Compliance Responses and Action Plans

  • Compliance Responses and Action Plans

    IFAC members and associates have provided self-assessment information about the regulatory and standard-setting framework in their countries (Part 1) and their organizations' activities in addressing IFAC's membership requirements (Part 2) as described in the Statements of Membership Obligations. Based on an analysis of this information, they are developing SMO Action Plans for continuous development and improvement.

    Some organizations have qualified to submit SMO Action Plans on a biennial basis by meeting eligibility criteria. These organizations are indicated with an asterisk (*).

    In the interest of transparency and providing information to the profession, regulators, and other stakeholders, all responses and SMO Action Plans are accessible below.

    The Institute of Chartered Accountants of Pakistan

     

    Introduction

    The information below has been submitted as part of the IFAC Member Body Compliance program. The Program has two components:

    Part 1: Assessment of the Regulatory and Standard-Setting Framework (provides information about regulatory requirements and standard-setting processes in member body countries); and
    Part 2: Assessment of Compliance (provides information on compliance by member bodies with the Statements of Membership Obligations). Part 2 of the Compliance Program will begin later this year, and the results will also be posted to the website.

    The responses to Part 1 are provided below. IFAC staff has reviewed the responses and, where necessary, validated them with external knowledgeable parties. A list of key terms is available to assist readers in understanding the responses.

    The purpose of this Part 1 Assessment is to collect information on the roles of IFAC member bodies and other organizations (including government, regulatory or other appointed authorities) with respect to:

    1. Setting auditing, accounting, ethics, public sector and education standards; and
    2. Regulating the accountancy profession.

    Sections 1 and 2 of Part 1 contain an introduction and instructions for member body respondents. For this reason, they are not included here, and the responses begin with Section 3.

    Questions or comments may be sent to complianceassessment@ifac.org.


    Section 3 -- Member Body General Information

    1. Country:

      Pakistan


    2. Name of member body:
      The Institute of Chartered Accountants of Pakistan

      Or please specify name:



    3. Individual responsible for preparation:
      Syed Sajid Ali


    4. Date member body became a member of IFAC:
      Note: Please enter a numeric date (e.g., 12/2001, Month/Year)

      02 / 1986



    Questions 5 - 22 are for internal use only


    Section 3G -- Affiliations


    23. Please list those regional organizations to which your organization belongs (e.g., FEE, CAPA, ECSAFA, IAA, etc.):
      SAFA
      CAPA



    Section 4 -- Statutory Framework


    Responses to this section will provide a description of the legal framework governing the commercial aspects of auditing and financial reporting in your country.

    Section 4A -- The Companies Act or Commercial Code


    The following questions concern the Companies Act (the Act) or Commercial Code (the Code) or similar Legal authority in your country. If no Legal authority exists, or the Legal authority does not address particular questions, please indicate "N/A" for Not Applicable.

    24. What is the full name of:
      a). the Act or the Code: Companies Ordinance, 1984 and the Securities and Exchange Commission of Pakistan Act, 1997
      b). the Enacting body: The Securities & Exchange Commission of Pakistan and the Government of Pakistan
      c). date the Act or Code came into force: /


    25. How can IFAC obtain a copy of the Act or Code?
      Available on web site of the Securities and Exchange Commission of Pakistan i.e. www.secp.gov.pk


    26. Is the Act or Code available in English?
      Yes   No


    27. What are the types of entities covered by the Act or the Code?
      Please check all that apply.
      Listed entities   Other (please specify): Non-listed entities (see attachment for a description of non-listed entities)
      Private companies   Other (please specify):
      Governmental   Other (please specify):
      Not-for-profit   Other (please specify):


    28. Is there a requirement for the following entities to prepare annual statutory financial statements? If YES, please describe the financial reporting requirements including the accounting standards to be followed.
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities The following sections of Companies Ordinance, 1984 apply to all the entities: Sections 233. Annual accounts and balance sheet, 234 Contents of balance-sheet and 237 Consolidated Accounts. In summary, accounts have to be prepared using International Accounting Standards and other standards as notified in the official Gazette. Except International Accounting Standards No. 15, 29 and 41 all other IASs have been notified by the Securities and Exchange Commission of Pakistan (SECP) to be followed by the listed entities. ICAP has recommended that non-listed entities also comply with IASs although the applicability for such entities has not been notified by SECP. In summary, 233(1) requires the directors of every company shall at some date not later than eighteen months after the incorporation of the company and subsequently once at least in every calendar year lay before the company in annual general meeting a balance-sheet and profit and loss account or in the case of a company not trading for profit an income and expenditure account for the period. Listed entities also have to prepare a statement of changes in equity, cash flow, statement of accounting policies, and where there is a change in accounting policy, whether the auditor agrees with the change. In summary, 234(1) requires that every balance-sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of its financial year, and every profit and loss account or income and expenditure account of a company shall give a true and fair view of the profit and loss of the company for the financial year so, however, that every item of expenditure fairly chargeable against the year’s income shall be brought into account. In summary, 237 requires that there shall be attached to the financial statements of a holding company having a subsidiary or subsidiaries, at the end of the financial year at which the holding company’s financial statements are made out, consolidated financial statements of the group presented as those of a single enterprise and such consolidated financial statements shall comply with the disclosure requirement of the Fourth Schedule and International Accounting Standards notified under sub-section (3) of section 234. (Refer to the attachment for additional detailed information).
      Private companies See above for listed entities
      Governmental
      Not-for-profit See above for listed entities
      Other (please describe) Non-listed entities See above for listed entities
      Other (please describe)


    29. Is there a statutory requirement for the following entities to be audited? If YES, describe the requirement including the auditing standards to be followed:
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities Under sub-section (3) of section 233 of the Companies Ordinance, 1984 all entities mentioned above are required to get the accounts audited. Section 233(3) is as follows:- 233(3). The balance-sheet and the profit and loss account or income and expenditure account shall be audited by the auditor of the company, in the manner hereinafter provided, and the auditor’s report shall be attached thereto. Except ISA 701 and ISA 720, all other ISAs have been adopted by ICAP. Compliance of which is mandatory for the members of the Institute. In addition members of the Institute are also required to follow Auditing Technical Releases (ATRs) issued by the Council of the Institute which relate to fixation of audit fees, acceptance of audits and other guidance keeping in view the local environment.
      Private companies See above for listed entities
      Governmental
      Not-for-profit See above for listed entities
      Other (please describe) Non-listed entities See above for listed entities
      Other (please describe) Non-listed entities


    30. Are the auditors ("statutory auditors") that are appointed for audits required by the Act or Code ("statutory audits") appointed for a specific period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    31. Who appoints the statutory auditors?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify): Normally the statutory auditors are appointed by the shareholders but in certain situations they could be appointed either by the Board of Directors or the Securities and Exchange Commission of Pakistan refer Companies Ordinance Act 1984 (252(3))
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    32. Does the Act or Code require joint auditors for the statutory audit?
      Yes   No
      If yes, please describe the requirement:


    33. Does the Act or Code require the rotation of the auditors or audit firms performing statutory audits?
      Yes   No
      If yes, please describe the requirement:
      These requirements have been changed recently, now:

      a) All listed companies in the financial sector shall change their external auditors every five years. Financial sector for this purpose, means Banks, Non Banking Finance Companies (NBFCs), Modarabas, and Insurance Companies.
      b) All listed companies other than those in the financial sector shall, at a minimum, rotate the engagement partner after every five years

      As such in case of clause (a) the words “external auditors” stand for an audit firm.



    Section 4B -- Securities Market Regulations


    Responses to this section will provide a description of the financial reporting and auditing requirements for listed entities in your country.

    34. What are (a) the major items of Legal authority for such requirements, (b) the Enacting body(ies) and (c) the latest amendment date? Please identify the specific articles or sections that pertain to auditing and financial reporting:
    1. the major items of Legal authority for such requirements

      i) The Companies Ordinance, 1984
      ii)International Accounting Standards notified by the Securities and Exchange Commission of Pakistan (SECP)
      iii)Format of Auditors’ Report to the members prescribed by the SECP
      iv)Accounting Technical Releases issued by the Institute of Chartered Accountants of Pakistan.
      v)Circulars and Notifications issued by the SECP from time to time.
      vi)International Standards on Auditing adopted by the Council of the Institute of Chartered Accountants of Pakistan
      vii)Auditing Technical Releases issued by the Institute of Chartered Accountants of Pakistan.

    2. the Enacting body(ies)

      1) The Securities and Exchange Commission of Pakistan
      2) The Institute of Chartered Accountants of Pakistan

    3. the latest amendment date?

      The Companies Ordinance, 1984 was last amended in 11/2002.


    35. How can IFAC obtain a copy of the Legal authority?
      Legal authority, except IAS, is available on the web site i.e. www.secp.gov.pk

      Legal authority, except ISA, issued by the Institute of Chartered Accountants is available on the web site i.e. www.icap.org.pk


    36. Is the Legal authority available in English?
      Yes   No


    37. Are there any additional or alternative financial statement reporting requirements for listed entities that are not described in your answer to Question 28?
      Yes   No
      If YES, please describe the requirement:


    38. Are there any additional auditing requirements that apply to listed entities other than those described in your answer to Question 29 (e.g., additional GAAS requirements, additional independence requirements, requirements to report to those charged with governance, etc.)?
      Yes   No
      If YES, please describe the requirement:


    39. Who appoints the statutory auditors of listed entities?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify): Normally the statutory auditors are appointed by the shareholders but in certain situations they could be appointed either by the Board of Directors or the Securities and Exchange Commission of Pakistan refer Companies Ordinance Act 1984 (252(3))
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    40. Are auditors who perform audits of listed entities appointed for a specified period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    41. Are joint auditors required for audits of listed entities?
      Yes   No
      If YES, please describe the requirement:


    42. Is rotation of the auditor or audit firm for audits of listed entities required?
      Yes   No
      If YES, please describe the requirement:
      Please see response to Question No. 33.



    Section 5 -- Auditing Standards


    Responses to this section will provide a description of the legal and professional framework governing audit and other assurance standards in your country. The section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 5A -- Statutory Framework


    43. Please provide the name of the Legal authority and/or self-regulatory rules that establish audit and other assurance standards in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting audit and other assurance standards. If the standards are different for different entities (e.g., listed entities, private companies, governmental bodies, not-for-profit organizations, etc.), please specify the details that apply to each:
      Type of entity Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting audit and
      other assurance standards
      Listed entity ISA & ATR ISA : 11/2004 ATR : 05/2005 The Institute of Chartered Accountants of Pakistan
      Other (please describe) Non-listed and Private entities ISA & ATR ISA : 11/2004 ATR : 05/2005 The Institute of Chartered Accountants of Pakistan
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      Auditing Technical Releases (ATRs) are available on ICAP web site.

      b. Are the documents available in English?
      Yes   No


    Section 5B -- Standard-Setting (The Institute of Chartered Accountants of Pakistan)


    44. For The Institute of Chartered Accountants of Pakistan, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Statutory Body established under Chartered Accountants Ordinance, 1961

      b. Name of standards

      International Standards on Auditing (ISAs) and Technical Releases (ATRs).

      ISA issued by IAASB are adopted by ICAP without any modification. Except ISA 701 and ISA 720, adoption of which are under process, all other ISAs have been adopted by ICAP.


    45. How many voting members does the standard-setting body have?
      16


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      12 members are elected on geographical basis and 4 are appointed by the Government of Pakistan


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      As stated above 12 members are elected by the members of the Institute and 4 members are appointed by the Government, out of which one is drawn from the Ministry of Finance who is normally Chairman of the Securities and Exchange Commission of Pakistan, one is Auditor General of Pakistan or his nominee, and one each is drawn from the Ministry of Education and Ministry of Commerce.


    49. What is the term of appointment for members?
      4 Year(s)


    50. For how many years has the standard-setting body been in existence?
      43 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      1,300,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      57.50



    52. To what entity is the standard-setting body accountable?
      As stated above the standard-setting body is the Institute of Chartered Accountants of Pakistan, which is governed by its Council, which is composed of 16 members, 12 elected and 4 nominated by the Government of Pakistan. The elected members of the Council are accountable to the general body of the Institute members.


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      The Council of the Institute every year constitutes an apex Committee known as the Professional Standards and Technical Advisory Committee. Members of this Committee are drawn from the profession, industry and the financial sector. Membership of this Committee varies from 12 to 15 members. This Committee in turn constitutes two Sub-committees, namely the Accounting and Auditing Standards Committees (North Committee and South Committee), whose members are also drawn from a broad spectrum of the profession. Exposure draft of a proposed Auditing Standard issued by IAASB is considered by the two Sub-committees and the consolidated comments are sent to IAASB. Any new Standard issued by IAASB is first considered by the two Accounting and Auditing Standards Committees, who send their recommendations to the Professional Standards and Technical Advisory Committee. The Professional Standards and Technical Advisory Committee after considering the recommendations of the two Accounting and Auditing Standards Committees recommends the matter to the Council of the Institute which is the final authority in this respect. The total membership of these three Committees is about 45 at any time. The Council of the Institute before finally approving the adoption of any auditing or assurance standard, exposes it to the general membership, who are given three to four weeks to come up with their comments. Members’ comments are again processed by the three Committees mentioned above and the final recommendation goes to the Council.
      ATRs are developed by the Technical Services Department of the Institute and go through the same process as followed for ISA.


    2. accessibility of meetings (i.e., public or private)

      The meetings of the three Committees and the Council are not open to the public. But any standard which may affect any specific sector of the industry is normally referred to the relevant association of that industry for circulation to its members and the comments if any received from such associations are duly considered by the three Committees.

    3. approval process for final standards (i.e., majority required to approve final standards)

      All decisions of the three Committees and the Council of the Institute are reached through consensus.

    4. other relevant due process activities

      The three committees and the Council of the Institute are duly supported by the Technical Services Department of the Institute, which is staffed by qualified Chartered Accountants who act as a research cell to these bodies.

      With regards to Q54, in the fiscal year 06/03, the Council and the Committees met as follows:

      (i)Council 14 days
      (ii)Professional Standards and Technical Advisory Committee 18 days
      (iii)Accounting and Auditing Standards Committee (South) 36 days
      (iv)Accounting and Auditing Standards Committee (North) 24 days


    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)



    Section 6 -- Ethics


    Responses to questions in this section will provide a description of the legal and professional framework governing ethics standards for accountants in your country. This section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 6A -- Statutory Framework


    55. For each of the following types of professionals, please indicate the name of the Legal authority and/or self-regulatory rules establishing ethics standards for accountants and auditors in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting the ethics standards.
      Type of professional covered Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting ethics standards
      Professional Accountants in Public Practice i) Chartered Accountants Ordinance, 1961/ii) Code of Ethics for Chartered Accountants 06/1983; 05/2005 The Institute of Chartered Accountants of Pakistan.
      Professional Accountants in Business i) Chartered Accountants Ordinance, 1961 ii) Code of Ethics for Chartered Accountants (03/2000) 06/1983; 05/2005 The Institute of Chartered Accountants of Pakistan.
      Professional Accountants in the Public Sector i) Chartered Accountants Ordinance, 1961 ii) Code of Ethics for Chartered Accountants 06/1983; 05/2005 The Institute of Chartered Accountants of Pakistan.
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      Chartered Accountants Ordinance, 1961 can be obtained from ICAP and the Code of Ethics for Chartered Accountants is available on the ICAP web site.

      b. Are the documents available in English?
      Yes   No


    Section 6B -- Standard-Setting (The Institute of Chartered Accountants of Pakistan.)


    56. For The Institute of Chartered Accountants of Pakistan., please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Statutory Body established under Chartered Accountants Ordinance, 1961

      b. Name of standards

      Chartered Accountants Ordinance, 1961
      Code of Ethics for Chartered Accountants


    57. How many voting members does the standard-setting body have?
      16


    58. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    59. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      12 members are elected on geographical basis and 4 are appointed by the Government.


    60. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      As stated above 12 members are elected and 4 members are appointed by the Government. Out of 4 members appointed by the Government 1 is Chairman of the Securities and Exchange Commission of Pakistan and three others are drawn from other departments of the Government working under Ministry of Finance.


    61. What is the term of appointment for members?
      4 Year(s)


    62. For how many years has the standard-setting body been in existence?
      43 Year(s)


    63. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      1,300,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      57.50



    64. To what entity is the standard-setting body accountable?
      As stated above the standard-setting body is the Institute of Chartered Accountants of Pakistan, which is governed by its Council, which is composed of 16 members, 12 elected and 4 nominated by the Government of Pakistan. The elected members of the Council are accountable to the general body of the Institute members.


    65. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      The Council of the Institute every year constitutes an apex Committee known as the Professional Standards and Technical Advisory Committee. Members of this Committee are drawn from the profession, industry and the financial sector. Membership of this Committee varies from 12 to 15 members. This Committee in turn constitutes two Technical Advisory Committees on geographical basis. Members of these Committees are also drawn from a broad spectrum of the profession. Code of Ethics for Chartered Accountants is largely based on IFAC Code of Ethics. Any amendment in IFAC Code of Ethics is first considered by the two Technical Advisory Committees, who send their recommendations to the Professional Standards and Technical Advisory Committee. The Professional Standards and Technical Advisory Committee after considering the observations of the two Technical Advisory Committees makes final recommendations in the matter to the Council of the Institute for approval and notification. The three Committees also consider various ethical issues raised by its members from time to time and give their opinions.

    2. accessibility of meetings (i.e., public or private)

      The meetings of the three Committees and the Council are not open to the public, but members may be co-opted from the relevant fields if deemed necessary.

    3. approval process for final standards (i.e., majority required to approve final standards)

      All decisions of the three Committees and the Council of the Institute are reached through majority.

    4. other relevant due process activities

      The three committees and the Council of the Institute are duly supported by the Technical Services Department of the Institute, which is staffed by qualified Chartered Accountants who act as a research cell to these bodies.

      With regards to Q66:

      In the fiscal year 06/03, the Council and the Committees met as follows:-

      i. Council 14 days
      ii. Professional Standards and Technical Advisory Committee 18 days
      iii. Technical Advisory Committee (South) 12 days
      iv. Technical Advisory Committee (North)8 days


    66. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)



    Section 7 -- Education


    Responses to questions in this section will provide a description of how education requirements for the profession are established. Please indicate the role your organization plays within this process.

    Section 7A -- Education Requirements


    67. Please describe in general terms the education system in your country including the different stages of education from early childhood education through to tertiary level study. Please indicate which aspects / levels are compulsory as part of the national education system:
      Education in Pakistan is imparted by Government and privately own and run schools and colleges. All schools and colleges are regulated by Boards of Secondary and Higher Education. Students at Private Schools have a choice to shift to O / A levels after class VIII. O / A levels examinations are conducted by London / Cambridge Universities.

      Medium of instructions in schools and colleges is both Urdu and English, however, English medium schools / colleges are generally preferred.

      University education is regulated by the Higher Education Commission of Pakistan.

      There is no compulsory education at national level so far but under the new national education policy (not yet enforced), it is planned to make primary education compulsory for all.

      Refer to the attachment for additional information regarding education in Pakistan.


    68. Is there a legal authority or regulation that specifies the requirements for an individual to operate as an accountant or auditor in your country?
      Yes   No

      If YES, please provide the name and describe the requirements, including any relating to education, experience or qualifications.

      Chartered Accountants Ordinance, 1961

      Section 4

      (1) Any of the following persons shall be entitled to have his name entered in the Register of the members of the Institute maintained under this Ordinance, namely:-

      (ii) any person who has passed such other examination and completed such other training as may be prescribed.

      Section 2(2)

      (2) A member of the Institute shall be deemed “to be in practice” when individually or in partnership with chartered accountants in practice, he, in consideration received or to be received,--

      (ii) offers to perform or performs services involving the auditing, or verification of financial transactions, books, accounts, or records or the preparation/verification or certification of financial accounting and related statements or holds himself out to the public as an accountant; or

      Section 6

      Certificate of practice.—(1) No member of the Institute shall be entitled to practice as an auditor of a public company as defined in the Companies Act, 1913 (VII of 1913), unless he has obtained from the Council a certificate of practice.

      (2) Every such member shall pay such annual fee for his certificate as may be prescribed, and such fee shall be due on the first day of July in each year.


    69. Please select from below all the relevant key levels of requirements to obtain certification from your member body (i.e. to qualify as a certified or chartered accountant) and provide a general description of the requirement.
      Academic requirements
      -Higher Secondary education or ‘A’ level or graduation for full-time education streams.

      -Graduate and Post Graduate entry streams covered under “Other”.

      -For details of entry requirements, examination schemes of education and training for CA qualification reference be made to Syllabus and Schemes Booklet being forwarded.
      Professional examinations
      After passing the Pre-entry Proficiency Test of the Institute, students have to undergo two years of Full time study at ICAP Registered Accounting Education Tutors during which they have to pass Foundation (Modules A & B) and Intermediate (Modules C & D) examinations. Foundation examinations (Modules A & B) comprise of six papers and Intermediate Examinations (Modules C & D) comprise of seven papers.
      Practical experience
      After passing Intermediate examinations students have to undergo 4 years of practical training with authorized Principals at CA Firms.
      Final qualifying examination
      Final examinations (Modules E and F) are to be attempted during and after training
      Other (please describe) Graduate and Masters
      Graduates and Masters can go into training directly and prepare and appear in all examinations of ICAP during and after training. Their training periods are 5 and 4 years respectively.


    70. Which of the following arrangements best describes who establishes the education requirements for the accounting profession in your country? Please select one option.
      A government ministry, department or agency establishes education requirements for the accounting profession with no additional requirements set by the member body(ies).
      A government ministry, department or agency establishes minimum education requirements for the accounting profession, and member body(ies) supplement these requirements.
      Member body(ies) establishes the education requirements for the accounting profession.
      Other (please describe)


    71. Please provide the name(s) of the relevant body in the government ministry, department, agency and / or member body who establishes the education requirements.
      The Institute of Chartered Accountants of Pakistan (ICAP)

    1. A general description of the role of the relevant body(ies) including how it operates and its due process in establishing the education requirements.

      ICAP is the regulating body for the profession of accountants. There is a Council of the Institute for managing the affairs of the Institute and for discharging the functions assigned to it under Chartered Accountants Ordinance, 1961 promulgated by the President of Pakistan. It operates through various standing and other Committees including Examinations Committee and Education & Training Committee which establish the requirements for examinations, coaching and training (gaining of practical experience) respectively. The schemes of education and training for qualifying the professional examinations are developed by the Education and Training Committee and approved by the Council.

    2. How many voting members does the relevant body(ies) have

      ICAP has sixteen voting members.

    3. Are the members of the relevant body(ies) involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:

    4. For how many years has the body been in existence?

      40 Year(s)


    72. How would you describe the authority that the education requirements have?
      Requirements are legally-based
      Requirements are set in the constitution, by-laws or other rules of the relevant body(ies).
      Requirements are set in member body(ies) policy document(s).
      Other (please describe)

    72 a. How can IFAC obtain copies of these documents?
      A copy of the Ordinance and bye-laws may be obtained upon request.

    72 b. Are these documents available in English?
      Yes   No


    73. Are the education requirements for accountants and auditors the same throughout your country, or do they differ among regions, provinces or states?
      Same   Different
      If different, please briefly describe the main differences:


    74. Please indicate the scenario that best describes who delivers the education and examination process for members of the profession. Please only select one option.
      The education program and final examination are delivered by the member body.
      The education program and final examination are delivered by the member body and other education institutions (e.g., universities, colleges, and others).
      The education program and final examination are delivered by education institutions (e.g., universities, colleges, and others).
      Other (please explain)


    75. Once qualified as a member of your professional body, can members offer their services directly to the public?
      Yes   No



    Section 7B -- Licensing


    76. Are there licensing requirements for auditors in your country?
      Yes (continue with Question 77)   No (proceed to Section 8)


    77. Who sets the requirements to obtain a license?
      The Council of ICAP under the CA Ordinance, 1961.


    78. What are the requirements to obtain a license (please select all relevant requirements.)?
      Academic study specific for obtaining a license
      Practical experience
      Licensing examination
      Final qualifying examination
      Other (please describe)
      He is a member of the Institute by virtue of academic requirements for entry into the profession, passing of all prescribed examinations of the Institute and satisfactory completion of training period.


    79. Are there ongoing requirements to retain a license?
      Yes   No

      If YES, please select all relevant requirements.
      Continuing professional development
      Re-examination
      Other (please specify): Payment of Annual renewal fee and compliance of the rules, regulations and directives (of the Council) at all times.


    80. What entity grants the license?
      ICAP


    81. Describe any additional licensing requirements for auditors of listed entities (e.g., additional education requirements, registration, etc.).
      There are no additional education requirements, however, according to Clause xxxvii of the Code of Corporate Governance “no listed company shall appoint as external auditors a firm of auditors which has not been given a satisfactory rating under the Quality Control Review Program of the Institute of Chartered Accountants of Pakistan”.



    Section 8 -- Public Sector Accounting Standards


    Responses to this section will provide a description of the legal and professional framework governing public sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate, where appropriate, the role of your organization within this framework.

    Section 8A -- Statutory Framework


    82. Please provide the name of the Legal authority and/or self-regulatory rules establishing public sector accounting standards in your country, the date of last amendment and the name of the body responsible for setting public sector accounting standards. If the standards are different for different entities (e.g., whole of government, ministry/department, statutory authority/agency, profit entity owned by government, state governments, local governments, other [please specify]), please specify the details that apply to each.
      Type of entity Name of
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting public sector
      accounting standards
      Whole of government
      Ministry/department
      Statutory authority/agency
      Profit entity owned by government
      State governments
      Local governments
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?



      b. Are the documents available in English?
      Yes   No



    Section 9 -- Private Sector Accounting Standards


    Responses to the questions in this section will provide a description of the legal, statutory and professional framework governing private-sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate what role your organization plays within this framework.

    Section 9A -- Statutory Framework


    94. Please provide the name of the Legal authority and/or self-regulatory rules that establish private-sector accounting standards in your country, the date of last amendment, and the name of the body responsible for setting private sector accounting standards. If the standards are different for different entities (for example, listed entities, private companies, governmental organization, not for profit organizations, etc.), please specify the requirements that apply to each.
      Type of entity Name of legal
      authority or
      applicable
      rules
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting private sector
      accounting standards
      Listed entity IAS, TRs and Circulars IAS – 01/2002 Cir. – 04/2004 TRs – 02/2003 The Securities and Exchange Commission of Pakistan
      Other (please describe) Non-listed and Private Entities TR 02-2003 The Institute of Chartered Accountants of Pakistan
      Other (please describe) Listed entity IAS, TRs and Circulars IAS – 01/2002 Cir. – 04/2004 TRs – 02/2003 The Institute of Chartered Accountants of Pakistan
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      Circulars issued by the Securities and Exchange Commission of Pakistan are available on SECP’s web site whereas Technical Releases (TRs) which are guidance notes on International Accounting Standards issued by the Institute of Chartered Accountants of Pakistan are available on ICAP’s web site. International Accounting Standards are adopted without any modification.

      b. Are the documents available in English?
      Yes   No


    Section 9B -- Standard-Setting (The Securities and Exchange Commission of Pakistan)


    95. For The Securities and Exchange Commission of Pakistan, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Statutory Body established under SECP Act, 1997

      b. Name of standards

      IAS/IFRS and SECP’s Circulars


    96. How many voting members does the standard-setting body have?
      SECP – 9


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: The Securities and Exchange Commission of Pakistan consists of seven Commissioners, including Chairman, who are appointed by Federal Government. It also has a Policy Board, which comprises of 9 members, five of which, including Chairman SEC are members in their ex-officio capacity and four are from private sector. Composition of ICAP is as follows:- ICAP has sixteen members, who work on voluntary basis. 12 members are elected on geographical basis and 4 are appointed by the Government of Pakistan, out of which one is drawn from the Ministry of Finance who is normally Chairman of the Securities and Exchange Commission of Pakistan, one is Auditor General of Pakistan or his nominee, and one each is drawn from the Ministry of Education and Ministry of Commerce.


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      The Securities and Exchange Commission of Pakistan Policy Board, which is governed by following Section 12 of the SECP Act, 1997 12.

      The Securities and Exchange Policy Board.—(1) The Federal Government shall appoint a Securities and Exchange Policy Board consisting of nine Members. While the setup of the Commission is governed by following section 5 of the SECP Act, 1997:- 5. The Commissioners.—(1) Subject to sub-section (2), the Commission shall consist of such number of Commissioners, including the Chairman, appointed by the Federal Government as may be fixed by the Federal Government but such number shall not be less than five and more than seven. A Commissioner shall be a person who is known for his integrity, expertise, experience and eminence in any relevant field, including the securities market, law, accountancy, economics, finance, insurance and industry. (2) The majority of the Commissioners shall always be of private sector persons. (3) Subject to the provisions of this Act, the Commission shall, in discharge of its functions and exercise of its powers, conduct its proceedings in accordance with the regulations made by the Commission.

      (4) The Commissioners, including the Chairman, shall be paid such remuneration and allowances as the Commission may, with the approval of the Board, determine.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Please see response to Question No.98.


    100. What is the term of appointment for members?
      4 Year(s)


    101. For how many years has the standard-setting body been in existence?
      7 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      N/A

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      N/A



    103. To what entity is the standard-setting body accountable?
      SECP is responsible to the Ministry of Finance, Government of Pakistan.


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      See response to Q104 relating to Institute of Chartered Accountants of Pakistan

    2. accessibility of meetings (i.e., public or private)

      See response to Q104 relating to Institute of Chartered Accountants of Pakistan

    3. approval process for final standards (i.e., majority required to approve final standards)

      All decisions of the three Committees, the Council of the Institute and the SECP Policy Board are reached through consensus.

    4. other relevant due process activities

      The SECP Professional Services and Policy Division is headed by a senior Chartered Accountant and staffed by qualified Chartered Accountants.


    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      3 Day(s)


    Section 9B -- Standard-Setting (The Institute of Chartered Accountants of Pakistan)


    95. For The Institute of Chartered Accountants of Pakistan, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Statutory Body established under Chartered Accountants Ordinance, 1961

      b. Name of standards

      Technical Releases (TRs, which are guidance notes on International Accounting Standards, are issued by the Institute of Chartered Accountants of Pakistan.

      Note: Notification of accounting standards other than for listed entities is awaiting the finalization of an accounting standard for SMEs, which is expected to be finalized by the end of 2005 till that time the IASB's standards on SMEs is issued.


    96. How many voting members does the standard-setting body have?
      16


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      12 members are elected on geographical basis and 4 are appointed by the Government of Pakistan, out of which one is drawn from the Ministry of Finance who is normally Chairman of the Securities and Exchange Commission of Pakistan, one is Auditor General of Pakistan or his nominee, and one each is drawn from the Ministry of Education and Ministry of Commerce.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      See response to Q99


    100. What is the term of appointment for members?
      4 Year(s)


    101. For how many years has the standard-setting body been in existence?
      43 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      1,300,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      Pak Rs. 57.50



    103. To what entity is the standard-setting body accountable?
      The elected members of the Council of the Institute of Chartered Accountants of Pakistan are accountable to the general body of the Institute members.


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      The Council of the Institute of Chartered Accountants of Pakistan every year constitutes an apex Committee known as the Professional Standards and Technical Advisory Committee. Members of this Committee are drawn from the profession, industry and the financial sector. Membership of this Committee varies from 12 to 15 members. This Committee is turn constitutes two Accounting and Auditing Standards Committees on geographical basis. Members of these Committees are also drawn from a broad spectrum of the profession. Any IAS/IFRS issued by IASB is first considered by the two Accounting and Auditing Standards Committees, who send their recommendations to the Professional Standards and Technical Advisory Committee.

      The Professional Standards and Technical Advisory Committee after considering the recommendations of the two Accounting and Auditing Standards Committees recommend the adoption of the IAS/IFRS to the Council of the Institute. The total membership of these three Committees is about 45 at any time.

      The Council of the Institute before finally recommending the adoption of any IAS/IFRs, exposes it to the general membership, who are generally given up to four weeks to come up with their comments. Members’ comments are again processed by the three Committees mentioned above and the final recommendation goes to the Council. Once this recommendation is approved, the relevant IAS/IFRS is sent to the Securities and Exchange Commission of Pakistan. There it is examined by their Professional Services and Policy Division. The recommendations of this Division are then approved by the SECP Policy Board. After an IAS/IFRS is approved for adoption by the SECP Policy Board it is sent to the Ministry of Finance for notification of adoption in the official gazette under Section 234(3) of the Companies Ordinance, 1984.


    2. accessibility of meetings (i.e., public or private)

      The meetings of the three Committees, the Council of the Institute and that of SECP Policy Board are not open to public.

      But any standard which may affect any specific sector of the industry is normally referred by the Institute of Chartered Accountants of Pakistan to the relevant association of that industry for circulation to its members and the comments if any received from such associations are duly considered by the three Committees.


    3. approval process for final standards (i.e., majority required to approve final standards)

      All decisions of the three Committees, the Council of the Institute and the SECP Policy Board are reached through consensus.

    4. other relevant due process activities

      The three committees and the Council of the The three committees and the Council of the Institute are duly supported by the Technical Services Department of the Institute, which is staffed by qualified Chartered Accountants who act as a research cell to these bodies.

      With regard to the response to Q105:

      In the fiscal year 06/03, the Council and the Committees met as follows:-

      i. Council 14 days
      ii. Professional Standards and Technical Advisory Committee 18 days
      iii. Accounting and Auditing Standards Committee (South) 27 days
      iv. Accounting and Auditing Standards Committee (North) 24 day


    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)



    Section 10 -- Monitoring (Quality Assurance) and Enforcement


    Responses to the questions in this section will provide a description of the legal and professional framework governing regulation of the profession in your country. Please indicate what role your organization plays within this framework.

    Section 10A -- Securities Market Regulatory Authority


    106. Name the authority that regulates the securities market:
      The Securities and Exchange Commission of Pakistan


    107. What responsibilities does this organization have for monitoring and enforcing compliance with accounting, reporting or auditing requirements? Please identify the Legal authority that establishes that responsibility:
      Sub-section (4) of Section 20 of the SECP Act, 1997 as reproduced below:

      (4) The Commission shall be responsible for the performance of the following functions:-

      (a) regulating the issue of securities;

      (b) regulating the business in Stock Exchange and any other securities markets;

      (c) supervising and monitoring the activities of any central depository and Stock Exchange clearing house;

      (d) registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with the securities markets in any manner;

      (e) proposing regulations for the registration and regulating the working of collective investment schemes, including unit trust schemes;

      (f) promoting and regulating self-regulatory organizations including securities industry and related organizations such as Stock Exchanges and associations of mutual funds, leasing companies and other NBFIs;

      (g) prohibiting fraudulent and unfair trade practices relating to securities markets;

      (h) promoting investors’ education and training of intermediaries of securities markets;

      (i) conducting investigations in respect of matters related to this Act and the Ordinance and in particular for the purpose of investigating insider trading in securities and prosecuting offenders;

      (j) regulating substantial acquisition of shares and the merger and take-over of companies;

      (k) calling for information from and undertaking inspections, conducting inquiries and audits of the Stock Exchanges and intermediaries and self-regulatory organizations in the securities market;

      (l) considering and suggesting reforms of the law relating to companies and bodies corporate, securities markets, including changes to the constitution, rules and regulations of companies and bodies corporate, Stock Exchanges or clearing houses;

      (m) encouraging the organized development of the capital market and the corporate sector in Pakistan;

      (n) conducting research in respect of any of the matters set out in this sub-section;

      (o) performing such functions and exercising such powers of the Authority, including any powers of the Federal Government delegated to the Authority, (other than the power to make any rules or regulations) under the provisions of the Ordinance, (the Securities and Exchange Ordinance, 1969 (XVII of 1969), the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980), and under any other law for the time being in force under which any function or power has been conferred on the Authority including, but not limited to, the functions and powers set out in the Schedule to this Act;

      (p) performing such functions and exercising such powers (other than the power to make any rules or regulations) under the Ordinance or any other law for the time being in force as may, after the commencement of this Act, be delegated to it by the Federal Government and exercising any power or performing any functions conferred on it by or under any other law for the time being in force;

      (q) proposing regulations in respect of all or any of the aforesaid matters for the consideration and approval of the Board;

      (r) exercising all powers, discharging all duties and performing all functions assigned to the Commission under, and generally administering, the Law of Insurance;

      (s) ensuring and monitoring compliance by insurers, insurance surveyors and insurance intermediaries of all laws, rules and regulations pertaining to insurance for the time being in force;

      (t) regulating professional organizations connected with the insurance business; and

      (u) encouraging the organized development of the insurance market in Pakistan.


    108. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      The SECP exercises the powers and performs the functions of the Federal Government, under Chartered Accountants Ordinance, 1961, which it derives from Section 20(4)(f) of the SECP Act, 1997, reproduced below:

      20(4) The Commission shall be responsible for the performance of the following functions:-

      (f) promoting and regulating self-regulatory organizations including securities industry and related organizations such as Stock Exchanges and associations of mutual funds, leasing companies and other NBFIs.
      and

      260. Penalty for non-compliance with provisions by auditors.- (1) If any auditor’s report is made, or any document of the company is signed or authenticated otherwise than in conformity with the requirements of section 157, section 255 or section 257 or is otherwise untrue or fails to bring out material facts about the affairs of the company or matters to which it purports to relate, the auditor concerned and the person, if any, other than the auditor who signs the report or signs or authenticates the document, and in the case of a firm all partners of the firm, shall, if the default is willful, be punishable with fine which may extend to one hundred thousand rupees.

      (2) If the auditor’s report to which sub-section (1) applies is made with the intent to profit such auditor or any other person or to put another person to a disadvantage or loss or for a material consideration, the auditor shall, in addition to the penalty provided by that sub-section, be punishable with imprisonment for a term which may extend to one year and with fine which may extend to one hundred thousand rupees.

      In case an auditor is held responsible under the above section by SECP, then the matter may also be referred to the Institute of Chartered Accountants of Pakistan for proceeding against that member under the disciplinary provisions of the Chartered Accountants Ordinance, 1961.


    2. accounting and auditing standard-setting

      For Accounting Standards setting please refer to response to Question No. 104 and for Auditing Standards setting please refer to response to Question No. 53.

    3. review of financial statements prepared by listed entities, and monitoring of their compliance with the accounting and disclosure requirements

      Review of financial statements prepared by listed entities is done by the Enforcement Division of the Securities and Exchange Commission of Pakistan, which has the power to take action under Section 234(6) of the Companies Ordinance, 1984 as reproduced below :

      234(6) The provisions of sub-section (7) of section 230 shall apply to any person who is a party to the default in complying with any of the provisions of this section.

      (For details of section 234 please see response to question 28)

      Section 230(7) is as follows:

      (7) If a company fails to comply with any of the requirements of this section, every director, including chief executive and chief accountant, of the company who has knowingly by his act or omission been the cause of such default shall,—

      (a) in respect of a listed company, be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than twenty thousand rupees nor more than fifty thousand rupees, and with a further fine which may extend to five thousand rupees for every day after the first during which the default continues; and

      (b) in respect of any other company, be punishable with imprisonment for a term which may extend to six months and with fine, which may extend to ten thousand rupees.

      Explanation: The term “chief accountant” shall include the chief accountant or any other person, by whatever name called, who is charged with the responsibility of maintenance of books of account of the company.




    Section 10B -- Stock Exchange


    109. Name the four largest stock exchangers (by market capitalization) and whether it is organized as a profit or not-for-profit organization:
      Profit Not
      for
      profit
      Stock Exchange
      Karachi Stock Exchange (Guarantee) Limited
      Lahore Stock Exchange (Guarantee) Limited
      Islamabad Stock Exchange (Guarantee) Limited



    Section 10B -- Stock Exchange
    Karachi Stock Exchange (Guarantee) Limited Details


    110. For Karachi Stock Exchange (Guarantee) Limited, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      Following are the pertinent requirements of the Listing Regulations of the Karachi Stock Exchange (Guarantee) Limited pertaining to financial reporting and auditing of listed entities: 17. Every listed company shall send to the Exchange its financial results, both in the case of half yearly and annual accounts, in such form as may be prescribed by the Exchange as soon as these are approved by the directors of the company. 18. (1) The company shall send to the Exchange 300 copies each of statutory report, annual report and audited accounts not later than 21 days before a meeting of the shareholders is held to consider the same. Regulations 38(xix)(d) (xix) The directors of listed companies shall include statements to the following effect in the Directors’ Report, prepared under Section 236 of the Companies Ordinance, 1984:- (d) International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there from has been adequately disclosed. For compliance with Auditing Standards please see format of Auditors’ Report reproduced under response to Question 29. Similar requirements have been prescribed in the Listing Regulations of the Lahore and Islamabad Stock Exchanges also.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      A listed company may be de-listed, suspended or placed on the Defaulters’ Counter, for any of the following reasons: - if it has failed to comply with the requirements of any of these regulations.

    3. How enforcement actions are administered.

      Listing Regulation No. 32 (2) of the Karachi Stock Exchange (Guarantee) Limited, reproduced below: No company will be de-listed or placed on Defaulters’ Counter, under these Listing Regulations, unless such company has been given an opportunity of being heard. Provided, however, placement of a company on the Defaulters’ Counter for reasons mentioned in sub-regulation (1) above, shall not impair the power of the Exchange to de-list such company subsequently, if the causes mentioned in paras (a) to (g) of sub-regulation (1) are not removed within a reasonable time, or if in the opinion of the Board, such causes will not be removed by the company within a reasonable time, and/or de-listing of such company becomes necessary in the public interest.


    Section 10B -- Stock Exchange
    Lahore Stock Exchange (Guarantee) Limited Details


    110. For Lahore Stock Exchange (Guarantee) Limited, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      See response relating to the Karachi Stock Exchange (Guarantee) Limited

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.



    3. How enforcement actions are administered.



    Section 10B -- Stock Exchange
    Islamabad Stock Exchange (Guarantee) Limited Details


    110. For Islamabad Stock Exchange (Guarantee) Limited, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      See response relating to the Karachi Stock Exchange (Guarantee) Limited

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.



    3. How enforcement actions are administered.




    Section 10C -- Regulatory Oversight of the Accounting Profession


    111. Has an audit profession oversight body been established (e.g., to oversee the external quality assurance review process, etc.)?
      Yes   No

      If NO, proceed to the next section.

      If YES, please describe :

    1. What are the name and duties of the oversight body?



    2. The number of members on the oversight body



    3. Its powers



    4. How the oversight body conducts or oversees a program of inspections to assess the degree of compliance of each audit firm/auditor with applicable auditing standards and regulations



    5. The sanctions the oversight body may impose in the event of non-compliance



    6. How the oversight body is accountable to any public institution or body



    Section 10D -- Banks Regulatory Authority


    112. Name the authority that regulates the banks and similar financial institutions. Discuss how this authority differentiates between accounting requirements for regulatory reporting and general purpose external financial reporting:
      The State Bank of Pakistan. State Bank of Pakistan regulates the banks and similar financial institutions. Accounting requirements for regulatory reporting are prescribed in the Prudential Regulations and external financial reporting is prescribed in the Companies Ordinance, 1984 and the Banking Companies Ordinance, 1962. As all banks are first registered as a limited liability company under the Companies Ordinance, 1984 and then given a license to do banking business by the State Bank of Pakistan, all requirements of the Companies Ordinance, 1984 in respect of the accounting and auditing apply to such banks and similar financial institutions. For Accounting Standards requirements please refer to Section 234(3) of the Companies Ordinance, 1984 and for requirements of Auditing Standards please refer to Form 35A as reproduced under response to Question No. 28 and 29.


    113. Discuss briefly the legal requirements with respect to monitoring and enforcement by the regulatory authority of accounting and auditing standards that apply to the banks and similar financial institutions:
      See response to Q114


    114. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      For auditing of banks and similar financial institutions, the State Bank of Pakistan maintains a Panel of Auditors and only such firms of auditors are placed on it who fulfill certain conditions as prescribed by the State Bank of Pakistan. Other than this the State Bank of Pakistan plays no role in the regulation of auditing profession.

    2. accounting and auditing standard-setting

      In the case of Accounting Standards setting, the State Bank of Pakistan may hold in abeyance any Accounting Standard, which may have been notified by the Securities and Exchange Commission of Pakistan under Section 234(3) of the Companies Ordinance, 1984. In setting Auditing Standards the State Bank of Pakistan has got no role.

    3. review of financial statements prepared by listed entities

      These are reviewed by the Inspection Department of the State Bank of Pakistan.

    4. enforcement of accounting, reporting and auditing requirements

      This is done by the State Bank of Pakistan through close liaison with auditors of the Banking Companies and directly with the Institute of Chartered Accountants of Pakistan also.



    Section 10E -- Non-Banking Financial Institutions Regulatory Authority


    115. Name the regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on non-banking institutions.
      The Securities and Exchange Commission of Pakistan


    116. What is the source of Legal authority of the regulatory authority(ies)?
      The Securities and Exchange Commission of Pakistan draw its authority from Section 282J of the Companies Ordinance, 1984:- 282J. Penalty for failure, refusal to comply with, or contravention of any provision of this Part.- (1) Notwithstanding anything contained in any other provision of this Ordinance, if a NBFC or its officers (including auditors) fails or refuses to comply with, or contravenes any provision contained in this Part or of any of the provisions of the rules made under section 282B or any direction or order passed by the Commission under the provisions contained in this Part or knowingly and willfully authorizes or permits such failure, refusal or contravention, shall, in addition to any other liability under this Ordinance, be also punishable with fine the amount of which shall not exceed five million rupees:


    117. Briefly describe the role of the regulatory authority(ies) as it relates to the following:
    1. regulation of the audit profession

      The Securities and Exchange Commission of Pakistan has no power to regulate the audit profession , as far as, it concerns the regulations of NBFIs, in addition to applicability of Accounting Standards as provided for in Section 234(3) of the Companies Ordinance, 1984 and compliance of Auditing Standards as provided in the format of Auditors’ Report

    2. accounting and auditing standard-setting

      None.

    3. review of financial statements prepared by listed entities

      This is done by the Non-Banking Finance Companies Division of the SECP.

    4. enforcement of accounting, reporting and auditing requirements

      This is done by the Non-Banking Finance Companies Division of the SECP. In addition to the above the Commission may also order special audit of NBFC under sub-section (1) Section 282H: 282H. Special Audit.- (1) Notwithstanding anything contained in any other provision of this Ordinance, the Commission shall monitor the general financial condition of a NBFC, and, at its discretion, may order special audit and appoint an auditor to carry out detailed scrutiny of the affairs of NBFC, provided that the Commission may, during the pendency of the scrutiny, pass such interim orders and directions as may be deemed appropriate by the Commission.



    Section 10F -- Insurance Companies Regulatory Authority


    118. Name the regulatory authority responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on insurance companies.
      The Securities and Exchange Commission of Pakistan


    119. What is the source of Legal authority of the regulatory authority(ies)?
      The following order issued by the Federal Government:- S.R.O. 952 (I)/99.—In exercise of the powers conferred by clause (p) of sub-section (4) of section 20 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997), the Federal Government is pleased to:-- (a) delegate all its powers; and (b) assign all its functions, under the Insurance Act, 1938 (IV of 1938), to the Securities and Exchange Commission of Pakistan.


    120. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      The Insurance Division of the Securities and Exchange Commission of Pakistan maintains a Panel of Auditors who are eligible to conduct audit of insurance companies.

    2. accounting and auditing standard-setting

      Under the Securities and Exchange Commission Insurance Rules 2002 formats of financial statements, formats of auditors report and accounting regulations have been laid down.

    3. review of financial statements prepared by listed listed entities

      This is done by the Insurance Division of the SECP.

    4. enforcement of accounting, reporting and auditing requirements

      This is done by the Insurance Division of the SECP.



    Section 10G -- Other Regulatory Authority


    121. Name any other regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements.
      None


    122. What is the source of Legal authority of each regulatory authority?


    123. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession



    2. accounting and auditing standard-setting



    3. review of financial statements prepared by listed listed entities



    4. enforcement of accounting, reporting and auditing requirements




    Section 10H -- Quality Assurance


    124. Does any organization of professional accountants/auditors organize a program of quality assurance review to monitor compliance with accounting, reporting and auditing requirements?
      Yes   No

      If NO, proceed to next Section.

      If YES, briefly describe the monitoring and enforcement mechanism.

      The Institute has established a Quality Control Review Committee (QCRC) which oversees the quality assurance of audit engagements. QCRC has developed a framework for reviewing the audit working paper files of member firms, and this framework is available on the Institute’s website. Names of those firms meeting the quality standards are published on the website, and the firms not meeting the criteria are given 6 months time to improve their performance, after which another review is conducted. Those firms which are found to be grossly negligent are referred to the Institute’s Investigation Committee for inquiry and if appropriate recommending necessary action by the Institute’s Council. It may be noted that in accordance with the listing regulations of Karachi Stock Exchange, a company listed on the Stock Exchange can only be audited by those firms, who have been given a satisfactory QCR rating by the Institute.



    125. Under what authority does the organization conduct the program of quality assurance review?
      The QCR reviews are conducted under authority of the Directive issued by the Council of the Institute of Chartered Accountants of Pakistan. However, such review can only be carried out with the consent of the client whose audit working papers are being reviewed.


    126. Who performs the review (e.g., one firm reviewing another firm, staff from the national professional organization, contractors, or a combination of these)?
      The QCR reviews are performed by Chartered Accountants, who are in full time employment of the Institute. The Institute has established a separate department for QCR namely Department of Professional Standards Compliance. All the reviewers have signed confidentiality undertaking with the Institute, and work under the supervision of the QCRC. Furthermore, a program for review of Published Financial Statements of Listed Companies has been initiated.



    Section 10 I -- Investigation and Discipline


    127. Is there a process for investigating and disciplining the accounting profession in your country?

    128. Which of the following best describes the responsibility for the investigatory and disciplinary function in your country?
      Government or other agencies are solely responsible for this function.
      Government or other agencies have this responsibility, but the member body or bodies participate in the process.
      Government formally delegates this function to the member body or bodies, to exercise on its behalf.
      Member body or bodies have separate and independent processes that operate alongside processes of legal authorities.
      Other (please explain)


    129. Please indicate the name of the body or bodies responsible for investigation and discipline.
      a)For matters relating to investigation, the Investigation Committee of the Institute is responsible.

      b)For matters relating to discipline, the Council of the Institute is responsible. (Responses to the Q130 to Q137 relating to the Council have already been covered in Q45 to Q52.)



    Responses to the remaining questions in this Section are required if your organization has responsibility for investigation and disciplinary actions.

    130. How many voting members does the body have?
      11


    131. Are the members of the body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: Members of the Investigation Committee, other than the Council members, are paid Rs.5,000 each for attending every meeting


    132. What are the criteria considered in selecting members of the body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      According to Bye-law 75 of the Chartered Accountants Bye-Laws, 1983 (as amended up to December 2000) the Investigation Committee shall consist of:

      (a) The President and the Vice-President or Vice-Presidents, ex-officio;

      (b) not less than three other members of the Council, elected by the Council; and

      (c) two other persons (not being members of the Council), nominated by the Council, of whom:-

      (i) one shall be a person who has exercised the powers of, or is or has been, a judge of a High Court or who is or has been an advocate of a High Court and is qualified to be a Judge of a High Court; and

      (ii) the other one shall be a person who, in the opinion of the Council, is suitable for such nomination.

      Provided that the persons under clause (c) shall be nominated for a period of four years or till the completion of the tenure of the Council, whichever is earlier.

      With regard to Q133:

      In the fiscal year 06/03, the Council and the Committee met as follows:
      i. Council 7 days
      ii. Investigation Committee 18 days



    133. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      The Council appoints the members of the Investigat


    134. What is the term of appointment for members?
      4 Year(s)


    135. For how many years has the body been in existence?
      40 Year(s)


    136. Please indicate the budget in US$ of the body for the last fiscal year.
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      (specify currency)



    137. To what entity is the body accountable?
      The Investigation Committee is accountable to the Council.


    138. Approximately how many days per year does the body meet in full session (including teleconferences)?
      Day(s)



     

     

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