17, 2006 about carrying out statutory audit of the annual and consolidated statements making changes to Directives of Council 78/660/EEC and 83/349/EEC and canceling the Directive of Council 84/253/EEC published in the Official magazine of the European Union by L 157/87 of June 9, 2006 with the last changes made by the Directive 2014/56/EU of the European Parliament and Council of April 16, 2014 about change of the Directive 2006/43/EU on carrying out statutory audit of the annual and consolidated statements.

1. The regulations on activities of Council for public supervision of audit (further - the Provision) establish procedure for the organization of activities of Council for public supervision of audit (further - Council), its functions and obligation, procedure for appointment of members and activities of Committee on supervision of audit.

2. Council is independent public organization with the status of the legal entity responsible for public supervision of audit.

3. Council has own budget, bank accounts on the single treasurer account of the Ministry of Finance and performs activities on the basis of the principles of self-government.

4. The structure of Council, condition and the amount of compensation of personnel affirm Committee on supervision of audit (further - Committee) within the budget approved by the Government.

5. In the activities Council is guided by the Constitution of the Republic of Moldova, the Law No. 271/2017 on financial records audit, this Provision, and also the Code of ethics of professional accountants (further - the Code of ethics), audit standards and other regulations in audit area.

6. Governing bodies of Council are Committee and the chief executive (further - the director).

II. Committee on supervision of audit

Part 1 Structure and procedure for appointment of members of the committee. Withdrawal of membership in Committee

7. The committee consists of seven members - not practicing auditors owning knowledge in economic or legal areas and has the following structure: two representatives from the Ministry of Finance, one representative from National Bank of Moldova, one representative from Audit Chamber, one representative from the National commission on the financial market, one representative from business environment and one representative from the academic circle specialized in audit area.

8. Representatives of the Ministry of Finance, National Bank of Moldova, Audit Chamber and National commission on the financial market are appointed at the request of Council.

Representatives from business environment and from the academic circle, specialized in audit, are selected by tender committee within Council on the basis of tender.

The tender committee is created on the basis of the order of the director from two employees of Council, including the director, and one member of the committee delegated by Committee, except for the representative of business environment and the representative of the academic circle specialized in audit.

The announcement of initiation of tender is placed on the official web page of Council. The representatives from the academic circle specialized in audit and from business environment are selected according to the requirements established in Item 10.

9. Members of council affirm the Government for a period of three years no more than two terms in a row.

10. Criteria of appointment of members is the following:

1) the higher education in economic or legal area;

2) working life at least ten years in economic, legal area or educations in the field of audit;

3) capability to carry out the comprehensive analysis and to apply it in decision making process;

4) ownership of Romanian;

5) capability it is accurate to express during the discussions, and also to formulate in writing notes and offers on the considered drafts of regulations and opinion on the discussed questions for the purpose of acceptance of the final decisions;

6) the husband/wife, relatives to the second degree of relationship, including the relations of property of the first degree, are not auditors, shareholders/participants, members of executive body of the subject of audit that is confirmed with the declaration under the personal liability;

7) the lack of criminal record confirmed with the certificate of lack of criminal record.

In selection process of representatives from business environment benefit is:

a) possession of the qualification certificate of the auditor;

b) possession of the international qualification certificate in the field of financial accounting and audit;

c) working life at least five years as the auditor / the financial director / the chief accountant;

d) ownership of English;

e) the written confirmation of support of the candidate as the member of the committee at least 10 subjects which are subject to statutory audit.

11. Members of the committee in subsequent can be approved repeatedly not earlier than three years from the moment of the expiration of the second term.

12. The withdrawal of membership in Committee is performed in connection with the expiration, established in Item 9, and also:

1) according to the statement of body (organization) which proposed the candidate including in case of dismissal;

2) according to the application in person of the member of the committee about voluntary response, including in case of discrepancy to the status of the nonpracticing auditor and/or to subitem provisions 6) Item 10;

3) in case of nonparticipation / unmotivated absence in three consecutive meetings, establishments of discrepancy to the status of the nonpracticing auditor, to subitem provisions 6) Item 10, according to the decision of Committee;

4) in case of the death of the member of the committee.

In the cases provided in the subitem 2), members of the committee in writing inform Council within 30 days.

Part 2 Obligations and rights of Committee

13. The committee has the following obligations:

1) makes decisions for the purpose of accomplishment of functions of Council;

Considers 2) and approves the budget statement, budget implementation, the annual plan of activities, the semi-annual plan of external control of quality, the annual statement about activities of Council;

3) approves the regulations developed by Council for supervision function accomplishment;

4) is approved by the Regulations on compensation of personnel of Council developed by Council;

5) will organize contest for post of the director;

Appoints 6) and dismisses the director;

7) appoints to position on competitive basis and dismisses personnel of Council;

8) approves the staff list of Council;

9) is considered by the accumulated experience by the physical persons having working life in economic or legal area at least 15 years in view of their release from training in audit;

10) is established by the size of rates for the services provided by Council;

11) issues the conclusions according to drafts of the regulations regulating audit in the corporate sector, the developed Ministry of Finance;

12) exercises supervision of procedure for observance by auditors and subjects of audit of requirements of the legislation in audit area of financial statements, audit standards and the Code of ethics;

13) is performed by monitoring of certification processes and continuous professional training of auditors;

14) makes decisions on application of disciplinary actions based on the Law No. 271/2017 on financial records audit;

Establishes 15) responsibility on spheres of activity of members of council;

16) makes decisions on delegation of function of external control of quality of audit to the professional organizations in audit area.

14. The committee has the following rights:

To request 1) from bodies of public management, organizations and the organizations, including from the professional organizations in audit area, subjects of audit, auditors documents and information necessary for accomplishment of the obligations;

2) to involve the specialists with high skill level in economic or legal area for the purpose of the problem resolution considered by Committee with respect for the principles of activities of Committee provided in Item 18, and the criteria provided in the subitem 6) of Item 10.

Members of the committee have the right to remuneration in the amount of 10 percent of the predicted average monthly salary on the economy which is annually approved by the Government for participation in one committee meeting.

Part 3 Management and organization of activities of Committee

15. The chairman elected by members of the committee secret vote from among members of the committee directs committee.

16. The chairman of Committee directs activities and presides over its meetings. In the absence of the chairman of Committee its functions are performed by the vice-chairman. The vice-chairman is elected from among members of the committee by open voting. The candidacy of the secretary of Committee is proposed by the chief executive from personnel of Council.

17. The chairman of Committee performs the following functions:

1) is represented by Council in the relations with bodies of public management, and also with legal entities and physical persons in the country and abroad;

2) establishes day of convocation of meeting and the agenda;

3) is provided by accomplishment of obligations of Committee, and also execution of its decisions;

4) approves the calculations relating to remuneration of members of the committee;

5) signs decisions, orders and other acts for the purpose of ensuring activities of Council;

6) bears the personal responsibility for activities of Committee.

18. Principles of activities of Committee:

1) legality;

2) independence;

3) impartiality;

4) confidentiality;

5) transparency;

6) integrity.

Members of the committee shall observe confidentiality of information obtained during the meetings and in the course of accomplishment of the obligations and to provide to Council the declaration on confidentiality according to appendix to this Provision within 30 days from start date of activities in Committee.

19. The secretary is responsible for:

1) preparation of materials for committee meetings and their transfer to members of the committee at least in five days prior to convocation of meeting;

2) creation, representation and storage of protocols of committee meetings;

3) the organization of clerical work and archive works according to the legislation of the Republic of Moldova.

20. Committee meetings are convened by the chairman as required, but at least once a quarter, according to the plan of activities of Council.

21. Members of the committee study previously received materials and express opinion concerning the problems considered at meeting.

22. Committee meeting is considered competent if participate in it at least 2/3 total number of his members, including the chairman or the vice-chairman. The committee independently establishes vote form - secret or open.

23. Upon completion of discussion on each question of the agenda the chairman or the vice-chairman does the short analysis of discussions within the meeting, with submission of the summary according to decisions which need to be accepted, and brings up them for vote.

24. Decisions of Committee are made by a simple majority vote the present members. Each member of the committee has the right to one voice, without the right to abstention. Voice transfer is not allowed, and members of the committee cannot designate instead of themselves other persons for substitution them in meeting.

25. Meetings are celebrated in protocols which are constituted by the secretary of Committee. The protocol is vised by the members of the committee who are present at meeting in 3-day time and signed by the chairman/vice-chairman and the secretary of Committee.

26. The minutes of Committee include:

1) number of the protocol;

2) date, time and venue of committee meeting;

3) surnames of persons which participate/are absent on committee meeting;

4) agenda of committee meeting;

5) the summary of opinions of persons participating in committee meeting;

6) the made decisions;

7) results of vote;

8) other information about decisions of Committee;

9) copies of documents on the questions considered within the meeting (are attached).

27. Protocols of committee meetings are registered in chronological procedure for one calendar year.

28. The secretary bears responsibility for completeness and correctness of information included in the protocol.

29. For participation in committee meetings the specialists in economic or legal area who are not members of the committee can be invited. These persons shall observe the principles of activities of Committee provided in Item 18.

III. Procedure for appointment and obligation of the chief executive

30. The director is appointed on competitive basis and corresponds to the following criteria:

1) is nonpracticing auditor;

2) has the higher education in economic or legal area;

10-year length of service in economic or legal area has 3) at least;

4) has no related relations to the second degree of relationship, including the relations of property of the first degree with auditors, with founders/shareholders, members of executive body of the subject of audit that is confirmed with the declaration under the personal liability;

5) the lack of criminal record confirmed with the certificate of lack of criminal record;

6) knows Romanian.

The director is appointed to four-year term with possibility of execution of powers two terms in a row.

31. Activities of the director stop:

1) after term of office;

2) according to the statement;

3) in case of discrepancy to the criteria provided in subitems 1), 4) and 5) of Item 30;

4) in case of death;

5) in other cases, stipulated by the legislation.

In case of vacancy the director's positions before appointment of its obligation as Committee of other director are taken up by person from structure of Council designated by Committee.

32. The director has the following obligations:

1) is represented by Council in the relations with bodies of the public power, physical persons and legal entities in the country and abroad;

2) will be organized by activities of Council;

3) participates in committee meetings and provides information on the questions considered within the committee meeting;

4) is provided by execution of decisions of Committee;

5) manages property of Council;

6) also their publication in the Official monitor of the Republic of Moldova provides development of regulations for the purpose of accomplishment of functions of public supervision;

7) issues orders for the purpose of ensuring activities of Council;

8) participates in the international conferences, seminars, trainings in audit area of financial statements;

9) approves official journeys of personnel of Council;

10) is provided by accomplishment of functions and obligations of Council.

IV. Organization of activities of council

33. Council performs the following functions:

1) registration of trainees and monitoring of training in audit;

2) certification and registration of auditors;

3) registration of subjects of audit;

4) monitoring of continuous professional training;

5) audit quality assurance;

6) conducting investigations and application of disciplinary actions to auditors and subjects of audit according to parts (2) - (4) article 42 of the Law No. 271/2017 on financial records audit;

7) development and approval of regulations for the purpose of execution of function of public supervision.

34. Council carries out the following obligations:

1) develops recommendations about improvement of system of continuous professional training of auditors;

2) will be organized by certification process of auditors;

3) establishes the minimum requirements to accomplishment of the program of training of the trainee in audit;

4) reviews the requests relating to public supervision of audit including on quality of carrying out audit;

5) makes decisions on application of disciplinary actions to auditors and subjects of audit;

6) exercises supervision and controls activities of trainees in audit, auditors and subjects of audit;

7) develops regulations for the purpose of accomplishment of function of public supervision;

8) represents offers on enhancement of the legislation to audit areas of financial statements;

9) employs specialists in Council;

10) is conducted by the public register of auditors and the public register of subjects of audit;

In accordance with the established procedure conducts 11) and places the list of the organizations and organizations for continuous professional training of auditors on the official web page of Council;

12) exercises external control of quality of audit;

13) cooperates with the Ministry of Finance, other bodies of the public power and professional associations;

14) cooperates with the international bodies of public supervision of audit.

For the purpose of accomplishment of the obligations Council can sign agreements on cooperation with other bodies in the country and from abroad, can be the participant of the program of professional training and training.

35. Council performs the following powers:

Accepts 1) from subjects of audit in the 5th monthly time at the end of each accounting period:

a) report on observance of procedures of management of quality of audit;

b) the report on transparency, in case of audit of subjects of public interest;

c) financial statements;

2) generalizes information from the report on observance of procedures of management of quality of audit, the report on transparency, in case of audit of subjects of public interest, financial statements of subjects of audit and constitutes the report which submits to Council for approval till July 1;

3) is provided by objectivity and transparency of the activities;

4) submits for approval to Committee the annual statement about the activities till March 1 of the next year;

5) represents to Committee on audit of the subject of public interest results of external control of quality of audit of the subject of audit which booked audit.

36. Compensation of personnel of Council is performed based on the Labor code, the Law on compensation No. 847/2002, of the collective employment contract, Regulations on compensation of personnel of Council and other regulations in the field of compensation.

37. Council provides transparency of activities and places on the official web page:

1) structure of Committee and personal record of members;

2) annual plan of activities;

3) semi-annual plan of external control of quality;

4) decisions of Committee;

5) the annual statement about activities;

6) annual budget and its execution;

7) the regulations connected with execution of function of public supervision;

8) after appeal term - the applied disciplinary actions for the term of at least 5 years;

9) the other information reflecting activities of Council.

38. Selection criteria of specialists of external control of quality of audit of Council is the following:

1) possession of specialists of external control of quality of audit of the qualification certificate of the auditor and experience in audit area of financial statements at least 2 years;

2) capability to carry out the comprehensive analysis and to apply it in the course of carrying out external control of quality of audit, determined in case of interview and carrying out the thematic test;

3) ownership of Romanian.

39. Activities of specialists of external control of quality of audit are based on the following principles:

1) confidentiality;

2) independence and objectivity;

3) legality and integrity;

4) competence and responsibility;

5) the checked not affiliation of specialists of external control of quality of audit with the subject of audit (the husband/wife, relatives to the second degree of relationship, including the relations of property of the first degree are not auditors, shareholders/participants, members of executive body of the auditiruyemy subject of audit) and confirmed with the declaration under the personal liability.

In case the specialist of external control of quality of audit is registered in the State register of auditors according to articles 6 and 7 of the Law No. 271/2017 on financial records audit, its activities as the auditor stop according to Item b) parts (1) article 13 of the specified law.

40. The rights and obligations of specialists of external control of quality of audit are established by the Regulations on external control of quality of audit approved by Council.

V. Delegation of function of external control of quality of audit

41. Council delegates to the professional organizations to audit areas on the basis of the agreement function of external control of quality of audit of their member subjects of audit who book audit of the subjects which are not subjects of public interest for a period of up to three years from the date of selection of the professional organizations in audit area.

42. Conditions of selection of the professional organizations in audit area for carrying out external control of quality of audit of the members:

1) number of subjects of audit of members of the professional organization in audit area - at least 30 units;

2) availability of division of external control of quality of audit within the professional organization in audit area;

3) possession of specialists of external control of quality of audit of the qualification certificate of the auditor and experience in audit area of financial statements at least 2 years. Compliance to conditions of selection proves to be true by giving of case with appendix of the relevant documents.

43. The decision on delegation to the professional organizations in audit area of function of external control of quality of audit of the members is made by Committee within 60 days of co of day of giving of case.

44. The selected professional organizations in audit area exercise external control of quality of audit of the members at subjects of audit which meet in total the following requirements:

1) did not book audit in subjects of public interest in the last 6 years;

2) have two and more auditors employed;

3) was carried out by at least 5 audit engagements a year for the last three years.

45. The procedure for supervision and monitoring of the professional organizations by Council in audit areas to which function of external control of quality of audit of the members, procedure for carrying out external control of quality of audit, procedure for withdrawal of function of external control of quality of audit, procedure for submission of the report by the professional organizations on results of control was delegated is established by the Regulations on external control of quality of audit approved by Council.

46. Council can withdraw delegation of function of external control of quality of audit in case:

1) discrepancies to the conditions provided by subitems 2) and 3) of Item 44;

2) not carrying out external control of quality of audit of the members;

3) non-presentations of information requested by Council about external control of quality of audit of the members;

4) in other cases established by Regulations on external control of quality of audit.

Appendix

to Regulations on activities of Council for public supervision of audit

Declaration on confidentiality

Undersigned(s),
_______________________________________________________________________________________ 
                                                    (surname, name)

Within the committee meetings and in the course of accomplishment of obligations I promise:

a) keep confidentiality of information obtained in the course of consideration of requests of rather public supervision of audit including on quality of carrying out audit;

b) keep confidentiality of information concerning decisions on application of disciplinary actions to auditors and subjects of audit;

c) observe requirements of the legislation on ensuring protection of trade and state secret.

I am informed that I have no right to open to the third parties information obtained on committee meetings and in the course of accomplishment of the obligations, except as specified, when it is requested by courts and bodies of prosecutor's office. Also I am informed that I in case of disclosure of information will be made responsible according to the legislation of the Republic of Moldova.

______________________________ _______________________ 
                      (date)                      (signature)

 

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