Stock Exchange Act, 1995

Duties of auditor.

34.—(1) An authorised member firm which is constituted as an unincorporated body of persons shall be required to appoint an auditor to audit and make a report on its accounts on an annual basis and a person shall not be qualified for appointment as an auditor of an authorised member firm which is constituted as an unincorporated body of persons unless he meets the requirements of, and is not excluded by, the provisions of the Companies Acts.

(2) The Bank may set out requirements in respect of the accounts and audit of an authorised member firm which is constituted as an unincorporated body of persons including requirements which are analogous to those set out in the Companies Acts and may impose duties or obligations on the auditor or on the authorised member firm concerned.

(3) If at any time an auditor of an approved stock exchange or of an authorised member firm and, in the case of paragraphs (e) and (f) of this subsection, an auditor of a member firm which is not an authorised member firm—

(a) has reason to believe that there exist circumstances which are likely to affect to a material degree the ability of the approved stock exchange or the authorised member firm to fulfil its obligations to investors or clients or meet any of its financial obligations, or

(b) has reason to believe there are material defects in the accounting records or systems of control of the business and records, or

(c) has reason to believe that there are material inaccuracies in, or omissions from, any returns made by the said approved stock exchange or authorised member firm to the Bank, or

(d) proposes to qualify any report or certificate which he is to provide in relation to the financial statements or returns of the said approved stock exchange or authorised member firm under the Companies Acts, or under this Act, or

(e) has reason to believe that there are material defects in the system of any member firm for ensuring the safe custody of money of clients or investment instruments or has reason to believe that a member firm is not complying with client money requirements or rules or provisions of this Act, or

(f) has reason to believe that a member firm has breached to a material degree the rules of an approved stock exchange of which it is a member firm, or

(g) decides to resign or not to seek re-election as auditor,

he shall report the matter to the Bank in writing without delay.

(4) The auditor of an approved stock exchange or member firm, if requested to do so by the Bank, shall furnish to the Bank a reportstating whether in his opinion and to the best of his knowledge the approved stock exchange or member firm has or has not complied with—

(a) any condition or requirement set out or imposed under this Act in relation to financial resources, money of clients and investment instruments, accounting records and specified aspects of control systems or any or all of these,

(b) any condition or requirement set out in or imposed under this Act,

and the Bank may specify that such a report be furnished to it in such form as it may specify either on an annual basis or on such other occasion as the Bank may specify or both.

(5) Where the auditor of an approved stock exchange or member firm so requests, the Bank may provide to the auditor, in writing, details of any information of a financial nature concerning the said approved stock exchange or member firm as the auditor requests for the purpose of enabling him to comply with this Act.

(6) An auditor of an approved stock exchange or member firm shall send to the approved stock exchange or member firm concerned a copy of any report made by him to the Bank under subsection (3) or (4) of this section.

(7) An auditor of an approved stock exchange or authorised member firm shall communicate to the Bank any matters which come to the attention of the auditor and are such as to give the auditor reasonable cause to believe that the matter is or may be of material significance for determining either—

(a) whether a person's competence is satisfactory having regard to the matters with which they would be concerned in relation to the business of an approved stock exchange or authorised member firm and their probity is such as to render them suitable to carry on the business of an approved stock exchange or authorised member firm; or

(b) whether disciplinary action should be taken, or a direction given, by reason of a person's contravention of any provision of this Act, or any conditions or requirements, or both, or directions imposed by the Bank under this Act.

(8) (a) Where the Bank is of the opinion that the exercise of its functions under this Act or the protection of investors or clients or the interest of the proper and orderly regulation of approved stock exchanges and their member firms so requires, it may require the auditor of an approved stock exchange or member firm to supply it with such information as it may specify in relation to the audit of the business of the said approved exchange or member firm and the auditor shall comply with the requirement.

(b) The Bank may require that, in supplying information for the purposes of this subsection, the auditor shall act independently of the approved stock exchange or member firm.

(9) No duty to which an auditor of an approved stock exchange or member firm may be subject shall be regarded as contravened and no liability to the approved stock exchange or member firm orto the shareholders, creditors, investors, clients or other interested parties of any approved stock exchange or member firm shall attach to the auditor by reason of his compliance with any obligation imposed on him by or under this section.

(10) It shall be the duty of an auditor in preparing a report under this section to carry out such investigations as will enable him to form an opinion as to whether—

(a) the approved stock exchange or authorised member firm has kept proper accounting records;

(b) the approved stock exchange or authorised member firm has maintained satisfactory systems of control of its business and records and systems of inspection and report thereon; and

(c) the approved stock exchange or authorised member firm has complied with rules or requirements relating to client money and investment instruments referred to in section 52 of this Act and with the provisions of sections 52 (3) and 52 (4) of this Act;

and where an auditor is of the opinion that the approved stock exchange or authorised member firm has failed to keep proper accounting records or to maintain a satisfactory system of control of its business or records or to comply with rules or requirements relating to client money and investment instruments referred to in paragraph (c) of this subsection and with the provisions of sections 52 (3) and 52 (4) of this Act he shall so state in his report.

(11) An auditor of an approved stock exchange or authorised member firm shall have a right of access at all reasonable times to the books, accounts, records and vouchers of the approved stock exchange or authorised member firm and to all other documents relating to its affairs (including documents and records relating to clients' money and investment instruments), and shall be entitled to require from the officers, directors, managers and employees of the said approved stock exchange or authorised member firm such information and explanations as are within their knowledge or can be procured by them as he thinks necessary for the performance of the duties of auditor.

(12) Subject to subsection (15) of this section, where an approved stock exchange or authorised member firm has a related undertaking or associated undertaking, then—

(a) if the associated undertaking or related undertaking is a body incorporated in the State, it shall be the duty of the associated undertaking or related undertaking and its auditors to give to the auditors of the approved stock exchange or authorised member firm, as the case may be, such information and explanation and such access to documents as those auditors may reasonably require for the purpose of their duties as auditors of the approved stock exchange or authorised member firm concerned; and

(b) in any other case, it shall be the duty of the approved stock exchange or authorised member firm, if required by its auditors to do so, to take all such steps as are reasonably open to it to obtain from the related undertaking orassociated undertaking such information and explanation and such access as are mentioned in paragraph (a) of this subsection.

(13) The Bank may set out requirements in respect of the audit of approved stock exchanges or authorised member firms and such requirements may relate to the communication of specified matters to the Bank which may include matters relating to an associated undertaking or related undertaking.

(14) Any report requested by the Bank under this section shall be prepared at the expense of the approved stock exchange or member firm concerned and shall be carried out and made within such time as may be specified by the Bank or within such further time as the Bank may allow.

(15) An associated undertaking or a related undertaking may apply to the Court for an order prohibiting the auditor of an approved stock exchange or authorised member firm from requesting particular information or classes of information under this section from that associated undertaking or related undertaking on the basis that it is unreasonable and unnecessary for the auditor to request that information.