Draft

Draft Official translation REPUBLIC OF LITHUANIA LAW AMENDING THE LAW ON AUDIT 15 June 1999 No. VIII-1227 Vilnius (As new version on 8 April 2004 No. IX-2105) Article

1. New Version of the Law on Audit of the Republic of Lithuania The Law on Audit of the Republic of Lithuania shall be amended and set forth to read as follows: “REPUBLIC OF LITHUANIA LAW ON AUDIT CHAPTER ONE GENERAL PROVISIONS Article
2. Purpose of the Law
3. This Law regulates the performance of the audit, the procedure for granting the title of the certified auditor, professional activities of audit firms, certified auditors and auditor’s assistants and supervision their and also the establishment, activities and management of the Chamber of Auditors.
4. Other laws shall be applicable to audit firms, certified auditors and auditors’ assistants only to the extent their activities are not regulated by this Law.
5. The provisions of this Law have been harmonised with the EU legal acts indicated in the Annex to this Law. Article
6. Definitions As used in this Law:
7. “Certified auditor” (hereinafter referred to as the “auditor”) denotes a person who meets the requirements set by this Law, holds the auditor’s certificate (hereinafter referred to as the “certificate”) and is a member of the Chamber of Auditors.
8. “Report on audit” means a document submitted together with the auditor’s report in the cases and according to the procedure provided by law; in it the auditor submits additional information about the results of the audit. The requirements of the report on audit shall be set by the Chamber of Auditors.
9. “Audit firm” means an enterprise established in accordance with the procedure set out by law and recorded in the list of audit firms of the Republic of Lithuania (hereinafter referred to as the “list of audit firms”).
10. “Audit network” means a system embracing the audit firm and related firms, in which the same trade mark is used or professional resources are shared.
11. “Auditor’s report” means a document signed for and on behalf of the audit firm by the head of the audit firm and the auditor where, in addition to other things, the auditor expresses his opinion about the financial statements of the enterprise or about the consolidated accounts of the group of enterprises.
12. “Auditor’s assistant” means a natural person meeting the requirements of this Law and entered in the list of the auditor’s assistants.
13. “Auditors’ Code of Professional Ethics” means a document approved by the meeting of members of the Chamber of Auditors setting out the standards of professional conduct for all auditors to abide by.
14. “Chamber of Auditors” means a public legal person uniting all auditors and implementing the auditors’ self-governance.
15. “Auditor Inspector” means the auditor appointed by the Audit Quality Control Committee under the Chamber of Auditors of the Republic of Lithuania to perform quality review of work of auditors and audit firms.
16. “Entity which is being audited” means an enterprise, institution or organisation the financial statements of which are audited or a group of enterprises the consolidated accounts of which are audited.
17. “Working papers” means information prepared, gathered or obtained by the auditor for the purpose of drawing up the audit plan, carrying out the audit and providing evidence to support the auditor’s report. Working papers may be different in form: in writing, recorded on film or preserved by electronic means and other devices.
18. “European Union Member State” means the Republic of Lithuania or any other state that is a member of the European Union. For the purposes of this Law, the concept of the Member State of the European Union shall also include states of the European Economic Area.
19. “Audit of financial statements” (hereinafter referred to as “audit”) means an independent examination of the financial statements of an enterprise, institution or organisation (hereinafter referred to as the “enterprise”) and provision of the opinion. The opinion shall state whether the financial statements or the consolidated accounts in all material respects give a true and fair view of the financial position of the enterprise, and of the results of its operations and its cash flows, and whether the financial statements or consolidated accounts comply with the legal acts regulating financial accounting and drawing up of financial statements, and also with other legal acts.
20. “Other services” means all lawful activities of the audit firm with the exception of performance of the audit.
21. “Client” means any enterprise, institution or organisation the financial statements of which are audited or a group of enterprises the consolidated accounts of which are audited and/or which is provided other services.
22. “National Standards on Auditing” means a series of regulations, rules and instructions approved by the Chamber of Auditors, which regulate the process of the audit performance and provision of non-audit services. The Standards must be complied with by all auditors when performing the audit or providing non-audit services.
23. “Supervisory institution” means the Bank of Lithuania, the Securities Commission of the Republic of Lithuania, the Insurance Supervisory Commission of the Republic of Lithuania.
24. “Related enterprise” means any enterprise related to the audit firm by common participants (or in which a participation is held), or any enterprise linked with the audit firm by common control or management bodies, whatever its legal form.
25. “International Standards on Auditing” means International Auditing Standards and Related Pronouncements drafted and approved by the International Auditing and Assurance Standards Board of the International Federation of Accountants.
26. “Audit contractor” means a legal or a natural person concluding a contract for the performance of an audit.
27. “Public interest entities” means entities that are of significant public relevance because of the size of their business, their number of clients, participants or employees or due to the nature of their business (credit institutions, financial brokerage firms, insurance undertakings, management companies, investment companies with variable capital, companies securities of which are admitted to trading on a regulated market. Article
28. Objectives of the Audit The key aims of the audit shall be: 1) to verify whether the financial statements of the enterprise (the consolidated accounts of a group of enterprises) give, in all material respects, a true and fair view of the financial position of the enterprise, and of the results of its operations and its cash flows; 2) to verify whether the financial statements of the enterprise (the consolidated accounts of a group of enterprises) have been drawn up in accordance with the legal acts in effect in the Republic of Lithuania, which regulate accounting and drawing up of financial statements as well as other legal acts; 3) to verify whether the data given in the annual report drawn up by the board (head) of the enterprise (if required under law) correspond to the data presented in the financial statements. Article
29. Principles of the Auditors’ Activities The basic principles of the auditors’ activities are as follows: 1) independence. The auditor may perform an audit only being independent from the audit contractor, client and the entity which is being audited; 2) integrity and objectivity. The auditor shall not knowingly misrepresent the facts and his opinion shall not be influenced by the opinion of other persons; 3) professional competence. The auditor shall have professional knowledge and skills allowing to professionally provide services; 4) confidentiality. The auditor must keep the information entrusted to him by the client confidential and not furnish it to third persons; 5) responsibility to the public. Supporting the normal course of business the results of the audit may be used by credit institutions, state institutions, employers and employees, investors, business and financial circles and other users who trust the auditors’ objectivity and integrity. The responsibility to the public is conditioned by the trust. CHAPTER TWO GRANTING THE TITLE OF THE AUDITOR Article
30. Terms and Conditions for Granting the Title of the Auditor The natural person shall be granted the title of the auditor at his request provided he: 1) is a citizen of the Republic of Lithuania or any other European Union Member State; 2) has a University degree in economics; 3) has experience of at least 3 years as an auditor’s assistant with an audit firm; 4) has a good command of the state language; 5) is of sufficiently good repute; 6) has passed the auditors’ qualification examinations or had his knowledge tested; 7) has been sworn in as auditor. Article
31. Sufficiently Good Repute A person shall not be considered of sufficiently good repute if: 1) he has been convicted of a serious or particularly serious crime, regardless of whether or not the conviction is spent, also if he has been convicted of any other criminal act until the conviction is spent; 2) he abuses narcotic, toxic, psychotropic substances or alcohol; 3) has been dismissed for professional misconduct or misconduct in office from the office of the internal auditor, examiner, accountant, financier of an enterprise, institution or organisation or dismissed from a civil service position following the imposition of a disciplinary penalty or from work for a breach of work duties where less than three years have passed since the dismissal; 4) his auditor’s certificate has been cancelled on the decision of the Auditors’ Court of Honour; 5) he does not comply with the requirements of the Auditor’ Code of Professional Ethics. Article
32. Procedure for Granting the Title of the Auditor
33. A person applying for the title of the auditor shall lodge an application with the Chamber of Auditors. The application shall comprise personal data, indicating name, surname, personal number, place of residence, citizenship and a response to the question whether or not there are grounds specified in this Law for refusing to grant him the title of the auditor.
34. The Chamber of Auditors shall make a decision to grant the title of the auditor within 30 days from the lodging of the application and inform about the possibility to take the auditor’s oath. The Chamber of Auditors shall send to the person a copy of the taken decision within 5 working days from the day of decision making.
35. When deciding the issue of granting the title of the auditor the Chamber of Auditors shall have the right to request the production of the documents proving the circumstances specified in Articles 5 and 6 of this Law.
36. The person who has taken and signed the auditor’s oath shall be granted the title of the auditor and issued the auditor’s certificate. Article
37. Auditor’s Qualification Examination
38. The auditor’s qualification examinations and knowledge tests (hereinafter referred to as auditor’s qualification examinations) shall be conducted by the Chamber of Auditors.
39. The subjects to be included in the auditor’s qualification examinations, the rules for taking the examinations and the amount of examination fees shall be approved by the Minister of Finance on the proposal of the Chamber of Auditors.
40. Theoretical knowledge in the following subjects shall be tested during the auditor’s qualification examinations: 1) general accounting theory and principles; 2) legal acts regulating the drawing up of financial statements and consolidated accounts 3) international accounting standards; 4) financial analysis; 5) cost and management accounting; 6) internal audit; 7) audit; 8) legal acts regulating audit and auditors’ activities and professional standards; 9) international standards on auditing.
41. In addition to subjects listed in paragraph 3 of this Article theoretical knowledge in the following subjects, to the extent they relate to audit, shall be tested during the auditor’s qualification examination: 1) company law, company management, bankruptcy procedures; 2) tax law; 3) civil and commercial law; 4) law regulating social insurance and the Labour Code; 5) IT and computer systems; 6) general, business economics and economics of finance; 7) mathematics and statistics; 8) basic principles of company finance management.
42. During the auditor’s qualification examinations the practical skills necessary for the auditor shall be tested.
43. After failing in the auditor’s qualification examinations, a person may repeatedly attempt to pass such examinations only after 6 months. The number of repeated attempts is not limited.
44. The Chamber of Auditors shall organise the auditor’s qualification examinations at least once per calendar year. Article
45. The Auditor’s Qualification Examination Commission
46. The Auditor’s Qualification Examination Commission (hereinafter the Examination Commission) shall be comprised of 7 members, including from among them the Commission Chairperson. Members of the Auditor’s Qualification Examination Commission shall be specialists in law, taxes, accounting or finance matters. 4 members, from among them the chairperson, shall be appointed by the Ministry of Finance, 3 auditors shall be appointed Examination Commission members by the meeting of the Chamber of Auditors
47. The Examination Commission member shall be appointed for a 3-year period. No persons may be appointed to serve more than two successive terms on the Examination Commission. For the following term the Examination Commission member shall be appointed within 30 days after the expiration of the term of office of the Commission member whose term expired. After the expiration of the term the Examination Commission member shall continue in office until an Examination Commission member is appointed for the following term. The institution which appointed the Examination Commission member shall have the right to recall him before the expiration of his term if the member is unable to duly perform the duties of the Commission member. A Commission member shall have the right to resign before the expiration of his term of office.
48. Logistic and financial support shall be provided to the Examination Commission by the Chamber of Auditors. Article
49. Procedure for the Recognition of Auditors of other European Union Member States
50. The persons who possess the auditor’s qualification granted by the authorised bodies of the European Union Member States shall be issued certificates in recognition of their qualifications after they submit the documents issued by the competent body carrying out the supervision of audit activity of the state in which the person performs audits (hereinafter – authorised body), attesting the right to perform audits in the European Union Member State and confirming the fact that the right has not been suspended or revoked and after they pass the knowledge test examination. In this case the provisions of subparagraph 3 of Article 5 of this Law shall not apply.
51. The knowledge test examinations based on subjects specified in paragraph 2 of Article 8 of this Law shall be conducted in the state language.
52. Any person who wishes to take the knowledge test examination shall submit to the Chamber of Auditors: 1) documents attesting the right to carry out audits in the European Union Member State and confirming the fact that the right has not been suspended or revoked; 2) certificate issued by the authorised body regarding the qualification requirements for auditors set in the European Union Member State.
53. Persons who fail to submit the documents indicated in paragraph 3 of this Article shall not be allowed to take the knowledge test. Article
54. The Auditor’s Oath
55. Before getting the certificate, the persons shall take the following oath: “I, (name, surname), swear to observe the Constitution of the Republic of Lithuania, its laws and other legal acts, honestly and conscientiously fulfil the duties of the auditor, adhere to the principles of objectivity, independence and confidentiality, continuously improve my professional knowledge and abide by the Auditors’ Code of Professional Ethics and the Statute of the Chamber of Auditors.”
56. The auditor’s oath shall be administered by the President of the Chamber of Auditors.
57. After reading the text of the oath, the auditor shall put his signature under the text. The text of the oath shall be kept in the auditor’s personal file in the Chamber of Auditors.
58. No certificate shall be issued to persons who have passed the auditors’ qualification examinations but have not taken the oath; such persons may not become members of the Chamber of Auditors and commence audit activities. Article
59. Issuance of Certificates
60. The persons who satisfy the requirements set in Article 5 of this Law shall be granted the auditor’s title and issued the auditor’s certificate.
61. The certificates shall be issued by the Chamber of Auditors. 3 The procedure for the issuance of certificates shall be defined by the Chamber of Auditors. Article
62. Suspension of the Procedure for the Issuance of Certificates The procedure for the issuance of the certificate may be suspended if the person who submitted an application for the granting of the auditor’s title is suspected or is accused of a criminal act. Issuance of the certificate or the process of examinations shall be suspended pending the termination of pre-trial investigation or rendering of judgement in the criminal case. Article
63. Suspension of the Certificate Validity
64. The Chamber of Auditors shall suspend the certificate validity: 1) on the decision of the Auditors’ Court of Honour; 2) at the written request of the auditor; 3) on the decision of the Presidium of the Chamber of Auditors if the auditor is suspected or accused of a criminal act. In such cases the validity of the auditor’s certificate shall be suspended until the disappearance of the circumstances which conditioned the reasons for the suspension.
65. The suspension of validity of the auditor’s certificate shall deprive him of the right to carry out audits, but he shall retain his membership in the Chamber of Auditors and all the duties set for auditors in Article 30 of this Law shall be binding on him, save for the duty specified in subparagraph 2 of paragraph 1 of Article 30 of this Law.
66. The auditor the validity of whose certificate has been suspended, wishing to start audit activities after the expiry of the suspension period, must submit the following documents to the Chamber of Auditors: 1) an application requesting renewal of the suspended certificate’s validity; 2) documents confirming the improvement of their professional qualifications in accordance with the procedure established by the Chamber of Auditors.
67. The decision on the restoration of validity of the certificate shall be made by the Chamber of Auditors. Article
68. Cancellation of Certificate Validity
69. The Chamber of Auditors shall cancel the validity of the certificate: 1) upon the auditor’s written request; 2) if facts that would have precluded the issuance of the auditor’s certificate transpire after the issuance of the certificate; 3) if at least one of the circumstances defined in Article 6 of this Law occur; 4) on the decision of the Auditors’ Court of Honour; 5) upon the auditor’s expulsion from the members of the Chamber of Auditors; 6) in the event of the auditor’s death.
70. In the event of cancellation of the certificate validity in the cases indicated in subparagraphs 3 to 6 of paragraph 1 of this Article the person may not repeatedly take the auditors’ qualification examination and a new certificate may not be issued. Article
71. Management and Publication of the List of Auditors
72. The Chamber of Auditors shall register the names of persons who have been granted the auditor’s title in the list of auditors. The list shall be updated on a regular basis and published on the web page of the Chamber of Auditors:
73. The list of auditors shall contain the following information about the auditor: 1) name, surname, registration number, number of the auditor’s certificate; 2) name, registered office address and telephone numbers of the audit firm of which the auditor is an employee or a participant.
74. The auditor shall within 10 days notify the changes in the particulars indicated in paragraph 2 of this Article to the Chamber of Auditors.
75. The information in the list of auditors shall be updated by the Chamber of Auditors immediately after the receipt of notification of the changes in the particulars.
76. After the cancellation of validity of the auditor’s certificate the auditor shall be removed from the list of auditors. CHAPTER TREE audit firms Article
77. Audit Firms
78. Audit firms may adopt any of the following legal forms: 1) individual enterprise (hereinafter referred to by the Lithuanian acronym IĮ); 2) general partnerships (hereinafter referred to by the Lithuanian acronym TŪB); 3) limited partnerships (hereinafter referred to by the Lithuanian acronym KŪB); 4) private limited liability companies (hereinafter referred to by the Lithuanian acronym UAB).
79. The owners of the audit firms which operate as individual enterprises must be auditors.
80. At least 3/4 of the general partners of the audit firms which operate as TŪB and KŪB must be auditors.
81. Shareholders of an audit firm which operates as UAB may include: 1) auditors; 2)audit firms; 3)audit firms of other European Union Member States; 4) other legal and natural persons not specified in subparagraphs 1, 2 and 3 of this paragraph.
82. Shareholders of the audit UAB specified in subparagraphs 1, 2 and 3 of paragraph 4 of this Article must hold at least 3/4 of all voting shares.
83. The head of the audit UAB administration must be an auditor or a person who has auditor’s qualification granted by authorised bodies of other European Union Member States.
84. Where the Board is formed in the UAB, 3/4 of the members of the Board must be auditors. Article
85. Procedure for Entering Enterprises in the List of Audit Firms
86. An audit firm may start its audit activities only after it is entered in the list of audit firms. The firm which has been entered in the list of audit firms shall be issued a certificate.
87. The list of audit firms shall be compiled by the Chamber of Auditors. Firms which meet the requirements set in Articles 17, 19 and 33 of this Law shall be entered in the list of audit firms.
88. In order to be entered in the list of audit firms, the following documents shall be submitted to the Chamber of Auditors: 1) an application containing the following particulars: name, registered number, registered office, telephone, full names and contact addresses of the participants in the firm, voting rights of each participant, and numbers of auditors’ qualification certificates and other information provided for in Article 21 of this Law, which is required for compiling the list of audit firms; 2) the firm’s registration certificate and its copy; 3) a copy of a certificate (policy) of compulsory insurance against civil liability; 4) a copy of the articles of association or other instrument of establishment specifying the object of the firm.
89. The decision to enter the firm in the list of audit firms shall be passed within 30 days from the day of submitting all documents specified in paragraph 3 of this Article to the Chamber of Auditors.
90. The Chamber of Auditors may refuse to enter the enterprise in the list of audit firms if the documents specified in paragraph 3 of this Article have not been submitted or the enterprise does not satisfy the requirements of Articles 17, 19 and 33 of this Law.
91. The Chamber of Auditors must notify the enterprise by a reasoned notice of its decision to enter or to refuse entering the enterprise in the list of audit firms within 30 days from the delivery of the documents.
92. The firm shall be entered in the list of audit firms and issued the certificate by the Chamber of Auditors which shall within 10 working days from the date of entry in the list of audit firms publish a notice to the effect in the information supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
93. The audit firm shall be considered to have been entered in the list of audit firms as from the next day after the publication of the list of audit firms in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios. Article
94. Compulsory Third Party Liability Insurance for Audit Firms
95. Prior to starting its audit activities, the audit firm must take out compulsory third party liability insurance. The contract of insurance shall be concluded in accordance with the procedure set in the rules for compulsory third party liability insurance for audit firms. The rules shall be laid down and approved by the Republic of Lithuania Insurance Supervisory Commission.
96. The minimum annual sum of third party liability insurance must amount to at least LTL 100,000 per insured event for auditing public interest entities and at least LTL 50 000 per insured event for auditing other enterprises. 3.An audit firms must take out compulsory third party liability insurance for the entire period of auditing activities.
97. Compulsory insurance of an audit firm against third party liability shall cover the firm’s third party liability for damage caused to the audit contractor, clients and/or third persons in the performance of activities provided for in paragraph 1 of Article 33 of this Law. Article
98. Removal of Audit Firms from the List of Audit Firms
99. An audit firm shall be removed from the list of audit firms if: 1) the firm no longer meets the requirements of Article 17 of this Law after the change of the head, Board or participants of the limited-liability private company (UAB); 2) the firm submits a request to remove it from the list of audit firms; 3) the firm has not extended or has not concluded a new contract of third party liability insurance; 4) the firm has been declared to be in bankruptcy or in liquidation; 5) the firm has failed to submit to the Chamber of Auditors the information specified in subparagraph 4 of paragraph 2 of Article 34 and Article 21 of this Law or has submitted fraudulent data; 6) the firm engages in activities not specified in paragraph 1 of Article 33 of this Law; 7) there has been a corresponding decision of the Audit Quality Control Committee.
100. If the firm of auditors has been removed from the list of audit firms, the Chamber of Auditors shall within 10 working days publish a notice to the effect in the information supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
101. The audit firm shall be considered removed from the list of audit firms as from the next day after the publication of the notice of its removal in the information supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
102. The firm removed from the list of audit firms shall be entered into it again no earlier than after 3 months after its removal if the reasons that caused its removal are eliminated.
103. When the ratio between the participants of the audit firm who are auditors and participants who are not auditors changes due to the auditor’s death, the participants of the audit firm must within a year’s period change the influence of the firm’s participants on the management of the firm so that it would meet the requirements of Article 17 of this Law. Article
104. Management and Publication of the List of Audit Firms
105. The list of audit firms shall be published on the web page of the Chamber of Auditors.
106. The following information shall be presented in the list of audit firms: 1) name of the company, registered office, registered number, audit firm certificate number; 2) telephone (or fax) number, web page address (if any), contact person data; 3) legal form of the audit firm; 4) names, surnames of auditors and auditor certificate numbers of auditors employed in the audit firm; 5) legal person names or natural person names, surnames of owners (participants) or work place addresses and registered office addresses; 6) names, surnames and addresses of the heads and managing body members; 7) names of the audit network members if the audit firm belongs to an audit network.
107. The data of the list of audit firms shall be forthwith updated by the Chamber of Auditors upon the receipt of a notice of any changes therein. CHAPTER FOUR AUDITOR’S ASSISTANT Article
108. Auditor’s Assistant The auditor’s assistant shall prepare for the auditor’s activities and together with the auditor takes part in the performance of audit of financial statements or consolidated accounts. Article
109. List of Auditor’s Assistants
110. Persons shall be entered in the list of auditor’s assistants on the decision of the Chamber of Auditors. A person may be entered in the list of auditor’s assistants provided he: 1) is a citizen of the Republic of Lithuania or any other European Union Member State; 2) is of sufficiently good repute in accordance with Article 6 of this Law; 3) works in the audit firm and the auditor has been assigned as supervisor of his work on probation according to the procedure set forth in Article 25 of this Law.
111. In order to be entered in the list of auditor’s assistants, the person shall submit the following documents to the Chamber of Auditors: 1) an application requesting entry in the list of auditor’s assistants. The application shall contain the applicant’s personal data (name, surname, personal number, place of residence, citizenship) as well as a response to the question whether or not there are grounds specified in this Law for which preclude his entry in the list of auditor’s assistants; 2) documents evidencing that he satisfies the requirements of this Law applied when entering in the list of auditor’s assistants; 3) agreement with the auditor regarding his consent to supervise the work on probation, the terms of probation work and a copy of employment contract.
112. The decision to enter the person in the list of auditor’s assistants shall be passed within 45 days from the day of receipt of the documents specified in paragraph 2 of this Article. The Chamber of Auditors shall dispatch to the applicant a copy of the taken decision within 5 working days from the day the decision is made.
113. If the Chamber of Auditors takes a decision to refuse to enter the person in the list of auditor’s assistants, the reasons for refusal must be given in the body of the decision. Article
114. Removal from the List of Auditor’s Assistants
115. The Chamber of Auditors shall remove the person from the list of auditor’s assistants if: 1) he files a written application for termination of his period of probation as auditor’s assistant; 2) the Auditors’ Court of Honour passes a decision that the person has violated the requirements of this Law or of the Auditors’ Code of Professional Ethics and there is a decision to remove the person from the list of auditors’ assistants; 3) it transpires that before being entered in the list of auditor’s assistants according to paragraph 1 or 2 of Article 23 of this Law the person submitted false data; 4) the circumstances provided for in Article 22 of this Law disappear; 5) he dies.
116. Upon removal of the person from the list of auditors’ assistants on the grounds specified in subparagraphs 2 and 5 of paragraph 1 of this Article the person shall not be repeatedly entered in the list. Article
117. Supervision of Work on Probation of Auditor’s Assistant The auditors’ assistant shall work on probation with the auditor who is employed in an audit firm, has experience of at least 3 years of work as auditor, has no effective disciplinary penalties imposed on him and has given a written consent to supervise the work on probation of the auditor’s assistant. The selection and dismissal of the supervisor of work on probation of the auditor’s assistant, the mandatory appointment to supervise the probation work of the auditor’s assistant shall be within the remit of the Chamber of Auditors. Article
118. Establishing the Procedure for Work on Probation of Auditor’s Assistant
119. The procedure for work on probation of the auditor’s assistant, the assistant’s rights and duties, the procedure for calculating the probation period and evaluating probation work shall be established by the Chamber of Auditors.
120. After the expiry of probation period set in this Law for the auditor’s assistant he may continue with the probation work until the Chamber of Auditors issues him the auditor’s certificate. CHAPTER FIVE ACTIVITIES, RIGHTS, DUTIES AND LIABBILITY OF AUDITORS AND AUDIT FIRMS Article
121. Activities of Auditors
122. The auditor may perform audit only if he is an owner, a general partner of a general partnership (TŪB) or a limited partnership (KŪB) or an employee of an audit firm.
123. Having started auditing activities, the auditor may not be employed or perform other duties for remuneration in other companies, except for work in the Chamber of Auditors, the Institute of Accounting, professional associations of auditors, and scientific, creative or teaching work.
124. The auditor whose certificate has been suspended may not perform audit.
125. Having performed the audit the auditor shall submit the auditor’ report . It must comply with the requirements set in Article 31 of this Law.
126. The audit shall be performed according to the national or international standards on auditing having regard to the contract conditions. Article
127. Restriction of the Auditors’ Rights to Perform the Audit
128. The auditor may only perform audit if he is independent from the audit contractor and the entity which is being audited.
129. The auditor shall be prohibited from performing audit if the auditor: 1) is related by blood, family or marriage to the head of the enterprise or its chief financial officer, members of the Supervisory Board or the Board of the entity which is being audited; 2) manages accounts and prepares financial statements of the entity which is being audited; 3) was previously employed by the entity which is being audited or by the audit contractor and the period from the date of termination of employment relations is less than 3 years; 4) is or has been a shareholder of the company which is being audited and the period from the date of transfer of shares is less than 3 years; 5) provided services to the enterprise that are specified in subparagraphs 3, 4, 8, 12, of paragraph 1 of Article 33 of this Law and the term of service provision coincides with the period of auditing; 6) is influenced by other conditions that may affect his independence.
130. The auditor shall indicate in his working documents all potential risks to his independence and the measures that have been taken to avoid the risks.
131. The auditor shall be prohibited from performing the audit and providing other services if there are circumstances that may affect the auditor’s independence.
132. The supervisory institutions which carry out supervision of public interest entities may set additional requirements for auditors performing the audit of public interest entities. Where such additional requirements have been set the nominee to the auditor’s position shall be agreed in advance (prior to performance of the audit) in order to ascertain whether the auditor satisfies the set requirements. Article
133. Rights of Auditors In performing audit, the auditor is entitled to: 1) select audit procedures at his own discretion, making use of his professional knowledge and experience; 2) obtain from the entity which is being audited documents and/or their copies necessary for the audit and have access to all accumulated information; 3) demand from the entity which is being audited that reference measurements be performed, stocktaking of assets be carried out, other inspection of the assets of the entity be conducted and other necessary actions be taken; 4) obtain the required written explanations from employees of the entity which is being audited; 5) be provided conditions in the entity which is being audited to perform audit, work independently and prepare an opinion.
134. The auditor shall be released from the confidentiality commitment to clients to the extent this is connected with the overview of the auditor’s working papers in the course of quality control review. Article
135. Duties of Auditors The auditor must: 1) perform his professional duties with integrity. Both while performing his professional duties and after the office hours, the auditor shall be bound by the oath taken and must comply with the Auditors’ Code of Professional Ethics; 2) comply with laws and other legal acts, national or international standards on auditing in performing audit; 3) continuously develop his professional qualifications; 4) protect the information entrusted to him in the course of his professional activities; 5) notify the changes in the particulars submitted for entry in the list of audit firms indicated in Article 21 of this Law to the Chamber of Auditors within 10 days from the day of emergence of changes in the particulars; 6) annually take part in the in-service training in the manner prescribed by the Chamber of Auditors; 7) fulfil other duties provided for by law.
136. In 3 calendar years the auditor must hear at least 120 hours of in-service training courses. The auditor must agree with the Chamber of Auditors the temporal distribution of the courses within the said period. Article
137. Audit Report
138. The report on audit shall include: 1) an introduction. It shall identify the financial statements or the consolidated accounts that are the subject of the audit together with the identification of the legal acts that have been applied in the drawing up of the financial statements or the consolidated accounts; 2) a description of the scope of the audit. It shall identify the standards on auditing in accordance with which the audit was conducted; 3) a part of an auditor’s opinion. It shall state clearly the opinion of the auditor as to whether the financial statements or the consolidated accounts give a true and fair view of the enterprise or group of enterprises relevant financial reporting framework and whether the financial statements or the consolidated accounts comply with statutory requirements regulating accounting and drawing up of financial statements as well as other legislation. The auditor’ opinion shall be either unqualified, qualified, an adverse opinion or, if the auditors are unable to express an opinion, a disclaimer of opinion; 4) a reference to any matters to which the auditors draw attention by way of emphasis without qualifying the auditor’s opinion; 5) a report concerning the consistency or otherwise of the annual report with the annual accounts for the same financial year where the enterprise subject to auditing is a public limited liability or private limited liability company, state-owned or municipal enterprise.
139. The auditor’s report shall be signed by the head of the audit firm and the auditor and the date of the auditor’s report shall be indicated Article
140. Liability of Auditors The auditor shall be held liable under law for presenting a fraudulent auditor’s report. Article
141. Activities and Rights of Audit Firms The audit firm may be engaged in the following activities: 1) conduct of audit; 2) performance of other review and analysis of activities and stocktaking of assets of companies; 3) valuation of assets and business (if authorisation has been granted according to the procedure prescribed by laws and other legal acts); 4) provision of accounting services; 5) provision of advice in accounting and taxes; 6) performance of expert examination of accounting records and financial statements per order of court; 7) performance of bankruptcy administration procedures (upon being issued authorisation prescribed by laws and other legal acts); 8) assessment of the terms of public and private limited liability company reorganisation; 9) provision of non-formal adult education services; 10) engaging in publishing to the extent this is related to the activities specified in paragraph 9 of this Article; 11) supervision of lotteries or contests in which monetary prizes or prizes in goods are offered; 12) performance of internal audit; 13) engaging in other activities not contrary to the Auditors’ Code of Professional Ethics and principles of the auditors’ activities.
142. The audit firms shall engage in other activities according to the national or international standards on auditing to the extent the above standards regulate appropriate activities.
143. The audit firm may be the founder or participant only of those enterprises whose activities comply with the requirements set out in paragraph 1 of this Article.
144. Having compensated the audit contractor, the audited enterprise or any third party for losses incurred through the auditors’ fault, the audit firm may have recourse against the guilty auditors. Article
145. Duties of Audit Firms
146. The audit firm when performing the audit must: 1) upon concluding a contract for audit, appoint a responsible auditor and notify the audit contractor and the enterprise to be audited thereof; 2) document audit results by issuing the auditor’s report according to Article 31 of this Law; 3) when documenting audit results at state-owned and municipal enterprises and public and private companies in which the shares owned by the state or municipality carry over ½ of votes at the general meeting of shareholders submit the report on audit together with the auditor’s report.
147. The audit firm shall: 1) keep information obtained in the course of the audit or while providing other professional services confidential; 2) not communicate to other persons the information obtained in the course of audit, except in cases established by law; 3) not use the information collected during the audit in the interests of the audit firm or third persons; 4) provide information about its activities to the Chamber of Auditors. The procedure for providing the information shall be set forth by the Presidium of the Chamber of Auditors; 5) notify the changes in the particulars submitted for entry in the list of auditors indicated in Article 21 of this Law to the Chamber of Auditors within 10 days from the day of emergence of changes in the particulars; 6) be of sufficiently good repute. The audit firm shall not be considered of sufficiently good repute if criminal or administrative proceedings have been instituted against it or if any of the members of the managing body of this legal person and the natural person which control this legal person are not of sufficiently good repute and criminal or administrative proceedings have been instituted against the legal person which controls this legal person; 7) preserve audit working papers in accordance with the procedure prescribed by the Law of the Republic of Lithuania on Documents and Archives; 8) provide the auditor’s assistants employed in the audit firm working conditions ensuring appropriate performance of work on probation; 9) fulfil the duties set by the Law on Financial Institutions and the Law on Insurance.
148. Working papers shall be the property of the audit firm. They may not be given to any third persons without the consent of the audited enterprise or the audit contractor, and access to them may not be demanded by other bodies which review the activities of the audit firm or the audited enterprise, except for the Chamber of Auditors (the Audit Quality Control Committee), which perform supervision of activities of the audit firms in accordance with the procedure prescribed by this Law and the Auditors’ Court of Honour during disciplinary proceedings against the owner, general partner of an enterprise which is a limited civil liability legal entity or against the auditor who is or was employed in the audit firm. Law enforcement or other institutions may seize or review audit working papers obtained or prepared by the auditor in the course of the audit performance only according to the procedure established by the Code of Criminal Procedure. Article
149. Restriction of Rights of the Audit Firms
150. The audit firm shall be prohibited from performing audit or providing other services if this could affect its independence.
151. The audit firm may not receive for auditing services from one enterprise in which it performs audit the amount of income which could affect its independence. Annual income received for auditing services from one audited enterprise may not exceed 20% of the total annual income of the audit firm for 2 successive years.
152. The audit firm may not conclude a contract for the audit of an enterprise if: 1) the client or the enterprise concerned is a participant in the audit firm; 2) the audit firm or its managers are participants in the enterprise concerned; 3) managers of or participants in the audit firm are related by blood, family or marriage to the participants in the enterprise concerned who have at least 1/3 of all voting rights.
153. The auditor may not perform the audit of one client for a period longer than 5 successive years. After the expiry of the above period the auditor shall not be allowed to perform any audit of the said client for 2 years. The audit of financial institutions shall be carried out subject to restrictions set for the performance of the audit in the same financial institution as laid down in the Law on Financial Institutions.
154. The audit firm which carries out the audit must notify in writing the managing body of the enterprise which is being audited of the potential threats to its independence and of other services provided as well as confirming that its independence and objectivity is not compromised, or otherwise declare that it has concerns that its independence and objectivity may be compromised.
155. The owners, participants, managers, other managing body members of audit firms as well as supervisory institutions of audit firms shall be prohibited from exerting influence on the performance of audit by any means that may compromise the independence and objectivity of auditors.
156. When performing the audit of a public interest entity the audit firm shall annually present to the managing body of the enterprise that is being audited a certificate of income received in the entity from audit and non-audit fees.
157. When performing the audit of the enterprise that is not a public interest entity, the audit firm may make a discretionary decision on presenting the certificate referred to in paragraph 7 of this Article.
158. When performing the supervision of public interest entities the supervisory institutions may set additional requirements for the audit firms performing the audit of public interest entities. Where such additional requirements have been set, the candidature of the concrete audit firm must be agreed in advance (prior to decision-making on the choice of the audit firm) with a view to establishing whether the firm meets the set requirements. Article
159. Liability of Audit Firms
160. The audit firm shall be held liable for the performance of audit and submission of the auditor’s report in accordance with the procedure set out by laws and the contract for audit signed between the audit firm and the audit contractor.
161. The audit firm must compensate the audit contractor, the audited enterprise or any third party for any losses incurred by them in accordance with the procedure set out by laws and the contract for audit signed between the audit firm and the audit contractor. Article
162. Relations between the Audit Contractor and the Audit Firm
163. The audit contractor shall select an audit firm at its own discretion or by way of tender, unless other legal acts provide otherwise.
164. A contract for audit shall be concluded between the audit contractor and the audit firm in writing. The copy of the contract belonging to the audit firm shall be registered and kept at the audit firm’s head office. Article
165. Audit Fee
166. The amount of remuneration for the performance of audit must allow to carry out the audit according to auditors’ activity principles.
167. The amount of the remuneration for the performance of audit shall be set in the contract for audit services.
168. The remuneration for the performance of audit shall not be influenced by the remuneration for the provided non-audit services Article
169. Duties of Managers of the Entity which is being Audited or Persons Authorised by them Managers of the entity which is being audited or the persons authorised by them must: 1) provide the auditor with documents of and information on the enterprise as required for the audit; 2) provide the auditor with the calculation and explanations which are considered by the auditor as necessary. CHAPTER SIX QUALITY ASSURANCE FOR AUDITORS (AUDITOR’S ASSISTANTS) AND AUDIT FIRMS Article
170. Quality Assurance for Auditors, Auditor’s Assistants and Audit Firms
171. Quality assurance for auditors, auditor’s assistants (hereinafter in this Chapter referred to as auditors) and audit firms shall be carried out by the Chamber of Auditors. The Audit Quality Control Committee is established under the Chamber of Auditors for audit quality assurance, analysis and evaluation.
172. The provision of this Chapter shall apply to auditor’s assistants same as to the auditors, unless provided otherwise or unless this is contrary to the essence of the status of the auditor’s assistant. Article
173. Audit Quality Control Committee
174. The Audit Quality Control Committee shall consist of 9 members. The majority of Committee members shall not be auditors. The Chamber of Auditors shall appoint 3 members, while the Ministry of Finance, the Bank of Lithuania, the Insurance Supervisory Commission of the Republic of Lithuania, the Securities Commission of the Republic of Lithuania, the organisations uniting entrepreneurs and/or their self-governance organisations as well as the organisations of scientists shall appoint 1 auditor each. The President of the Committee shall be appointed and the composition of the Committee shall be approved by the Minister of Finance.
175. Each Audit Quality Control Committee member shall be appointed for a 3-year term. The same persons may serve as members of the Audit Quality Control Committee for no more than 2 successive terms. The Committee member shall be appointed to the successive term within 30 days from the end of the term of office of the Committee member whose term of office expired. After the expiry of the term of office of the Audit Quality Control Committee member he shall continue in office until a Committee member is appointed for the next term. The institution which appointed the Committee member shall have the right to recall him before the expiration of his term of office if the member is unable to fulfil the duties of the office properly.
176. The Chamber of Auditors shall appeal to the organisations uniting entrepreneurs and/or their self-governance organisations as well as the organisations of scientists to appoint by common consent members to the Audit Quality Control Committee.
177. The rules of procedure of the Audit Quality Control Committee shall be approved by the Minister of Finance. Article
178. Tasks and Rights of the Audit Quality Control Committee
179. The principal task of the Audit Quality Control Committee is to implement the system of quality assurance for auditors and audit firms and to ensure its functioning.
180. The Audit Quality Control Committee shall have the right to: 1) obtain information about the audit quality reviews of activities of auditors and audit firms performed by auditors inspectors; 2) review audit working papers and the methodology for performing audit; 3) request explanations of how the auditors and audit firms have performed their work; 4) request explanations from every employee who participated in the performance of the audit; 5) review the performance of non-audit services according to the National and International Standards on Auditing; 6) submit proposals to the Committee of the Chamber of Auditors regarding the improvement of the audit quality; 7) submit the candidatures of auditors inspectors to the Committee of the Chamber of Auditors for approval; 8) publish the adopted resolutions on the web page of the Chamber of Auditors; 9) impose disciplinary penalties specified in Article 48 of this Law. Article
181. Functions of the Audit Quality Control Committee The Audit Quality Control Committee shall fulfil the following functions: 1) coordinate quality assurance of auditors and audit firms; 2) analyse the material of reviews carried out by auditors inspectors; 3) examine the received statements and complaints about the improperly performed audit; 4) draw up and approve plans for annual reviews of activities of auditors and audit firms; 5) coordinate the reviews carried out by auditors inspectors, examine and sum up the results of reviews carried out by auditors inspectors; 6) submit proposals to the Chamber of Auditors regarding improvement of audit methodology; 7) prepare and submit to the Chamber of Auditors for approval the methodology for quality assurance for auditors and audit firms (methodology for the evaluation of review results, rules for the examination of complaints about audit quality, etc.); 8) review compliance of the audit performance with this Law and other legal acts regulating audit as well as with the National or International Accounting Standards; 9) upon establishing negative outcomes of quality reviews impose disciplinary penalties referred to in Article 48 of this Law and take decisions; 10) provide information specified in Article 49 of this Law to the Ministry of Finance; 11)annually report at the general meeting of members of the Chamber of Auditors on the activities of the Audit Quality Control Committee. The quality reviews of auditors and audit firms carried out shall be evaluated in the report (giving the number of the performed reviews, their results, etc.). Article
182. Rights and Duties of Auditors Inspectors
183. When carrying out quality reviews of auditors and audit firms the auditors inspectors shall comply with the Methodology for Quality Assurance for Auditors and Audit Firms approved by the Chamber of Auditors, Regulations for the Selection, Training and In-service Training of Auditors Inspectors and other methodology regulating quality assurance for auditors and audit firms, this Law, the National and International Standards on Auditing, the Auditors’ Code of Professional Ethics, the Statute of the Chamber of Auditors.
184. When performing the review assigned to him, the auditor inspector shall have the right to: 1) have access to all information accumulated by the audit firm and the auditor and examine the audit working papers and the methodology for carrying out audits; 2) obtain explanations of how the auditors and audit firms performed their work; 3) obtain explanations from each employee who took part in the performance of audit and provision of non-services; 4) review the performance of non-audit services according to the National and International Standards on Auditing; 5) obtain from the Chamber of Auditors and other persons information required for reviews; 6) enlist the assistance of experts (specialists) with appropriate knowledge for addressing the issues arising in the course of the review; 7) be provided with conditions to work and prepare opinion independently.
185. Duties of auditors inspectors shall be: 1) to review compliance of the audit performance with this Law and legal acts regulating the audit, the national or international standards on auditing; 2) to analyse the review material; 3) upon carrying out the review, to prepare a review report and submit it to the Audit Quality Control Committee; 4) to refuse to carry out the review and notify the Audit Quality Control Committee thereof in case a conflict of interest may arise in the course of the review performance or independence may be compromised; 5) to improve one’s professional qualification, skills, other professional properties and abilities. Article
186. Subject of Quality Review and Selection of Reviewees from among Auditors and Audit Firm
187. The subject of quality review shall be an individual auditor and/or an audit firm.
188. The auditors and audit firms shall be selected in such a manner as to ensure that all auditors and audit firms are reviewed in 5 years time.
189. Quality review of audit firms carrying out audits of entities of public interest and of auditors and audit firms in which the outcomes of quality review have been negative must be carried out every three years. Article
190. Scope of Quality Assurance
191. Quality assurance relates to the quality of auditing and non-audit services provided by the audit firm according to the National and International Standards on Auditing. Quality assurance includes an assessment of the internal quality control system of an audit firm and a sufficient compliance testing of procedures and audit files to verify its adequate functioning.
192. The scope of quality review should include the following subjects for testing files relating to auditing and non-audit services: 1) the quality of the evidence from the audit working papers as a basis for assessing the quality of the audit work and methodology for audit performance; 2) compliance with standards on auditing; 3) compliance with ethical principles and rules, including independence rules and legal acts; 4) auditor’s report (report on audit where prepared); 5) provision of non-audit services according to the National and International Standards on Auditing.
193. The following shall be reviewed when reviewing the auditor’s report: 1) appropriate format and type of opinion; 2) compliance of financial statements with the financial reporting framework, as referred to in the auditor’s report; 3) whether or not there is omission of facts proving non-compliance of financial statements with the requirements of other legal acts as specified in the auditor’s report. Article
194. Confidentiality Clause for Auditors and Audit Firms Quality Reviews
195. Members of the Audit Quality Control Committee shall have access to the material on auditors and audit firms accumulated by auditors inspectors in the course of reviews of auditors and audit firms.
196. Members of the Audit Quality Control Committee and auditors inspectors shall be subject to confidentiality rules approved by the Audit Quality Control Committee. Article
197. Disciplinary Penalties and other Decisions Made by Audit Quality Control Committee
198. The Audit Quality Control Committee may impose on the auditor one of the following penalties for violations of quality of audit performance, other services, standards, taking into account the gravity of the violations: 1) a warning; 2) a reprimand; 3) a reprimand with the publication thereof on the website of the Chamber of Auditors; 4) an instruction to improve professional qualification at the Chamber of Auditors.
199. For material or repeatedly established violations of quality of audit performance the Audit Quality Control Committee may: 1) apply to the Auditors’ Court of Honour to bring a disciplinary action against the auditor; 2) make a decision to remove the audit firm from the list of audit firms.
200. Upon taking a decision to impose the penalties specified in paragraph 1 of this Article or the decision indicated in subparagraph 2 of paragraph 2 of this Article, the Audit Quality Control Committee must within 14 days from the date of making of the appropriate decision submit it to the Chamber of Auditors. The Chamber of Auditors shall give a written notification of the adopted decision to the auditor or the audit firm as well as the institutions which carry out supervision of entities of public interest within 3 days from the date of adoption of the decision. Article
201. Submitting Information about Quality Assurance of Auditors and Audit Firms
202. The Audit Quality Control Committee shall twice annually - on 1 June and 1 December – submit to the Ministry of Finance information about the performed auditors and audit firms quality reviews (number of reviews, review results, disciplinary penalty imposed, recommendations to auditors and/or audit firms regarding audit quality, compliance with the previous recommendations of the Audit Quality Control Committee and the penalties imposed).
203. The Committee shall publish on the website of the Chamber of Auditors by 1 December of the current calendar year the information specified in paragraph 1 of this Article about the performed audit reviews of individual auditors or audit firms.
204. The decisions of the Audit Quality Control committee shall be published on the website of the Chamber of Auditors. Article
205. Rights and Duties of the Chamber of Auditors in Supervision of Auditors and Audit Firms Quality Assurance
206. When performing the supervision of audit firms quality assurance the Chamber of Auditors shall have the following rights: 1) to review audit working papers, methodology for audit performance; 2) to request explanations of the performance of their work, compliance with this Law, observance of the Auditors’ Code of Professional Ethics by the auditors or audit firms; 3) request explanations from each employee who participated in the performance of the audit and provision of non-audit services.
207. The Chamber of Auditors shall have the following duties: 1) to check compliance in the course of audit performance with this Law and other legal acts, the National and International Standards on Auditing, the Auditors’ Code of Professional Ethics; 2) upon establishing violations of professional activities, this Law and other legal acts, the National and International Standards on Auditing, the Auditors’ Code of Professional Ethics, to propose that the Auditors’ Court of Honour bring a disciplinary action against the auditor; 3) to submit proposals to the Ministry of Finance on the manner to address the issues relating to audit; 4) to coordinate the work of the Audit Quality Control Committee and the Auditors’ Court of Honour; 5) to provide logistic and financial support to the Audit Quality Control Committee and the Auditors’ Court of Honour. Article
208. Grounds for Bringing a Disciplinary Action against the Auditor
209. A disciplinary action may be brought against the auditor on the motion of the Committee of the Chamber of Auditors or the Audit Quality Control Committee for a violation of this Law, negative outcomes of quality review, breaches of professional activities or Auditors’ Code of Professional Ethics .
210. The Auditors’ Court of Honour shall within 30 days from the day of receipt of the motion of the Committee of the Chamber of Auditors or the Audit Quality Control Committee to bring a disciplinary action against the auditor make a decision on whether or not to bring a disciplinary action against the auditor. Article
211. Auditors’ Court of Honour
212. The Auditors’ Court of Honour shall consist of 7 members: 1) 3 auditors with an at least five-year’s record of work as auditors shall be appointed members by the general meeting of the Chamber of Auditors members; 2) 2 lawyers from the Ministry of Finance or institutions subordinate to it, who are appointed as members of the Court of Honour by the Minister of Finance ; 3) 1 member shall be appointed by common accord by the organisations uniting entrepreneurs and/or their self-governance organisations upon receipt of the appeal of the Chamber of Auditors; 4) 1 member shall be appointed by common accord by the organisations uniting scientists upon receipt of the appeal of the Chamber of Auditors.
213. The term of office of the Auditors’ Court of Honour member shall be 3 years. The same members may be appointed as members of Auditors’ Court of Honour for no more than 2 consecutive terms of office. For the following term the Auditors’ Court of Honour member shall be appointed within 30 days after the expiration of the term of office of the Court member whose term expired. After the expiration of the term the Auditors’ Court of Honour member shall continue in office until a Court member is appointed for the following term. The institution which appointed the Auditors’ Court of Honour member shall have the right to recall him before the expiration of his term if the member is unable to duly perform the duties of the Court member. A member of the Court shall have the right to resign before the expiration of his term of office.
214. The Auditors’ Court of Honour shall act in accordance with its Statute. The Statute shall be approved by the General Meeting of the members of the Chamber of Auditors.
215. Duties of the Auditors’ Court of Honour: 1) to hear auditors’ disciplinary cases; 2) to adopt resolutions on imposing penalties provided for in Article 53 of this Law.
216. The Auditors’ Court of Honour shall have the following rights: 1) to obtain from the auditor whose case is heard information relating to the disciplinary case; 2) to receive from the audit firms written explanations and documents relating to audit; 3) to invite the auditors to take part in the meetings of the Auditors’ Court of Honour where cases on imposing on them disciplinary penalties are heard; 4) to obtain information relating to the disciplinary case being heard from the Chamber of Auditors and other persons; 5) to make use of the services of experts and other persons possessing relevant knowledge for preparing findings in the cases being heard; 6) to exercise other rights specified in the Statute of the Auditors’ Court of Honour.
217. Members of the Auditors’ Court of Honour shall keep confidential the information which they receive when hearing auditors’ disciplinary cases and which is recognized by the audit contractor as a commercial (production) secret and shall not use it for personal benefit or for the benefit of other persons.
218. The Auditors’ Court of Honour shall be guided in its activities by this Law, other legal acts and its own Statute.
219. The decisions of the Auditors’ Court of Honour shall be binding on the members of the Chamber of Auditors.
220. The Auditors’ Court of Honour may hear cases if it is attended by at least 5 members, including 1 lawyer.
221. The Auditors’ Court of Honour must pass a decision within 60 days from the day of adoption of the decision to take a disciplinary action. Article
222. Disciplinary Penalties and Other Resolutions Adopted by the Auditors’ Court of Honour
223. Penalties listed below may be imposed on the auditor by the Auditors’ Court of Honour for the violations specified in paragraph 1 of Article 51 of this Law: 1) a warning; 2) a reprimand; 3) a reprimand with an official publication thereof on the website of the Chamber of Auditors; . 4) suspension of validity of certificate for an up to 1-year period.;
224. Only one penalty shall be imposed for one breach. After the lapse of 1-year period after the imposition of the penalty the auditor shall be deemed not to have been imposed any penalty.
225. If the auditor with the penalty being still effective repeatedly commits breaches specified in paragraph 1 of Article 51 of this Law, the Auditors’ Court of Honour may adopt one of the following decisions: 1) to suspend the validity of his certificate for a period from 1 to 3 years; 2) to cancel the validity of certificate; 3) to advise him to repeatedly take the auditors’ qualification examination.
226. Having adopted a decision to impose penalties specified in Paragraph 1 of this Article or the decision described in paragraph 2 hereof, the Auditors’ Court of Honour must submit the decision to the Chamber of Auditors within 14 days of the adoption of the relevant decision. The auditor shall be given a written notification of the adopted decision within 3 days from the day of adoption of the decision.
227. The auditor may carry out audit and perform other duties while the hearing of the case is in progress in the Auditors’ Court of Honour.
228. Before bringing a disciplinary action against an auditor from another European Union Member State who has been granted the title of the auditor in the Republic of Lithuania, the Chamber of Auditors must notify the authorised institution of that Member State, who has granted the highest auditor’s qualification. It shall also be dispatched information about the decision adopted by the Auditors’ Court of Honour in respect of such auditor.
229. Decisions of the Auditors’ Court of Honour shall be published on the website of the Chamber of Auditors within 5 days from the adoption thereof and copies of the decisions shall be dispatched to the auditors in respect of whom the decisions were adopted and to the legal persons and audit firms in which they are employed or in which they are participants as well as to the supervisory institutions which carry out supervision of public interest entities. Article
230. Disciplinary Liability of Auditor’s Assistants
231. The auditor’s assistants shall be subject to the provisions of this Chapter, except for the provisions of subparagraph 4 of paragraph 1 and paragraphs 3, 4 and 6 of Article 53 of this Law.
232. In addition to the disciplinary penalties specified in subparagraphs 1 to 3 of paragraph 1 of Article 53 of this Law, the auditor’s assistant may be removed from the list of auditor’s assistants. Article
233. Appeals the Decisions Adopted by the Auditors’ Court of Honour The decision adopted by the Auditors’ Court of Honour may be appealed within 1 month of serving of the relevant decision in accordance with the procedure established by laws. CHAPTER SEVEN CHAMBER OF AUDITORS Article
234. Chamber of Auditors
235. The Chamber of Auditors is a public legal person having a seal bearing its name and a bank settlement account. The Chamber of Auditors shall be liable for its obligations to the extent of its assets and shall not be liable for the obligations assumed by its members. The members of the Chamber of Auditors shall not be liable for the obligations of the Chamber of Auditors.
236. In its activities the Chamber of Auditors shall be guided by the Constitution of the Republic of Lithuania, the Law on Associations to the extent this Law does not provide otherwise, this Law and other legal regulations and its own Statute. The Statute of the Chamber of Auditors shall be approved by the General Meeting of the members of the Chamber of Auditors. Article
237. Establishment and Registration of the Chamber of Auditors
238. The Chamber of Auditors shall be established by the Constituent General Meeting of the members of the Chamber of Auditors.
239. The Statute of the Chamber of Auditors shall be approved at the Constituent General Meeting. If the Statute of the Chamber of Auditors is not approved at the Constituent Meeting, a repeat meeting shall be convened within 30 days.
240. The Chamber of Auditors shall be deemed established on the day of registration of its Statute in accordance with the procedure set by laws. Article
241. Statute of the Chamber of Auditors
242. The Statute of the Chamber of Auditors must indicate: 1) the name, logo and address of the Chamber of Auditors; 2) the object, functions and objectives of the activities; 3) the terms and conditions and procedure for withdrawal from membership and for expulsion of members from the Chamber of Auditors; 4) the rights and obligations of the members of the Chamber of Auditors; 5) the procedure for establishing and liquidating branches; their rights and relations with managing bodies of the Chamber of Auditors; 6) the procedure of formation of the managing bodies of the Chamber of Auditors, their competence, functions and responsibility, the procedure for dismissing the elected managing bodies and their members; 7) the use of funds and income, as well as the procedure of control of activities of the Chamber of Auditors; 8) the procedure for providing financial and other support; 9) the procedure for making amendments to the Statute.
243. The Statute of the Chamber of Auditors may also provide for other regulations of activities of the Chamber of Auditors provided such regulations do not contradict this Law and other laws.
244. The amended Statute of the Chamber of Auditors shall be signed by the managing body of the Chamber of Auditors or by the person appointed by the general meeting of the Chamber of Auditors.
245. The amendments to the Statute shall come into force as of their registration in the Legal Entities’ Register. Full text of the Statute (new version) shall be submitted to the Legal Entities’ Register together with the amendments to the Statute. Article
246. Members of the Chamber of Auditors
247. The following persons may become members of the Chamber of Auditors: 1) persons who have passed qualification examinations for the title of the auditor and hold a certificate to confirm this, have been sworn in as auditors and have undersigned the oath they have taken; 2) persons who have auditor’s qualification granted to them by the authorised bodies of other European Union Member States and have passed the knowledge test.
248. Members of the Chamber of Auditors shall have the right to: 1) take part in the activities of the Chamber of Auditors and nominate their representatives to the managing bodies of the Chamber; 2) make use of the services provided by the Chamber of Auditors; 3) make use of the information accumulated by the Chamber of Auditors; 4) obtain information about the activities of the Chamber of Auditors; 5) contest in court the resolutions of the managing bodies and decisions of the administration of the Chamber of Auditors.
249. An auditor may be excluded from the members of the Chamber of Auditors in the manner laid down by the general meeting of the Chamber of Auditors members. Validity of the certificate of the auditor excluded from the Chamber of Auditors shall be cancelled. Article
250. Rights of the Chamber of Auditors The Chamber of Auditors shall have the right to: 1) possess, use the property and funds belonging to them and to dispose thereof; 2) enter into contracts and assume obligations; 3) establish branches; 4) collect, store and summarise information about auditors and audit firms; 5) provide services according to the procedure established in the Statute of the Chamber of Auditors; 6) give support to its members according to the procedure established in the Statute of the Chamber of Auditors; 7) establish means of mass media, engage in publishing activities; 8) join international organisations; 9) receive from state institutions information about the auditors and audit firms that is necessary for the performance of its functions.
251. The Chamber of Auditors shall handle accounting, provide information to state institutions and pay taxes according to the procedure established by laws. Article
252. Duties of the Chamber of Auditors The Chamber of Auditors shall have the following duties: 1) to prepare the National Standards on Auditing; 2) to prepare the methodology for carrying out audits; 3) to prepare the Auditors’ Code of Professional Ethics; 4) to prepare the Statute of the Chamber of Auditors; 5) to prepare the Statute of the Auditors’ Court of Honour; 6) to organise and co-ordinate the programmes of internship, in-service training for auditors; 7) to establish the obligatory number of hours of in-service training courses to be attended by auditors every year; 8) to address the issues of performance of audit and improvement of auditors’ professional activities; 9) to carry out supervision of auditors and audit firms; 10) to register the auditors of European Union Member States who are applying for the title of the auditor and who have been granted the auditor’s title in the Republic of Lithuania. Article
253. Management of the Chamber of Auditors
254. The Statute of the Chamber of Auditors shall determine the managing bodies of the Chamber of Auditors, their composition, competence, convocation and decision taking procedure, procedure of remuneration for work of the managing body members, procedure for taking the minutes of the meetings.
255. The Chamber of Auditors shall have the General Meeting of the members or any other body (conference, convention, congress, assembly) possessing all or part of the rights of the General Meeting.
256. The conference, convention, congress, assembly possessing all the rights of the General Meeting shall be subject to the provisions applied in this Law with respect to the General Meeting of the members.
257. Where a body of the Chamber of Auditors (conference, convention, congress, assembly) is formed possessing only part of the rights of the General Meeting of the members, the General Meeting of the members shall be mandatory.
258. The structure, competence, convocation and decision-making procedure of the bodies of the Chamber of Auditors shall be established in the Statute of the Chamber of Auditors.
259. Members of the collegial bodies specified in the Statute of the Chamber of Auditors which are not managing bodies shall not be paid any remuneration for work.
260. Minutes shall be taken of the General Meetings of the members and sittings of the collegial bodies.
261. The decisions of the managing bodies of the Chamber of Auditors, for which a special appeals procedure is not established by this Law, shall be appealed in the manner prescribed by law. Article
262. General Meeting of Member of the Chamber of Auditors
263. Auditors shall attend the annual General Meeting of the members of the Chamber of Auditors to discuss and develop auditing activities and performance of auditors.
264. The General Meeting of the members of the Chamber of Auditors shall be convened and organised by the Committee of the Chamber of Auditors.
265. The General Meeting of the members of the Chamber of Auditors shall be the supreme management body of the Chamber of Auditors.
266. The General Meeting of the members of the Chamber of Auditors shall be convened according to the procedure set out in the Statute of the Chamber of Auditors. An extraordinary meeting shall be convened if it is requested by no less than 1/5 of the members of the Chamber of Auditors or by the Committee on its resolution.
267. The General Meeting of the members of the Chamber of Auditors shall have the right to: 1) adopt, amend and supplement the Statute of the Chamber of Auditors; 2) establish the number of members in the Committee of the Chamber of Auditors; 3) elect and dismiss members of the Committee of the Chamber of Auditors; 4) elect the President of the Chamber of Auditors; 5) appoint 3 auditors to the Auditors’ Court of Honour and 3 auditors to the Examination Commission; 6) fix the amount of the membership fee to be paid by the members of the Chamber of Auditors; 7) approve the Statute of the Auditors’ Court of Honour; 8) approve the National Standards on Auditing and the Auditors’ Code of Professional Ethics; 9) approve the annual financial statements of the Chamber of Auditors; ; 10) establish the number of employees at the Chamber of Auditors and fix their salaries; 11) address other issues provided for in the Statute of the Chamber of Auditors.
268. The General Meeting of the members shall be valid if it is attended by no less than a half of the members. The resolutions shall be adopted by a simple majority vote.
269. If the General Meeting of the members of the Chamber of Auditors does not have a quorum, a repeat meeting must be convened no later than within 1 month following the procedure prescribed by the Statute. Such repeat meeting shall have the right to adopt resolutions on all items on the agenda of the meeting which failed to take place, irrespective of the number of members present. Article
270. Sources of Income of the Chamber of Auditors Sources of income of the Chamber of Auditors shall consist of: 1) membership fees provided for in the Statute of the Chamber of Auditors and other special purpose contributions; 2) income from the conducted examinations, provided teaching services; 3) property and funds transferred by natural and legal persons without compensation; 4) funds donated by non-public organisations, international organisations and foundations; 5) interest paid by credit institutions on the deposited funds; 6) legacy left by a will or testament; 7) borrowed funds; 8) deductions of audit firms for the supervision of auditors and audit firms; 9) other funds received in legal ways.
271. Audit firms shall annually by 1 July pay the deductions for the Chamber of Auditors intended for the supervision of auditors and audit firms, the annual contribution amounting to one minimum monthly wage (hereinafter – MMW).
272. After the performance of the audit firm review the audit firm shall pay the deductions for the Chamber of Auditors intended for the supervision of auditors and audit firms in the amount of three MMW for the review of one auditor’s performance according to the procedure prescribed by the Committee of the Chamber of Auditors.
273. Late payment of deductions shall make the audit firm liable to default interest calculated in accordance with the procedure prescribed by law. Article
274. Reorganisation, Transformation and Liquidation of the Chamber of Auditors The Chamber of Auditors may be reorganized, transformed or liquidated in the manner prescribed by law. Annex to the Law of the Republic of Lithuania on Audit Implemented EU legislation
275. Fourth Council Directive of 25 July 1978 based on article 54