The Commission for Public Oversight on Statutory Auditors was established in compliance with the Directive 2006/43/EC of the European Parliament and of the Council.
Sofia 1000
phone: +3592 983 55 39
fax: +3592 983 13 85
office@cposa.bg
REGULATION FOR THE ACTIVITY OF THE COMMISSION FOR PUBLIC OVERSIGHT OF STATUTORY AUDITORS
Issued by the Commission for Public Oversight of Statutory Auditors
Prom. SG.1/6 Jan 2009, amend. SG. 38/22 May 2009
Chapter One.
General Provisions
Art. 1. This regulation shall provide:
(1) the activity of the Commission for Public Oversight of Statutory Auditors, hereinafter called The Commission;
(2) the structure, functions and activity of its administration.
Art. 2. The Commission is an independent body, budget-subsidized legal entity, having its registered office in
Art. 3. The Commission shall exercise public oversight over the activity of statutory auditors and the
Art. 4. The Commission shall cooperate with the respective authorities of the European Union, with supervision bodies of the Member States of the European Union or of third countries which are in charge of independent financial audit.
Chapter Two.
STRUCTURE AND ACTIVITY OF THE COMMISSION
Section I.
Competence of the Commission
Art. 5. (1) The Commission is acting as a College and consists of a Chairman and six members. In case the Chairman is absent, his/her functions shall be performed by a member of the Commission, appointed by the Chairman for each individual case.
(2) Chairman and members of the Commission shall be elected by the National Assembly.
(3) The Mandate of the Commission shall be 4 years. The Chairman and the members of the Commission may not be elected for more than two consecutive mandates. In case of termination of the mandate of a Chairman or of a member of the Commission they shall perform their duties till new Chairman and members of the Commission are elected.
(4) The members of the Commission, not including its Chairman, shall not be established staff members of the Commission.
(5) The activity of the Commission shall be supported by administration.
(6) At carrying out its activity the Commission can hire outside not-on-the-payroll colaborators.
Art. 6. The Commission shall be in charge of the oversight over:
1. acquisition of competence, registration of statutory auditors, including auditors and audit firms from other Member States of the European Union, and from third countries, as well as deprivation of the competence.
2. adopting and observing standards for professional ethics, internal quality control of auditor firms and at the performing of the audit;
3. continuing training for the statutory auditors, quality assurance system, investigation and penalties imposement;
Art. 7. (1) The Commission shall exercise supervision over the Institute of certified public accountants’ activity as an actor in the public oversight system.
(2) The Commission shall approve the following rules, methodologies and provisions proposed by the Institute of certified public accountants:
1. Methodologies for defining the amount of working hours appropriate for quality and efficient completion of the independent financial audit;
2. Rules and the procedures for carrying out quality assurance reviews of the activity of the statutory auditors, the persons involved in the reviews, as well as the annual plan for carrying out reviews;
3. Contents, organisation, rules and procedures for conducting the candidates’ exams for getting a diploma as a certified public accountant;
4. Rules for organising and conducting continuing training of the candidates for certified public accountants;
5. Rules and procedures for conducting in Bulgarian language the exams on Bulgarian commercial, taxation and insurance legislation for persons who have acquired audit capacity in a member state of EU, or in a state within European economic community;
6. Amount of fees due for quality assurance reviews of their audit activity;
7. Remuneration for the persons carrying out quality assurance reviews.
Art. 8. The Commission shall:
1. approve the Institute of certified public accountants’ reports on the results of the quality assurance reviews on the activity of the statutory auditors completed;
2. assess the results of the quality assurance reviews completed according to criteria approved by the Commission;
3. assign further or repeated reviews in those cases where the results of the quality assurance reviews carried out by the Institute of certified public accountants’ bodies are unsatisfactory;
4. appoint a member respectively members of the Commission to take part in the reviews alongwith the Institute of certified public accountants’ bodies in case of repeated failure to observe the fixed terms for completion of the reviews or unsatisfactory quality of the reviews.
Art. 9. (1) The Commission shall approve the annual budget funds ensuring the functioning of the quality control system.
(2) The Budget per para 1 shall be grounded on the planned number of audit practices reviews, relevent working hours and the defined renumeration rates per hour.
(3) On the basis of the budget defined, in line with the provisions of the Independent Financial Audit Law, the Commission shall approve the monthly expenses on quality control and shall undertake together with the Institute of certified public accontants the due monetary alignment of expense funding.
Art. 10. (1) The Commission shall carry out investigations upon received warnings and proposals by interested persons regarding alleged contraventions. In other cases the Commission shall be vested with discretion; in those cases the Commission may be supported by the respective bodies of the Institute of certified public accountants;
2) On the basis of the reviews results The Commission shall have the right to prescribe mandatory instructions to the statutory auditors and undertake measures against them.
Art. 11. (1) The Commission, in a 14-day term, pronounces on the decisions of the Management Board of the Institute of certified public accontants providing refusal for membership and registration of candidates for statutory auditors.
(2) The Commission shall be sitting on the cases of withdrawal of approval and resignation of a statutory auditor, on the explanations given and relevant reasons.
(3) The Commission shall impose penalties as per the Independent Financial Audit Law.
Art. 12. The Commission shall develop and publish on its web-site the following:
1. annual work programme for its activity;
2. results of the reviews;
3. information on the cooperation with the respective authorities of the European Union, with supervision bodies of the Member States of the European Union or of third countries;
4. annual activity report;
5. other materials concerning its activity.
Art. 13. The Commission shall prepare and present to the National Assembly an annual activity report not later than May 30th of the next year.
Art. 14. (1) The Chairman of the Commission shall administer the activity of the Commission and shall represent it.
(2) The Chairman of the Commission shall be an authorising person of budget estimates.
(3) The Chairman of the Commission shall:
1. represent the Commission in the country andd abroad;
2. summon and chair sessions of the Commission;
3. ordain penal provisions as per the Independent Financial Audit Law;
4. organise, administer and control the activity of the administration of the Commission;
5. approve the staff listing of the administration of the Commission, within the structure provided in the Regulation, and job description of the servants;
6. sign, amend and terminate employment of the servants in the administration of the Commission;
7. assign remuniration of the servants of the administration and the procedure of payment;
8. sign civil contracts with not-on-the-payroll collaborators;
9. sign contracts necessary for the functioning of the Commission and its administration;
10. send on official trips, in the country and abroad, members of the Commission and its administration;
11. organise drafting of the budget and submit it to the Commission for approval;
12. organise implementation, closing and reporting of the budget submit it to the Commission for approval;
13. issue ordinances and instructions governing the activity of the administration of the Commission.
(4) The Chairman of the Commission has the right to establish consultative committees on fulfillment of his functions
(5) The procedure of commissioning and reporting of the Chairman shall be regulated in a decision of the Commission.
Section II.
Organisation of the Activity of the Commission
Art. 15. (1) The Commission shall be a standing body.
(2) The Commission shall be sitting and deciding matters of its competence in public sessions. Upon the Commission’s decision given sittings can be in camera.
(3) The sessions of the Commission shall be regular and called meetings, as follows:
1. The Commission shall be sitting regularly twice a month with a preliminary communicated agenda; materials on the agenda shall be handed to the members not later than two days ahead of session;
2. The Commission shall be summoned on a called meeting by the Chairman or upon proposal of not less than two members;
3. Matters not on the agenda can be discussed when none of the present members raises objection;
4. The Chairman of the Commission nominates servants of the administration to attend sessions when sitting on specific issues.
Art. 16. (1) The sessions of the Commission shall be held when the Chairman and not less than four members are present.
(2) The absence from sessions on behalf of a member shall be seen eligible only if he/she is:
1. on an official mission;
2. on leave, due to correspondent procedures;
3. on sick leave.
(3) In case the person has not taken part in three or more sessions of the commission within a one-year period the Chairman of the Commission shall submit to the National Assembly a proposal for termination of mandate of the correspondent member of the Commission ahead of term .
(4) The Commission shall take decisions by open vote and a majority of four votes.
(5) Decisions per art. 41 and art. 42 of the Independent Financial Audit Law concerning deprivation of right to carry out an independent financial audit and the right of exercising audit activity shall be taken with a majority of five votes by secret vote
(6) The Chairman and the members of the Commission shall not obstain from voting.
Art. 17. (1) Minutes shall be taken of each session of the Commission by a designated servant from administration. It shall be signed by the Chairman, the members of the Commission present at the session and the minute-keeper.
(2) Based on the Minutes an abstract shall be drafted including topics on the agenda and the decisions taken. The abstract shall be signed by the Chairman and a designated servant from administration.
(3) The decisions of the Commission shall be communicated to the interested persons in written in a seven-day term.
Section III.
Quality Control on the Activity of Statutory Auditors
Art. 18. (1) All statutory auditors, auditors and audit firms from third countries, registered at the Institute of certified public accountants, shall be subject to quality control regarding their activity.
(2) The quality control system shall be established and functioning according to the rules, procedures and plans, approved by the Commission upon proposal by the Institute of certified public accountants.
(3) The quality control system shall function by the following manner – persons, appointed by the Quality control council at the Institute of certified public accountants, and persons who do not perform activity related to independent financial audit shall participate in the reviews under the supervision of the Commission. The persons to take part in the reviews shall be approved by the Commission.
(4) The persons who do not exercise activity related to independent financial audit, involved in the carrying out of the reviews, shall be in employment or non-employment relationships with the Commission.
(5) In fulfillment of their duties the members and inspectors of the Commission shall be obliged to establish their identity by official card and to present the commission’s decision ordaining the review.
Art. 19. In fulfillment of their duties the chairman, the members of the Commission and persons designated upon a decision of the Commission to carry out reviews, shall be entitled to require:
1. within terms fixed by them, from the statutory auditor who is subject to review - documents, certified copies of documents, data, references and other information of importance for the reviews;
2. within terms fixed by them, from the statutory auditor who is subject to review in writing explanations on matters related to the review;
3. certified copies of documents, data, references and other information – from legal persons and sole traders, regardless the statutory auditor who is subject to review, that are related to the review;
4. from the Institute of certified public accountants provision of documents, certified copies of documents, data, references and other information related to the powers of the Commission.
Art. 20. Quality control on the activity of the statutory auditors shall respect the following requirements:
1. control shall be exercised by persons independent from the correspondent statutory auditors subject to control;
2. The persons who do not exercise activity related to independent financial audit, involved in the carrying out of the reviews, shall be in employment or non-employment relationships with the Commission.
3. The funding for the control system shall be adequate, sufficient and free from influence by the statutory auditors subject to control;
4. Adequate resources shall be secured for the appropriate control activity;
5. The persons, carrying out quality control shall have proper education and experience in the field of independent financial audit and also they must have undergone quality assurance training course;
6. there shall be no conflict of interests between the persons carrying out quality control, and the statutory auditors – subject to the review.
Art. 21. (1) Quality control of the statutory auditors’ activity shall include:
1. review of the audit documentation regarding compliance with the audit standards applicable;
2. review for compliance with the requirements of the International Audit Standards;
3. review regarding compliance with ethical principles and rules, including independence rules;
4. ascertainment of adequacy of time and human resources, used for carrying out of the audit according to its scope and complexity;
5. ascertainment of adequacy of the auditors’ remunerations for the audit;
6. assessment of the internal quality control system, applied by the statutory auditor.
(2) When carrying out audit of an audit company in the excerpt shall be included the audits, carried out by each registered auditor, who has carried out activity on behalf of the company.
(3) Reports shall be worked out for the results of each review carried out, containing the main conclusions from the exercised control. A copy of the report shall be given to the statutory auditor – subject of the review.
(4) The statutory auditor or audit firm – subject of the review shall have the right in a 14-day period to submit to the Commission the objections to Report conclusions.
Art. 22. (1) A statutory auditor, carrying out independent financial audit of a company performing public interest activity, shall be subject to an audit activity quality review at least once in three years.
(2) Quality assurance reviews under para 1 shall be led and carried out with the participation of persons who do not perform activity related to independent financial audit. Statutory auditors may also take part in the review.
(3) A copy of the report on the result of the said review shall be provided to the Commission in three-days term from its issue.
Art. 23. (1) A statutory auditor who does not carry out independent financial audit of a company performing public interest activity, shall be subject to review regarding the quality of the audit activity at least once in four years.
(2) Quality assurance reviews under para 1 shall be carried out by the Institute of the certified public accountants with the participation of persons who do not perform activity related to independent financial audit.
(3) The Report on results of the review as per para 1 shall be submitted to the Quality Control Council of the Institute of the certified public accountants whilst a copy of it shall be presented to the Commission.
(4) The Institute of certified public accountants shall draw in a detailed report on the quality assurance reviews of the activity of the said auditors per each calendar quarter. A copy of the report shall be presented to the commission within 15 days from the expiry of the respective quarter.
Sector IV.
Cooperation and information exchange with the competent bodies of other states
Art. 24. (1) The Commission shall cooperate with the respective competent authorities from other Member States of the European Union with the purpose of exercising their powers in the field of public oversight of statutory auditors.
(2) In cases where requests have been submitted by the competent authorities of other states, the Commission shall immediately undertake the appropriate actions to collect the required information. The Commission shall be supported by the Institute of certified public accountants in the performing of this activity.
(3) The requirement of professional secrecy shall not impede the information exchange between the Commission and the competent authorities of the Member States of the European Union.
Art. 25. (1) Where the Commission has reasonable doubts that on the territory of another Member State of the European Union activities contrary to the provisions of Directive 2006/43/EC of the European Parliament and of the Council are being carried out, the Commission shall provide detailed information thereof to the competent authority of the respective Member State of the European Union.
(2) In cases where the Commission has been notified by the competent authority from a Member State of the European Union of a violation of the requirements of Directive 2006/43/EC within the territory of the Republic of Bulgaria, the Commission shall take the appropriate measures and inform the respective competent authority of the Member State of the European Union about the outcome.
Art. 26. (1) The Commission shall carry out an investigation upon request by the respective competent authority of another Member State of the European Union. In such cases the Commission may allow representatives of the competent authority of the Member State of the European Union to take part in the investigation
(2) The Commission may also request an investigation to be carried out by the competent authority of another Member State of the European Union within the latter's territory, whilst its members participate as observers in the investigation.
Art. 27. (1) The Commission may refuse to act on a request for information and carrying out of investigation with the participation of observers in cases as per Art. 40q of the Independent Financial Audit Law.
(2) In the cases referred to in para 1 the Commission shall notify the body which has requested cooperation.
Art. 28. (1) The Commission may allow the transfer to the third country competent authorities of audit working papers related to the carrying out of independent financial audit, or other documents held by statutory auditors
(2) The transfer is in accordance with the requirements of Chapter six from the Law for Protection of the Personal Data.
(3) The request from a competent authority of a third country can be refused following the provisions of Art. 40s, para 2, p. 4 of the Independent Financial Audit Law.
Chapter Three.
ADMINISTRATION OF THE COMMISSION
Section I.
General Provisions
Art. 29. (1) Carrying out its functions and powers the Commission shall be supported by specialized and general administration, structured in directorates.
(2) Total number of administration is 30 permanent appointments, allocated in directorates as per the staff listing (Supplement).
(3) The Chairman and the staff shall have the right to:
1. additional paid annual holiday for the performance of official duties out of working hours. The amount of the additional holiday for the Chairman shall be earmarked in a Commission’s decision, and for the staff members in a Chairman’s ordinance;
2. refund of the expenses for training, improvement of qualification and re-qualification, when they are nominated for training in a Commission’s decision;
3. entertainment allowances for working clothing equal to the value of four minimal monthly salary for the country. The specific amount of means shall be earmarked by the Chairman of the Commission for each calendar year, grounded on internal rules approved by the Commission;
4. bonuses for the execution of specific functions provided with the Independent Financial Audit Law following rules of procedure determined with internal rules for salaries. The means shall be defined up to 25 per cent of the annual gross amount of means allotted for salaries and are secured through savings in the budget of the Commission.
(4) In accomplishing its activity where necessary the Commission may contract outside collaborators and experts. Their statute shall be determined with a Commission’s decision.
Art. 30. Preliminary financial control shall be exercised by a servant, designated with an ordinance by the Chairman of the Commission.
Art. 31. The direction of administration, concerning direct implementation of the Commission’s decisions as well as informational, technical and administrative assurance of its activity shall be executed by a secretary general, to be appointed by the Chairman of the Commission.
Section II.
Structure and Functions of Administration
Art. 32. General administration shall provide technical and organisational support to the activity of the Commission and the specialized administration and shall be structured in “General administration” Directorate.
Art. 33.(1) Specialized administration shall execute the quality control on the activity of the statutory auditors, supervision over the
(2) Specialized administration shall be structured in Directorates:
1. "Quality Control on the Activity of Statutory Auditors";
2. "Methodology and International Relations".
Art. 34. (1) Secretary General shall provide the functioning of the Commission’s administration as follows:
1. shall coordinate development, current implementation and reporting of the annual working programme of the Commission;
2. shall represent Commission’s administration in front of legal and natural persons in the country and abroad, in compliance with the powers designated by the Chairman of the Commission;
3. shall coordinate and monitor the development of the materials for the Commission’s sessions;
4. shall accomplish other tasks, designated by the Chairman of the Commission.
(2) Secretary General shall participate in the sessions of the Commission with the right of advisory vote.
(3) Secretary General shall be superseded by a director of directorate, designated with an ordinance by the Chairman of the Commission.
Art. 35. (1) Director of Directorate shall:
1. manage the directorate in charge of in line with the functions defined in the Regulation;
2. distribute the assignments among the servants in the directorate, control and be answerable for their timely and duly completion;
3. participate in the Commission’s sessions where issues within the competence of the relevant directorate are on the agenda, including making statements;
4. propose servants from the relevant directorate for promotion, stimulating, transfering or imposing penalty;
5. make proposal for sending servants from the relevant directorate on official trips in the country and abroad;
6. perform other tasks, assigned by the Chairman of the Commission and Secretary General.
(2) In case of absense the Director shall be superseded by the most senior servant in the directorate.
Art. 36. Within the administration of the Commission departments shall be set up, reorganised or closed with an ordinance by the Chairman of the Commission.
Art. 37. “Quality Control on the Activity of Statutory Auditors” Directorate shall:
1. draft the annual programme for contol activities;
2. implement the planned and additionally assigned quality assurance reviews on the activity of the statutory auditors;
3. report to the Commission the results of the reviews completed and propose the appropriate measures and imposing of penalty;
4. support members of the Commission in the reviews carried out by them;
5. draft statement on the submitted by the
6. participate in the joint audits with third country representatives;
7. summarize the results of the annual control activity and draft the annual report of the Commission.
Art. 38. “Methodology and International Relations” Directorate shall:
1. maintain relations with the systems for independent financial audit oversight in member states of EU, and the correspondent bodies within European Commission;
2. be in charge of receipt and provision of information to the public oversight bodies for auditors and audit firms in the other Member States of the European Union, and in third countries;
3. explore and popularize local and international good practice in the field of oversight activity;
4. organise training and qualification increase of the servants in the administration;
5. provide review and draft statements on the submitted for the Commission’s approval materials of the
6. prepare and coordinate implementation of international projects;
7. perform public relation activities;
8. maintain the Commission’s web-site in Bulgarian and English languages;
9. secure technical literature and up-date library;
10. daily prepare a review of the press and distribute to the chairman, secretary general and directors of directorates.
Art. 39. "General Administration" Directorate shall:
1. organise administrative and technical preparation of the Commission’s session;
2. prepare minutes of the sessions and abstract of the decisions of the Commission; the latter are communicated to the correspondant bodies and persons in a 7-day term;
3. organise the overall financial and accounting service of the Commission in regard to the requirements of the Acconting Law and the other relevant legal acts;
4. draft the budget and the annual financial statement;
5. provide material and technical supply, filing, storing and statement of tangible assets;
6. organise and perform document records activity;
7. prepare acts and store documents concerning originating, amendment and termination of labour legal relations;
8. secure the proper implementation of legal acts concerning employment payment and material stimulus of servants;
9. be in charge of security, order and cleanliness;
10. organise maintenance and repair works of the premises and equipment.
Art. 40. Legal expert shall:
1. assure legal normative service and procedural representation of the Commission;
2. be in charge of the legitimacy of the draft-decisions, draft-ordinances, draft-documents and contracts where the Commission is a party;
3. analyse court practice on appealed acts of the Commission and propose improvement of legislative framework;
4. participate in the drafting of internal normative acts;
5. prepare legal statements in regard to the implementation of laws and other normative acts, concerning the powers and functions of the Commission.
Art. 41. Upon a decision of the Commission members and servants of the Commission may be granted insignia of honour and rewards; the terms and conditions shall be provided in the internal rules.
Concluding provisions
Single para. This regulation is adopted on the grounds of art. 35 d, para. 1 of the Independent Financial Audit Law, at a Commission session, dated 16th December 2008.
Supplement to art. 29, para 2
Supplement to art. 29, para 2
Number of administration - 30 permanent appointments, including the Chairman of the Commission, and:
1. Secretary General - one;
2. “Quality Control on the Activity of Statutory Auditors” Directorate – 14;
3. "Methodology and International Relations" Directorate - 5;
4. "General Administration" Directorate - 8;
5. Legal expert - 1.