LAW OF THE REPUBLIC OF LITHUANIA

LAW OF THE REPUBLIC OF LITHUANIA LAW OF THE REPUBLIC OF LITHUANIA AMENDING THE LAW OF THE REPUBLIC OF LITHUANIA ON AUDIT 15 June 1999 Mo VIII-1227 Vilnius (A new version of 3 July 2008  No X-1676) Article 1. New version of the Law of the  Republic of Lithuania on Audit The Law of the the Republic of Lithuania on Audit shall be amended and set it forth to read as follows: “LAW OF THE REPUBLIC OF LITHUANIA ON AUDIT CHAPTER ONE GENERAL PROVISIONS Article1. Purpose of the Law 1. This Law shall establish the procedure for carrying out the audit of a set of financial statements and consolidated financial statements (hereafter – financial statements), the procedure of granting the name of a certified auditor and of his entry in the list of certified auditors, the procedure of entering the audit firms in the list of audit firms and issuing the certificates of audit firms, professional activities of audit firms and certified auditors, assurance of the quality of audit carried out by certified auditors and firms of auditors, the investigation of the carried out audit and public oversight of certified firms of auditors, requirements of audit of financial statements of public interest entities, provision of assurance and other related services, the rights and duties of the Authority of Audit and Accounting, the activities of the Lithuanian Chamber of Auditors, (hereafter referred to as Chamber of Auditors). When the regulations of this Law are applied both to a set of financial statements and a set of consolidated financial statements, the term “financial statements” shall apply. 2. Additional requirements applied to public interest entity audit may be established by other laws regulating the activities of these entities. 3. The provisions of this Law are in accordance with the legal acts of the European Union specified in the Annex of this Law. Article2. Definitions 1. Certified auditor (hereinafter referred to as the auditor) denotes a natural person who holds the title of the certified auditor granted according to the procedure set in this Law. 2. Audit firm means a firm entered in the list of audit firms. 3. Audit network  means a group of certain entities to which the audit firm and the related  entities of any legal form belongs, which is clearly aimed at profit- or cost-sharing or shares common ownership, control or management, common quality-control policies and procedures, a common business strategy, the use of a common brand-name and/or a significant part of professional resources; 4. Auditor’s report means a document in which the auditor, the auditor of another Member State or the auditor of a non-member country, in addition to other obligatory required items, communicates his opinion about the audited financial statements. 5. Auditor’s assistant means a natural person seeking the auditor’s title and entered in the list of auditor’s assistants. 6. Public oversight of auditors and audit firms (hereinafter referred to as public oversight) means the totality of measures whereby the Authority of Audit and Accounting seeks to assure the quality and security of financial statements. 7. The auditor controller (hereinafter referred to as the controller) means the auditor or the auditor of another Member State, approved by the Authority of Audit and Accounting to carry out the revision of quality of audit of financial statements carried out by the auditors and audit firms. 8. Audited entity means a legal person or a group of entities the financial statements whereof are being audited. 9. Code of Ethics for Professional Accountants means the principles of professional ethics prepared and approved by the International Ethics Standards Board for Accountants of  International Federation of Accountants.  10. Audit of financial statements (hereinafter referred to as audit) means independent inspection of financial statements of the audited entity and provision of the  auditor's report according to the requirements set by legal acts regulating the carrying out of audit of financial statements. 11. Report on audit of financial statements (hereinafter referred to as report on audit) means the document provided in the cases and according to the procedure established by law together with the auditor’s report in which the auditor, the auditor of another member state or the auditor of a non-member country indicates additional information on audit of financial statements. 12. Working documents of audit of financial statements (hereinafter referred to as working documents) means the entire material collected and received by the auditor, the auditor of another Member State or the auditors of a  non-member country and documents which he prepares for drawing up the plan of audit of financial statements, for carrying out  the audit of financial statements and for substantiating the auditor’s report. 13. The contractor of audit of financial statements (hereinafter referred to as the contractor) the audited entity or the legal or natural person, which chooses or selects the audit firm for carrying out the audit of financial statements and/or  which concludes an agreement for the audit of financial statements.. 14. Another Member State (hereinafter referred to as the  Member State) means a Member State of the European Union, except for the Republic of Lithuania, as well as a Member State of the European Economic Area. 15. The auditor of another Member State (hereinafter referred to as the auditor of a Member State) means a natural person particularly granted by the competent authority of a Member State the right to carry out an audit in that Member State. 16. Audit firm of another Member State (hereinafter referred to as the audit firm of a member state) means a firm set up in the Member State, whatever its precise legal form, having the right to carry out an audit in the Member State. 17. The competent authority means the Authority of Audit and Accounting, the Chamber of Auditors, the authority of another Member State and/or professional organisation of another Member State, which will be specified to the European Commission as the competent authority, or the authority of the another non-member country  and/or professional organisation  which shall be given responsibility for carrying  out public oversight of auditors and audit firms or carrying  out the functions related to auditors and audit firms. 18. A non-practitioner shall be a natural person who is deemed to be knowledgeable in the areas relevant to the statutory audit either because of his past professional skill or, alternatively, is sufficiently knowledgeable in audit and who has at least 3 years before taking up employment in the Audit and Accounting Service fulfilled all the following requirements: 1) he did not carry out  the audit and was not employed in the audit firm; 2) was not an owner/one of owners of the audit firm and/or did not have any influence on the management of the audit firm; 3) he was not a member of the management body of the Chamber of Auditors . 19. International Auditing Standards means the International standards on auditing, Audit Practice Statements and other related to audit  standards  prepared and approved by the International Auditing and Assurance Standards Board of the International Federation of Accountants. 20. International Quality Control Standard means the standard prepared and approved by the International Auditing and Assurance Board of the International Federation of Accountants whereby the internal quality control of the audited entity is regulated. 21. Assurance and other related services means the services other than auditing provided by the audit firm to which the International Standards on Assurance Engagements,  Standards on Review Engagements, International Standards on Related Services and Related Practice Statements prepared and approved by  the International Auditing and Assurance Board of the International Federation of Accountants are applied.. The Chamber of Auditors shall establish the methodology in applying the International Standard on Assurance Engagements, Standards on Review Engagements, the International Standards on Related Services and Related Practice Statements and shall control the quality of assurance and related services. 22. Audit firm of a non-member country – means a firm of any precise legal form set up in any non-member country entitled to carry out audit in that non-member country. 23. Auditor of a non-member country means a natural person entitled by the competent authority of that non-member country to carry out audit in that non-member country.            24. Public-interest entity means an entity that is of significant public relevance because of the nature of its business, its size or the number of clients. A public-interest entity shall be: 1) public company whose securities are traded in the regulated market of the Republic of Lithuania and/or any other member state; 2) the bank and the Central Credit Union; 3) brokerage houses; 4) investment company with variable capital and closed-end investment fund whose property management has not been transferred to management firm; 5) firms of management of undertakings of collective investment and/or pension fund/funds; 6) insurance undertaking and reinsurance undertaking; 7) central securities depository of Lithuania and Vilnius Securities Exchange. 25. Other terms used in this Law are understood within the meaning they are used in the Law of the Republic of Lithuania on Accounting, the Law of the Republic of Lithuania on Financial Statements of Entities and the Law of the Republic of Lithuania on Consolidated Financial Statements of Groups of Entities. CHAPTERTWO PURPOSES OF AUDIT AND PRINCIPLES OF PROFESSIONAL ETHICS Article 3. Purposes of Audit The purposes of audit shall be to establish whether: 1) the financial statements in all material aspects present fairly the entity’s financial position of the audited entity, its performance and cash flows under the legislation regulating the accounting and drawing up of financial statements; 2) the financial data provided in the annual report (consolidated annual report) or the entity’s activity report (if they are drawn up under the requirements of legislation) meet the data provided in the annual financial statements (annual consolidated financial statements). Article 4. Principles of Professional Ethics 1. Audit firms and auditors when carrying  out the audit must abide by the principles set in the Code of Ethics for  Professional Accountants. 2. Regardless of the principles specified in the Code which is set in paragraph 1 of this Article, audit firms and auditors shall abide by these main principles of professional ethics: 1) independence and objectivity – the auditor and audit firm may carry out audit only being independent from the audited entity and not taking part in the decision making in that entity; 2) confidentiality and professional secrecy – the auditor and audit firm must conceal the information entrusted by the contractor and/or the audited entity and not to divulge it to third persons except in cases established by this law and other legal acts, not to use the contractor’s and/or audited entity’s information received during the auditing for meeting the interests of the audit firm and/or third persons; 3) integrity – the opinion of the auditor and the audited entity shall not be subject to the opinion of others; 4) professional competence and due diligence – the auditor must have the required knowledge and skills, devote sufficient time for the audit to be carried out professionally; 5) social responsibility – audit results are used by the consumers of financial statement information (credit institutions, the employers and employees, the owners of and participants in the entities, the investors and other), when taking economic decisions. Article 5. Application of the Principles of Independence and Objectivity 1. The auditor and/or the audit firm may not carry out the audit, if the auditor, the audit firm or the audit network to which the audit firm or the audited firm belongs is directly or indirectly related and this could impair the independence of the auditor and/or the audit firm. 2. The auditor shall be considered independent from the audited entity if: 1) he is not linked by family, close relations or or not related by marriagerelated by familyrelated by marriage with the participants in the audited entity, its head, chief accountant (accountant) or with any other employees of the audited entity, who may have a direct and material influence on the drawing up of financial statements, on the members of the entity’s board and/or supervisory board, if it is formed; 2) he is not an employee of the entity subject to audit and, if he were an employee of the audited entity who may have a direct and material influence on the preparation of the financial statements, at least 3 years have lapsed from the end of employment relations; 3) he is not a participant of the audited entity and, if he was a participant of the audited entity, at least 3 years have lapsed from the day of transferring shares or parts of shares; 4) he has not provided to the audited entity the services of asset and business valuation, book keeping and drawing up of financial statements, the services of valuation of reorganisation of public and private companies, did not perform internal audit services and if provided/performed, not less than one year has lapsed from the moment of their provision or performance; 5) he is not influenced by other material conditions that might effect his independence.     3. The audit firm shall be deemed independent from the audited entity if: 1) the audited entity is not a participant in the audit firm ; 2) the audit firm, participants in the audit firm, its head, members of the firm’s board and/or supervisory board, if it is formed, shall not be participants in the audited entity; 3) participants in the audit firm, its head, members of the head, the firm’s board and/or supervisory board, if they are formed, are not linked by family, close relations or related by marriage with the participants in the audited entity; 4) it did not provide to the audited entity the services of asset and business valuation, book keeping and drawing up of financial statements, the services of valuation of reorganisation of public and private companies, did not perform internal audit services, and if provided/performed , not less than one year has lapsed from the moment of their provision or performance; 5) the audit firm does not receive for its audit services the amount of income from the audited entity that it could affect its independence; 6) it not affected by other material conditions that could affect its independence. 4. The auditor may not carry out the audit of one and the same entity for longer than 7 consecutive financial years and, in case of auditing a public interest entity, for longer than 5 consecutive years, unless other laws establish otherwise. After the expiration of the said period the auditor may not carry out the audit of the entity for 2 years and, if the audited entity is a public interest entity, for 2 years he may not become its head or board member. The provisions of this paragraph shall also apply to the auditor/auditors who undersigned the auditor’s report. 5. When the audit of consolidated financial statements of a group of entities is carried out, the provisions of paragraph 4 of this Article shall be applied to the auditor who carried out the audit of consolidated financial statements of a group of entities and to the auditor/auditors, who carried out the audit of financial statements of material subsidiaries. 6. The head of the audit firm and/or audit network to which it belongs, members of the board and/or supervisory board shall not affect performance of the audit in such a way that would affect the auditor’s independence and objectivity. 7. In the working documents the auditor and/or the audit firm shall specify significant risk to auditor’s and/or audit firm’s independence and the measures the auditor and/or the audit firm has to take in order to avoid the risks. If the applied measures do not help to avoid the risk to independence, the auditor and/or the audit firm may not carry out the audit. 8. The Authority of Audit and Accounting shall establish the procedure for committing to independence, applied to inspectors, Authority of  Audit and Accounting staff and members of the Audit Supervision Committee. The Chamber of Auditors, having agreed in writing with the Authority of Audit and Accounting , shall establish the procedure of committing to the independence, applied to members of the Chamber of Auditors and personnel, appointed responsible for the implementation of audit quality assurance and for other persons invoked by the Chamber of Auditors to carry out that function.. Article 6. Application of the Principle of Confidentiality and Professional Secrecy 1. The Authority of Audit and Accounting shall establish the procedure for observing the obligation of confidentiality and professional secrecy applied to controllers, personnel of the Authority of Audit and Accounting, members of the Audit Supervision Committee and experts referred to in subparagraph 5 of paragraph 5 of Article 35 and paragraph 7 of Article 36 of this Law. The Chamber of Auditors, having adjusted in writing with the Authority of Audit and Accounting, shall establish the procedure for adhering to confidentiality and professional secrecy, applied to the members and staff of the Chamber of Auditors who are appointed responsible for ensuring the quality of audit and other person invoked for carrying  out the function by the Chamber of Auditors. 2. When, upon termination of the contract for carrying out the audit with one audit firm a contract is concluded for the caring out of the audit with the other audit firm, and for that reason the auditor/audit firm is replaced by another auditor/audit firm, the auditor/audit firm which carried the audit must submit to the auditor/audit firm which takes over the carrying out of audit all the information required for carrying out the audit on audited entity. Article 7. Audit Fee for Carrying out the Audit 1. The scope of the audit fee must ensure that the audit would be carried out according to principles of professional ethics and requirements of international auditing standards. 2. The audit fee must be set in the audit contract and no contingent conditions which may affect the amount of the fee for the carrying out of the audit may be set in the contract. 3. The audit fee shall not be affected by the fee paid for non-audit services provided by the audit firm carrying out other activities established in sub-paragraphs 2 and 3 of paragraph 1 of Article 29 of this Law. CHAPTER THREE THE GRANTING AND DEPRIVATION OF  THE TITLE OF THE AUDITOR Article 8. Requirements for Granting the Title of the Auditor The person shall be granted the title of the auditor if he: 1) knows the state language; 2) holds a university degree; 3) is of good repute; 4) has worked in the audit firm and/or in the audit firm of a member state for at least 3 years as an auditor’s assistant and if, at the time of submitting the application to be granted the title of the auditor, the person was no longer working in the audit firm, the work in the audit firm as auditor’s assistant was completed at least 3 years before submission of the application; 5) has passed the qualification examinations of the auditor; 6) has been sworn in as the auditor. Article 9. Good Repute The person shall be deemed to be of good repute: 1) if the person concerned has not been convicted of an offence or if the conviction has been expunged or vacated according to the procedure established by law, also if he has not been convicted of a criminal offence; 2) he does not abused narcotic, toxic, psychotropic materials or alcohol ; 3) he has been dismissed by his undertaking, entity or organisation from the position of internal auditor, inspector, accountant, auditor’s assistant for professional misconduct or career development violation, from civil service position upon appointing official penalty and, if he was dismissed, not less than 3 years have lapsed from his dismissal; 4) he was not a head of the audit firm which was deprived of the audit firm certificate and was withdrawn of the list of audit firms at the time when the circumstances arose for which the audit firm was deprived of the audit certificate and was withdrawn of  the list of the audit firms, and if he was head of the firm – not less than 3 years have lapsed from the deprivation of certificate of the audit firm and its withdrawal from the list of audit firms. The subparagraph shall not be applied if the audit firm was withdrawn of  the list of audit firms on the grounds set in subparagraphs 1, 2 and 3 of  paragraph 1 of Article 22 of this Law; 5) he not guilty of a material breach of the principles of professional ethics specified in Article 4 of this Law. Article 10. Practice of the Auditor’s Assistant in the Audit Firm 1. The auditor’s assistant shall work (i.e. shall undergo practical training) in the audit firm and/or in the audit firm of the member state under the guidance of the auditor and/or of the auditor of the member state, having an at least 3 years’ period of service as an auditor, has given his consent subject to written confirmation on management the work of the auditor’s assistant and there are no disciplinary measures that may apply before his appointment to manage the work of the auditor’s assistant. If, following his appointment to manage the work of the auditor’s assistant, the auditor is imposed a disciplinary penalty, the Chamber of Auditors shall immediately appoint another auditor who meets the requirements for managing the work of auditor’s assistant. 2. The list of auditor’s assistants shall be managed by the Chamber of Auditors. 3. The procedure for entering in the list of auditor’s assistants and withdrawal from it, the management of the list of auditor’s assistants, the procedure of training for auditor’s assistants, the procedure of appointment/dismissal of the auditor as the auditor’s  assistant’s practice guide, calculation of the time of practice of the auditor’s assistants, the procedure of the auditor’s assistants’ practice evaluation, the training of the auditor’s assistants and other requirements for carrying  out the practice of the auditor’s assistants shall be set by the Chamber of Auditors, upon the adjustment thereof in writing with the Authority of Audit and Accounting. Article 11. The Auditor’s Qualification Examinations 1. The auditor’s qualification examinations shall be held by the Chamber of Auditors at least once per calendar year. 2. The Chamber of Auditors, upon adjustment thereof with the Authority of  Audit and Accounting, shall: 1) approve the procedure for holding the auditor’s qualification examinations; 2) determine the amount of the fee for the auditor’s qualification examinations . 3. The Chamber of Auditors shall appraise the application submitted by the person seeking to be granted the title of the auditor and shall decide on whether or not to allow the person to take the auditors’ qualification examinations. 4. The Committee of the Auditors’ Qualification Examinations (hereinafter – the Examining Committee) shall be comprised of 7 members, one of them shall be the Chairman of the Board. Law, taxation, accounting and/or finance experts and auditors shall be appointed as members of the Examining Committee). 4 members, from among them also the Chairman, shall be appointed by the Ministry of Finance of the Republic of Lithuania (hereinafter referred to as the Ministry of Finance), 3 members - auditors – by the Chamber of Auditors. A member of the Examining Committee shall be appointed for 3 years. The same persons may be appointed as members of the Examining Committee) for no more than 2 consecutive terms of office. The composition of the Examining Committee) and the rules of procedure shall be approved by the Authority of Audit and Accounting. The authority which appointed the member of the Examining Committee shall be entitled to recall him before the expiry of his term of office. A member of the Examining Committee) may resign before the expiry of his term of office. 5. The Examining Committee shall approve: 1) programmes of the auditor’s qualification examinations; 2) the tasks of the auditor’s qualification examinations and the methodology of their assessment; 3) assessment of the auditor’s qualification examinations. 6. The list of the auditor’s qualification examinations, where the areas listed in paragraph 8 of this Article are to be included, shall be approved by the Authority of Audit and Accounting on the recommendation of the Chamber of Auditors. The tasks of the auditor’s qualification examinations according to the programmes approved by the Examining Committee shall be prepared by the Chamber of Auditors. 7. The auditor’s qualification examinations must be organised in such a way, that the persons who pass the examinations should have theoretical knowledge necessary for carrying out the audit and would be able to apply the knowledge when carrying out the audit. 8. The text of theoretical knowledge included in the examination must cover the following subjects in particular: 1) theory and principles of accounting ; 2) legal acts regulating preparation of annual and consolidated financial statements; 3) the International Accounting Standards; 4) financial analysis; 5) cost and management accounting; 6) risk management and internal control; 7) audit and professional skills ; 8) legal acts regulating audit and auditors’ activities; 9) International Auditing Standards; 10) principles of professional ethics, including the principle of independence. 9. In addition to theoretical knowledge in the areas listed in paragraph 8 of this Article, during the auditors’ qualification examinations in so far as they are relevant to auditing the knowledge in these areas shall be checked: 1) company law, the law of insolvency and similar procedures; 2) tax laws; 3) civil and commercial law; 4) social-security law and law of employment; 5) information and computer systems; 6) business, general and financial economics; 7) mathematics and statistics; 8) basic principles of the financial management of undertakings. 10. The examination of the knowledge of the person seeking to be granted the title of the auditor in the areas listed in subparagraphs 5 to 8 of paragraph 9 of this Article (all or any one of them) may be not examined if the person has passed the examinations in theoretical knowledge in these areas (the examination has been evaluated “excellent”, “very good”, “good” or “mediocre”) according to the areas of university study programme. In such case the person seeking to be granted the title of the auditor shall submit to the Chamber of Auditors the application to abstain from checking of the knowledge in the areas listed in subparagraphs 5 to 8 of paragraph 9 of this Article and evidence that programmes of theoretical knowledge of these areas in schools of high education meet the criteria of relevant programmes approved by the Examining Committee as well as evidence of the passed examinations. The decision to abstain from checking of the knowledge in the areas listed in subparagraphs 5 to 8 of paragraph 9 of this Article shall be taken by the Chamber of Auditors. 11. A person who fails to pass the auditor’s qualification examinations may repeatedly attempt to pass such examinations only after 6 months. The number of repeated attempts is not limited. 12. The appeals of the persons who fail to pass the auditor’s qualification examinations and disagree with the evaluation of the auditor’s qualification examinations approved by the Examining Committee as well as the complaints about the refusal of the Chamber of Auditors to abstain from the checking of the knowledge in the areas listed in subparagraphs 5 to 8 of paragraph 9 of this Article shall be considered by the Authority of Audit and Accounting. Article12. The Procedure for Granting the Title of the Auditor 1. The person seeking to be granted the title of the auditor shall submit to the Chamber of Auditors an application to be granted the title of the auditor. The application shall contain the personal data (name, surname, identification number, place of residence), also the response to the question whether or not there are the reasons specified in this Law precluding the granting of the title of the auditor. 2. The Chamber of Auditors, having received the application and all documents demonstrating compliance of the person seeking to be granted the title of the auditor with the requirements specified in Article 8 of this Law, shall no later than within 20 working days from the filing of all documents take a decision to grant the title of the auditor and shall notify in writing of the decision the person seeking to be granted the title of the auditor and of the possibility to take the oath. 3. Before becoming the auditor, the person shall take the following oath to the person authorised by the Chamber of Auditors: “ I, the auditor (name, surname), swear to  comply with  the Constitution of the Republic of Lithuania, its laws and other legal acts, honestly and in full independence fulfil the duties of the auditor, be bound by the obligation of professional secrecy, continue further training, comply with the Code of Ethics of Professional Accountants and the Statute of the Chamber of Auditors.“. 4. The person who swore the oath of the auditor and put his signature under the text of the oath shall be granted the title of the auditor, provided with the auditor’s certificate and included in the List of Auditors indicated in Article 23 of this Law. The procedure for issuing the auditor’s certificate, the suspension of its validity, renewal of its validity and its cancellation shall be set by the Chamber of Auditors upon coordination thereof in writing with the Authority of Audit and Accounting. The Chamber of Auditors shall notify the Authority of Audit and Accounting of the issued auditor’s certificate according to the procedure coordinated in writing with it. Article13. Suspension and Renewal of Validity of the Auditor’s Certificate 1. The Chamber of Auditors shall by its decision suspend the validity of the auditor’s certificate   : 1) in the case prescribed by subparagraph 2 of paragraph 1 of Article39 of this Law – until the repeated passing of the specified examination/examinations; 2) on the written application of the auditor in the case specified in paragraph 6 of Article 43 of this Law; 3) if the auditor fails to submit within the term indicated in the notice of the intended suspension of validity of the auditor’s certificate the data required for the management of the list of auditors established in Article 23 of this Law and/or it proves that the provided data are not correct; 4) the auditor did not provide within the term set in the notice of the intended suspension of validity of the auditor’s certificate conditions for review of quality of the carried out audit established in Article 34 of this Law and/or the investigation of the carried out audit prescribed by Article 36 of this Law. 5) on the written application of the auditor. 2. The suspension of validity of the auditor’s certificate shall preclude the auditor from carrying out audit during the suspension of validity of the certificate, but the duty set in paragraph 1 of Article 28 of this Law  to develop professional qualification  shall apply. 3. Having suspended the validity of the auditor’s certificate on any ground specified in subparagraphs 3 and 4 of paragraph 1 of this Article the Chamber of Auditors shall set the term, on the ground indicated in subparagraph 4- coordinated with the of the Authority of Audit and Accounting, for submitting the required and/or correct data or for creating the conditions. 4. The validity of the auditor’s certificate shall be renewed on the decision of the Chamber of Auditors after the elimination of the reasons for the suspension of validity of the auditor’s certificate and after the filing of the application to renew the validity of the suspended auditor’s certificate. 5. The auditor shall be notified in writing of the decisions of the Chamber of Auditors to suspend, renew the validity of the auditor’s certificate no later than within 5 working days from the day of adoption of the decision. The Chamber of Auditors shall notify the Authority of Audit and Accounting according to the procedure coordinated with it in writing of the suspended, renewed validity of the auditor’s certificate. Article 14. Deprivation of the Title of the Auditor and  Invalidation of the Auditor’s Certificate The auditor shall be deprived of the title of the auditor on the decision of the Chamber of Auditors: 1) in the case established in subparagraph 1 of paragraph 2 of Article39 of this Law; 2) in case the auditor repeatedly fails to pass the examination/examinations specified in subparagraph 2 of paragraph 1 of Article 34 of this Law for longer than 3 years of the day of giving such instruction; 3) if the auditor failed to submit to the Chamber of Auditors within the term set in paragraph 3 of Article 13 correct data and/or the data required for the management of the list of auditors established in Article 23 of this Law; 4) if the auditor did not provide within the term set in paragraph 3 of Article 13 of this Law the conditions for review of quality of the carried out audit established in Article34 of this Law and/or the investigation of the carried out  audit prescribed by Article 36 of this Law; 5) on the written application of the auditor; 6) if, after granting the title of the auditor, circumstances come to light which would be detrimental to the granting of the title of the auditor; 7) if the auditor no longer meets the requirement of good repute; 8) upon the auditor’s withdrawal from the members of the Chamber of Auditors. 2. After the auditor is deprived of title of the auditor, the validity of the auditor’s certificate shall be cancelled and the auditor shall be withdrawn from the list of auditors. The auditor shall be notified in writing of the decision of the Chamber of Auditors to cancel the validity of the auditor’s certificate no later than within 5 working days from the date of adoption of this decision. The Chamber of Auditors shall notify the Authority of Audit and Accounting of the validity of the cancelled auditor’s certificate following a procedure harmonized with it. 3. After the auditor is deprived of the title of the auditor in the cases established in paragraph 1 of this Article, except subparagraph 5, the person may repeatedly attempt to pass the qualification examinations referred to in Article 11 of this Law or have their knowledge tested according to the examinations specified in Article15 of this Law no earlier than after 3 years. 4. If, in the cases specified in paragraph 1 of this Article, the persons entitled by the competent authority/authorities of other member states to carry out the audit are deprived of the title of the auditor, the Authority of Audit and Accounting shall notify thereof the competent authority/authorities which entitled the person to carry out the audit and shall indicate the reason for which the person  was deprived  of the auditor’s title. 5. In the event of the auditor’s death the validity of his auditor’s certificate shall be cancelled and the auditor shall be withdrawn from the list of the auditors. Article 15. Granting of the Title of the Auditor to Member State Auditors, Suspension of Validity of the Auditor’s Certificate, Deprivation of the Title of the Auditor and Cancelling the Validity of the Auditor’s Certificate 1. The Authority of Audit and Accounting shall establish the procedure for granting the title of the auditor to the auditors of member states which are entitled to carry out audit by the competent authority/authorities of the member state/member states. 2. The title of the auditor shall be granted to member state auditors who have been granted the right to carry out audit by competent authorities of the member states on the decision of the Authority of Audit and Accounting upon submission of the documents issued by the competent authority of the member state which was the first to grant the right to carry out audit, whereby the right to carry out audit in a member state is demonstrated and whereby it is demonstrated that the right has not been suspended or cancelled, and after they pass the knowledge tests. 3. The aptitude tests shall be taken according to the established procedure in State language in the areas specified in subparagraphs 2 and 8 of paragraph 8 and subparagraphs 1 to 4 of paragraph 9 of Article11 of this Law. 4. The validity of the auditor’s certificate shall be suspended for a member-state auditor or he shall be deprived of the title of the auditor and the validity of the auditor’s certificate shall be cancelled on the same grounds and according to the same procedure which is provided for auditors in Articles 13 and 14 of this Law, also in case the member state/states’ competent authority/authority whereof have granted the right to carry out the audit, suspends or cancels the right. The decisions on suspending or deprivation of the title of the auditor shall be taken by the Authority of  Audit and Accounting. Article16. Granting the Title of the Auditor to Auditors of Non-Member Countries, Suspension of Validity of the Auditor’s Certificate, Deprivation of the Title of the Auditor and Cancelling the Auditor’s Certificate 1. All the requirements set in Article15 of this Law shall be applied to the auditor of a non-member country, including the requirement to demonstrate that he satisfies the requirements set in subparagraphs 1 to 4 of Article 8 of this Law, has passed qualification examinations in the areas specified in paragraph 8 of Article11 of this Law and has appropriate theoretical knowledge in the areas provided in paragraph 9 of Article 11 of this Law. 2. The validity of the auditor’s certificate for the auditors of non-member countries shall be suspended or he shall be deprived of the auditor’s title and the validity of the auditor’s certificate shall be cancelled on the same grounds and according to the same procedure provided for the auditors in Articles 13 and 14 of this Law, also in case the competent authority of a non-member country which granted the right to carry out the audit suspends or cancels that right. The decisions on the suspension or deprivation of the auditor’s title shall be taken by the Authority of Audit and Accounting. CHAPTER FOUR ENTERING THE AUDIT FIRM IN THE LIST OF AUDIT FIRMS Article17. Procedure for Entering the Audit Firm in the List of Audit Firms 1. The firm may start its auditing activities only after having been entered in the list of audit firms on the decision of the Chamber of Auditors. Entered in the list of audit firms may be the entity registered in the Republic of Lithuania and audit firms of the member states which have established branches in the Republic of Lithuania and other audit firms of member states which wish to carry out audits according to the procedure established by legal acts of the Republic of Lithuania. 2. In order to be entered in the list of audit firms, the firm shall submit the following documents: 1) an application containing the following particulars: name, registered number, names and surnames of the registered office, telephone, full names and addresses of partners, the voting rights of each partner, the numbers of certificates which show the granting of the auditor’s name and other particulars established in paragraph 2 of Article 24 of this Law which are necessary for entering in the list of audit  firms. When registering the audit firm of a member state which has a branch in the Republic of Lithuania, the data concerning the member state auditors and the branch shall be additionally submitted; 2) a copy of the statutes or other document of incorporation specifying the firm’s objectives. When registering an audit firm of a member state, which has a branch in the Republic of Lithuania, a copy of the statutes of the branch and the data of the registration of the audit firm in the member state shall be additionally submitted; 3) documents which show that the firm has taken out insurance against civil liability according to the procedure established in Article20 of this Law. 3. Upon receipt of all the documents referred to in paragraph 2 of this Article and having ascertained that the firm corresponds to the requirements set in Articles 18, 19 and 20 of this Law, the Chamber of Auditors shall adopt a decision to enter the audit firm in the list of audit firms within 20 working days from the day of submission of documents referred to in paragraph 2 of this Article. The Chamber of Auditors shall dispatch to the firm seeking to be entered in the list of audit firms a copy of the adopted decision not later than within 5 working days from the day of adoption of the decision. The Chamber of Auditors shall notify the Authority of  Audit and Accounting of the adopted decision according to the procedure coordinated with it in writing . 4. Having adopted the decision to enter the firm in the list of audit firms, the Chamber of Auditors shall within 2 working days enter the firm in the list of audit firms. Having entered the firm in the list of audit firms the Chamber of Auditors shall provide the firm with a certificate confirming it. 5. Audit firms of member states which have no branches established in the Republic of Lithuania shall be entered in the list of audit  firms according to the procedure and in cases established by the Government of the Republic of Lithuania or the authority authorised by it. Article 18. Audit Firms 1.Audit  Firms may operate in one of the two legal forms: 1) individual enterprises (sole proprietorships) ; 2) general partnerships ; 3) limited partnerships ; 4) private companies . 2. The owners of audit firms which operate as sole proprietorships must be auditors. 3. At least 3/4 of the general partners of the general partnership and  limited partnership must be auditors, auditors of member states, audit firms and/or audit firms of  a member state. 4. Shareholders of an audit firm which operates as a private company may include: 1) auditors and/or auditors of member states; 2) audit firms and/or audit firms of member states; 3) other legal and natural persons not specified in subparagraphs 1 and 2 hereof. 5. Shareholders of the private company specified in subparagraphs 1 and 2 of Paragraph 4 hereof must hold at least 3/4 of all voting shares. 6. The head of the audit firm must be an auditor or an auditor of a member state. 7. Where the Management Board is established in the private company, over 1/2 of the members of the Board must be auditors and/or auditors of member states. If the Board is formed of two members, one of them must be an auditor or an auditor of member states. 8. The requirements concerning legal forms set in paragraph 1 hereof shall not apply to an audit firm of a member state, but other requirements of this Article shall apply to it mutatis  mutandis. Article 19. Good Repute of Audit Firms 1. An audit firm must be of good repute. 2. A audit firm shall be considered to be of good repute if: 1) its members and auditors employed in the firm are considered to be of good repute; 2) it has not been charged or its parent company has not been charged. Article 20. Civil Liability Insurance of Firms of Auditors 1. The audit firm must insure its civil liability by a general and/or compulsory civil liability insurance. 2. The minimum annual sum of general civil liability insurance must amount to at least LTL 100,000. General civil liability insurance object shall be civil liability of the audit firm for the damage caused to the contractor and/or third persons when carrying out audit in other authority, organizations or firms, which are not  specified in paragraphs 3 and 4 of this Article. The contract of insurance shall be concluded according to the procedure laid down in the Law of the Republic of Lithuania on Insurance. 3. The minimum annual sum of compulsory civil liability insurance must amount to at least LTL 100,000 per one insured event. The object of compulsory civil liability insurance shall be the firm’s civil liability insurance for the damage which would have been caused to the contractor and/or third persons when carrying audit in the firms in which audit must be carried out according to the procedure laid down by legal acts, except for the audit of public interest entities. The contract of insurance shall be concluded according to the procedure established by the rules of compulsory civil liability insurance of audit firms. The rules shall be drawn up and, after their coordination with the Authority of Audit and Accounting, shall be approved by the Insurance Supervisory Commission of the Republic of Lithuania. 4. When the object of compulsory civil liability insurance is civil liability of the audit firm for damage which would have been caused to the contractor and/or third persons when carrying out audits in public interest entities, the minimum annual sum of civil liability insurance must amount to at least LTL 200,000 per one insured event. The contract of insurance shall be concluded according to the procedure laid down in the rules for compulsory civil liability insurance of audit firms. The Rules shall be drawn up and, after their coordination with the Authority of Audit and Accounting, shall be approved by the Insurance Supervisory Commission of the Republic of Lithuania. 5. The audit firm must take out a civil liability insurance for the whole period of audit work. Article 21. Suspension and Renewal of Validity of the Certificate of the Audit Firm The Chamber of Auditors may suspend the validity of the certificate of the audit firm: 1) if the audit firm did not present to the Chamber of Auditors within the period indicated in the notice of intention to suspend the validity of the audit firm’s certificate data indicated in Article 24 of this Law and/or the information indicated in subparagraph 6 of Article 30 of this Law and/or it appeared that incorrect data has been submitted; 2) if the audit firm did not pay in a timely manner within the period indicated in the notice of intention to suspend the validity of the audit firm’s certificate the deductions of the audit firm set in paragraphs 2 and/or 3 of Article 60 of this Law; 3) if the audit firm did not allow, within the period indicated in the notice of intention to suspend the validity of the audit firm’s certificate to carry  out review of audit quality established in Article34 of this Law and/or the investigation of the carried out audit prescribed by Article36 of this Law; 4) by a written application of the member/members and/or the head of the audit firm, if the shareholders of more than a half of the audit firm’s voting shares or more than a half of the audit firm’s general members agree with the suspension for the period requested by them of the validity of the certificate of the audit firm. 2. The Chamber of Auditors, having suspended the validity of the audit firm’s certificate on any ground specified in subparagraphs 1, 2 and 3 of paragraph 1 of this Article shall set the term within which the audit firm must submit the necessary and/or correct data, pay the deductions or allow to carry out quality assurance reviews or the investigations of the carried out audit. In the case specified in subparagraph 3 of paragraph 1 of this Article the set term shall be coordinated with the Authority of Audit and Accounting. 3. The audit firm, for which the validity of the audit firm’s certificate was suspended on the decision of the Chamber of Auditors as set in subparagraphs 1, 2 and 3 of paragraph 1 of this Article, upon removing the reasons for which the validity of the audit firm’s certificate was suspended, shall have the validity of the audit firm’s certificate renewed after it submits a written application to the Chamber of Auditors to renew the validity of the audit firm’s certificate. The audit firm the validity of whose audit certificate has been suspended on the decision of the Chamber of Auditors as set in subparagraph 4 of paragraph 1 of this Article, upon the submission of a written application to the Chamber of Auditors, if the shareholders of more than a half of the firm’s voting shares or more than a half of the general members consent to the renewal of validity of the audit firm’s certificate, the validity of the audit firm’s certificate shall be renewed. 4. The suspension of validity of the audit firm’s certificate shall repeal the audit firm’s right to carry out audits during the suspension of validity of the certificate. If the validity of the audit firm’s certificate is suspended when the audit firm is carrying out audit, the audit firm must immediately notify the audited entity and the contractor. 5. The audit firm shall be informed in writing of the decision of the Chamber of Auditors to suspend, renew the validity of the audit firm’s certificate not later than within 5 working days from the day of adoption of the decision. The Chamber of Auditors shall inform the Authority of Audit and Accounting of the validity of the suspended, renewed certificate of the audit firm according to the procedure coordinated with it in writing. Article 22. Withdrawal of Audit Firms from the List of Audit Firms 1. An audit firm shall be deprived of the audit firm’s certificate and shall be withdrawn from the list of audit firms on the decision of the Chamber of Auditors: 1) if a member/members and /or head of the audit firm submits a written application to withdraw it from the list of audit firms and the holders of more than a half of the audit firm’s voting shares or more than a half of the audit firm’s general members agree with it, also if the branch of the audit firm of a member state in the Republic of Lithuania is liquidated; 2) if it no longer meets any of the requirements set in Articles 18, 19 and 20 of this Law; 3) if it is declared going bankrupt or in liquidation; 4) in the case specified in subparagraph 2 of paragraph 2 of Article 39 of this Law; 5) if it failed to submit to the Chamber of Auditors within the time period set in paragraph 2 of Article 21 of this Law the required and/or correct data, as established in Article 24 of this Law, and information as prescribed in paragraph 6 of Article 30 of this Law or failed to pay the deductions as established in subparagraphs 2 and 3 of Article 60 of this Law; 6) if it failed to allow within the term established in paragraph 2 of Article 21 of this Law the carried out audit quality assurance review prescribed by Article 34 of this Law and/or investigation of the carried out audit established in Article 36 of this Law. 2. The audit firm shall be withdrawn from the list of audit firms on the day following the day of adoption of the decision established in paragraph 1 of this Law. After the audit firm is withdrawn from the list of audit firms it shall be deprived of its certificate of audit firm. The audit firm shall be informed in writing of the decision of the Chamber of Auditors to cancel the validity of the audit firm’s certificate and to withdraw from the list of audit firms not later than within 5 working days of the adoption of the decision. The Chamber of Auditors shall notify the Authority of Audit and Accounting of the cancelled validity of the audit firm’s certificate and withdrawal from the list of audit firms according the procedure coordinated with it. 3. In the case established in subparagraph 3 of paragraph 1 of this Article the audit firm must within 3 months of the adoption of the court order to open insolvency proceedings complete, amend or terminate contracts on the carrying out of audit concluded before the day of adoption of the court order to open insolvency proceedings. In this case the audit firm shall be considered withdrawn from the list of audit firms on the next day following 3 months from the end of the period of adoption of the court order to open insolvency proceedings. 4. In the case specified in subparagraph 4, 5 and 6 of paragraph 1 of this Article the audit firm withdrawn from the list of audit firms may apply to the Chamber of Auditors for re-entry of the audit firm into the list if audit firms according to the procedure established in Article17 of this Law not earlier than after 3 years from the days of withdrawal of the audit firm from the list of audit firms. The audit firm withdrawn from the list of audit firms on other grounds may be re-entered in the list of audit firms according to the procedure established in Article17 of this Law upon withdrawal of the reasons for which it was withdrawn from the list of audit firms. 5. When in the cases established in paragraph 1 of this Article an audit firm of a member state is withdrawn from the list, the Authority of Audit and Accounting shall notify thereof the competent authority/authorities of the member state/states, which entitled the firm to carry out audits and indicate the reasons why it was withdrawn from the list of audit firms. CHAPTER FIVE LISTS OF AUDITORS AND AUDIT FIRMS Article 23. List of Auditors 1. The Chamber of Auditors shall enter the persons granted the title of the auditor and the auditors of a non-member country specified in paragraph 5 of this Article in the list of auditors. 2. Data about the auditor must be gathered in the list of auditors: 1) name, surname, registration number, number of the auditor’s certificate; 2) name/names of the audit firm/firms and other firm/firms in which the auditor is employed, number/numbers of the audit firm’s certificate, address of the registered office, telephone, fax (if available) number and address of the internet website (if available); 3) if the auditor is a participant in an audit firm/firms – the name/names of the audit firm/firms, the number of the certificate of the audit firm/firms, the address of the registered office, telephone, fax (if available) number and address of the internet website (if available); 4) if the validity of the auditor’s certificate is suspended in the cases established in paragraph 1 of Article13 of this Law – the beginning of suspension of validity of the certificate and the number and date of the document whereby the decision of the Chamber of Auditors to suspend the validity of the auditor’s certificate is formulated; 5) if the competent authorities of the member state or a country which is not a member country registered the person as a member state’s auditor or as an auditor of a non-member country – the name/names of the registering authority/authorities, the registration number/numbers and any other information about the registration; 6) the disciplinary penalties in force, with the exception of the penalty established by subparagraph 1 of paragraph 2 of Article 59 of this Law. 3. The auditor must inform the Chamber of Auditors of the changes of the data submitted in paragraph 2 of this Article, except for the information indicated in subparagraphs 4 and 6 of paragraph 2 of this Article immediately, but not later than within 10 working days of the day of change. The information submitted by the auditor must be signed by him personally or according to the procedure established by the Law of the Republic of Lithuania on Electronic Signature. 4. Upon any change in the data the Chamber of Auditors shall immediately change the data of the list of auditors. 5. The non-member country auditors having carried out an audit of the financial statements of an undertaking registered in a non-member country, which securities are offered publicly or admitted to trading on a regulated market in the Republic of Lithuania, are provided according to the procedure established by the legal acts shall, before submitting the financial statements and the auditor’s report, apply to the Authority of Audit and Accounting for their entry in the list of auditors. The auditors of a non-member country shall be entered in the list of auditors as  non-member country auditors according to the procedure established by the Government of the Republic of Lithuania or the authority authorised by it. 6. The Chamber of Auditors, upon coordinating with the Authority of  Audit and Accounting, shall lay down the procedure for presenting information required for drawing up, updating and publishing the list of auditors prescribed by paragraph 2 of this Article . Article 24. List of Audit Firms 1. The Chamber of Auditors shall enter into the list of audit firms the firms which have been provided with the certificate of the audit firm and the audit firms of non-member country which are indicated in paragraph 5 of this Article. 2. Data about the audit firm must be gathered in the list of audit firms: 1) name of the firm, address of the registered office, registration number, number of certificate of the audit firm; 2) legal form of the audit firm; 3) telephone, fax (if available) number and address of the internet website (if available) and other contact information; 4) names, surnames and numbers of auditor’s certificates of auditors employed in the audit firm, separately identifying the auditors and other employees of the audit firm, who are participants in the audit firm (hereinafter referred to as partners), when the employees of the audit firm are auditors; 5) the names, surnames and addresses of the participants, and where the owners or participants are legal persons – their names, code numbers and addresses of the registered office; 6) names, surnames and addresses of management and supervisory bodies (if they are formed) and if members of the supervisory body are legal persons – their names, codes and addresses of the registered offices; 7) if the audit firm belongs to an audit network – the names of other firms belonging to the audit network, their addresses or references where such information may be received; 8) if the audit firm has branches and representations – their names and addresses; 9) if the validity of the audit firm representation is suspended in the cases established in subparagraph 1 of Article 21 of this Law – the beginning of suspension of validity of the certificate and the number and date of the document whereby the decision of the Chamber of Auditors to suspend the validity of the certificate of audit firm is formulated; 10) if the competent authority of another member state or another non-member country registered as the audit firm of another member state or as the audit firm of another non-member country - all information related thereto, including the name of the registering authority; 11) the disciplinary penalties in force. 3. The audit firm must notify the Chamber of Auditors of the changes in the data presented in paragraph 2 of this Article immediately, except the information specified in subparagraph 9 and 11 of paragraph 2 of this Article, but not later than within 10 working days after the day of their change. The information submitted by the audit firm must be signed personally by the owner or participants and/or the head of the audit firm according to the procedure laid down by the Law of the Republ …