Background
In 2008 an Auditors’ Oversight Board (“Board”) was established as an independent oversight arm of the Capital Market Authority (“CMA”). The purpose of the Board was to introduce in Egypt the practice of monitoring and overseeing the quality of professional work undertaken by auditing firms and auditors with respect to their auditing of securities companies. This was in line with international best practice which had placed an increasing importance over the quality of financial disclosure in the last few years, even prior to last year’s financial crisis.
Board’s Composition and Functions
The Board’s board of directors was composed of representatives of the Ministry of Finance, the Central Auditing Agency, the Investment Authority and the CMA, in addition to auditors’ participation in the Board meetings. The main functions of the Board were stated – in CMA Decision Number 84 of 2008 - to include:
- Registering auditors accredited to audit securities companies.
- Setting standards for auditing.
- Reviewing complaints relating to auditors’ professional conduct.
- Ensuring the improvement of quality of reporting and disclosure.
- Coordinating with other international bodies fulfilling the same functions.
Post-Merger: EFSA
On July 1
st, 2009 the Egyptian Financial Supervisory Authority was established by virtue of Law No. 10 of 2009 (Egypt Legal Update .., .., and ..) to be the single non-bank financial regulator, thus replacing the Capital Market Authority, the Insurance Supervision Authority and the Mortgage Finance Authority. Law No. 10 of 2009 stated that EFSA would replace all three agencies in their entire functions and supervisory powers, including oversight over auditors of regulated entities.
Current Oversight Board
On the basis of the preceding, EFSA issued a number of decrees extending its oversight on auditors to include – in addition to securities companies – insurance, re-insurance, mortgage, re-mortgage, and financial leasing companies.
Conclusion
The extension of the Auditors’ Oversight Board functions and powers over all companies subject to the EFSA’s regulation is a normal and welcome outcome of the merger of the previously existing three Authorities. It should also lead to a better auditing environment for non-bank financial companies and to significant synergies in terms of procedures and standards. There needs, however, to be an increased effort in making the markets and the professionals aware of the significance and role to be played by the Oversight Board other than a register of auditing firms and professionals. It needs to engage more with the markets, to better disclose its policies and standards and to provide a proper platform for the improvement of auditing practices.
Background
In 2008 an Auditors’ Oversight Board (“Board”) was established as an independent oversight arm of the Capital Market Authority (“CMA”). The purpose of the Board was to introduce in Egypt the practice of monitoring and overseeing the quality of professional work undertaken by auditing firms and auditors with respect to their auditing of securities companies. This was in line with international best practice which had placed an increasing importance over the quality of financial disclosure in the last few years, even prior to last year’s financial crisis.
Board’s Composition and Functions
The Board’s board of directors was composed of representatives of the Ministry of Finance, the Central Auditing Agency, the Investment Authority and the CMA, in addition to auditors’ participation in the Board meetings. The main functions of the Board were stated – in CMA Decision Number 84 of 2008 - to include:
- Registering auditors accredited to audit securities companies.
- Setting standards for auditing.
- Reviewing complaints relating to auditors’ professional conduct.
- Ensuring the improvement of quality of reporting and disclosure.
- Coordinating with other international bodies fulfilling the same functions.
Post-Merger: EFSA
On July 1
st, 2009 the Egyptian Financial Supervisory Authority was established by virtue of Law No. 10 of 2009 (Egypt Legal Update .., .., and ..) to be the single non-bank financial regulator, thus replacing the Capital Market Authority, the Insurance Supervision Authority and the Mortgage Finance Authority. Law No. 10 of 2009 stated that EFSA would replace all three agencies in their entire functions and supervisory powers, including oversight over auditors of regulated entities.
Current Oversight Board
On the basis of the preceding, EFSA issued a number of decrees extending its oversight on auditors to include – in addition to securities companies – insurance, re-insurance, mortgage, re-mortgage, and financial leasing companies.
Conclusion
The extension of the Auditors’ Oversight Board functions and powers over all companies subject to the EFSA’s regulation is a normal and welcome outcome of the merger of the previously existing three Authorities. It should also lead to a better auditing environment for non-bank financial companies and to significant synergies in terms of procedures and standards. There needs, however, to be an increased effort in making the markets and the professionals aware of the significance and role to be played by the Oversight Board other than a register of auditing firms and professionals. It needs to engage more with the markets, to better disclose its policies and standards and to provide a proper platform for the improvement of auditing practices.