Ministry of Commerce and Industry Resolution No. 13 of 2020 Issuing the Executive Regulations of Law No. 103 of 2019 on the Practice of the Auditing Profession

Ministry of Commerce and Industry Resolution No. 13 of 2020
Issuing the Executive Regulations of Law No. 103 of 2019 on the Practice of the Auditing Profession

Article One

The provisions of the Executive Regulations of Law No. (103) of 2019 on the Regulation of the Practice of the Auditing Profession, the texts of which are attached to this Resolution, shall be applied.

Article Two

The fees to be collected upon registration, issuance of the licence and the procedures prescribed in accordance with the provisions of Law No. (103) of 2019 on the Practice of the Auditing Profession shall be applied at the rates set out in the schedule annexed to this Resolution – Annex (A).

* Replaced by Ministerial Resolution No. 183 of 2023 (Kuwait Al-Youm, Issue No. 1665, 10 December 2023).

Article Three

Every provision contrary to this Resolution is hereby repealed.

Article Four

This Resolution shall be published in the Official Gazette and shall come into force from the day following the date of its publication.

Executive Regulations of the Law on the Practice of the Auditing Profession

Chapter One – Definitions

Article 1

The words and expressions used in these Regulations shall have the meanings set out in the Law on the Practice of the Auditing Profession, and the following words and expressions shall have the meaning set out against each of them, unless the context requires otherwise:
1- State: the State of Kuwait.
2- Ministry: the Ministry of Commerce and Industry.
3- Minister: the Minister of Commerce and Industry.
4- Law: Law No. (103) of 2019 on the Practice of the Auditing Profession.
5- Competent Department: the department in charge of auditing affairs at the Ministry.
6- Profession: the auditing profession.
7- Register: a register at the Ministry in which practising and non-practising auditors and professional companies are entered.
8- Registration: the entry made in the Register to register auditors.
9- Registration Committee: the Auditors Registration Committee at the Ministry.
10- Auditor: the natural or legal person entered in one of the Registers and holding a valid licence to practise the Profession.
11- Licence: the document issued in accordance with the provisions of the Law and these Regulations, which entitles its holder to practise the Profession.
12- Investigation Committee: the Investigation Committee at the Ministry.
13- Grievances Committee: the Grievances Committee at the Ministry.
14- Association: the Kuwait Accountants and Auditors Association.
15- Related Parties: related parties means what is set out in Article (12) of these Regulations.

Chapter Two – Conditions and Procedures for Practising the Profession

Article 2

A Register shall be kept at the Ministry in accordance with the forms annexed to these Regulations (Annex 3), in which auditors shall be entered according to the following categories:
1- Register of Practising Members of the Profession.
2- Register of Non-Practising Members of the Profession.
3- Register of Professional Companies.
The Profession may not be practised except by a person entered in the Register referred to in Clause (1) or Clause (3), or after the transfer of his registration from the Register referred to in Clause (2) to the Register of Practising Members of the Profession has been recorded.

Article 3

The application for registration referred to in the preceding Article shall be submitted on the form prepared for this purpose (Annex 1) by the Competent Department, accompanied by the following:
1- A copy of the civil identity card or its equivalent.
2- A university degree certificate in accounting from a university recognised and accredited in the State.
3- The applicant shall be of good conduct and reputation.
4- A criminal record certificate.
5- A certificate from the Competent Department that no disciplinary decisions have been issued against the applicant for registration within a period of not less than five years from the date of their entry into force.
6- A certificate of practical experience in auditing of not less than five years after the university degree. For the purposes of this Clause, the applicant’s work in accounting and auditing — such as internal audit and financial control — at government entities, companies or auditors’ offices, or work as an assistant professor at Kuwait University or those in an equivalent position teaching accounting or auditing, shall be taken into account.
7- A valid membership certificate of the Association.
8- A certificate of passing the examination for practising the Profession in accordance with the procedures prescribed by law.
9- Professional companies shall attach the following to the application:
a- A certificate of registration of all partners in the Register of Practising Members of the Profession.
b- A professional risk insurance policy according to the following tiers:
– KWD 250,000 (two hundred and fifty thousand Kuwaiti Dinars)
– KWD 500,000 (five hundred thousand Kuwaiti Dinars)
– KWD 750,000 (seven hundred and fifty thousand Kuwaiti Dinars)
– KWD 1,000,000 (one million Kuwaiti Dinars)

Article 4

The Competent Department shall, immediately upon its submission, refer the application that meets the conditions set out in the preceding Article, together with the documents attached to it, to the Registration Committee formed in accordance with the provisions of the Law and these Regulations. The Committee shall decide on the application for registration within thirty days from the date of its receipt. Where the Committee requests the applicant for registration to complete additional information or documents, the thirty-day period referred to shall only run from the date on which the information is completed or the required document is submitted.
The applicant shall be notified of the decision accepting or rejecting the registration, provided that it is reasoned in the latter case, within fifteen days from the date of its issue.

Article 5

An auditor licensed to practise the Profession shall notify the Competent Department of his chosen address, and of any change to that address within thirty days from the date of the change. If he fails to notify the Competent Department of the change, notification to his registered address shall be deemed valid.

Article 6

The Licence shall be issued — after the particulars of the application, if accepted, have been recorded in the Register for the auditor’s category — for a period of five years, renewable for similar periods each time, after payment of the fee for issuing or renewing the Licence according to the category in which he is registered in the Registers referred to in Article (2) and the amount shown in the schedule annexed to this Resolution (Annex 2).

Article 7

An auditor entered in the Register of Practising Members of the Profession, whether as an individual or as a partner in a professional company, who ceases work temporarily or permanently for any reason whatsoever, shall follow the following procedures:
1- He shall submit to the Competent Department a notice of his wish to cease practising the Profession, attaching proof that his audit clients have received a copy of it, provided that his cessation does not harm the interests of the clients whose accounts he has been engaged to audit. He shall state the reasons for a temporary cessation and its duration, and shall support the application with a certificate from the Capital Markets Authority cancelling his registration if he is registered in its records.
2- The Competent Department shall submit a memorandum to the Registration Committee, and the said Committee shall decide on this application and, where it finds that the application is justified by reasons supported by documents, shall issue its decision suspending the Licence and recording his registration in the Register of Non-Practising Members of the Profession.
3- Where one of the partners in a professional company ceases permanently, the other partners shall amend the Company Contract in accordance with the Companies Law.
When an auditor applies to transfer his registration to the Register of Practising Members of the Profession, a memorandum to that effect shall be submitted by the Competent Department to the Registration Committee, and the Registration Committee shall decide on this application by lifting the suspension of the Licence and recording his re-registration in the Register of Practising Members of the Profession after payment of the fee prescribed for this in the schedule annexed to this Resolution (Annex 2).

Chapter Three – Rights and Duties of the Auditor

Article 8

The auditor shall comply with the Code of Ethics for Professional Accountants issued by the International Federation of Accountants, comprising integrity, objectivity, professional competence and due care, and confidentiality, and other fundamental principles and the international independence standards contained in the same Code, in accordance with the latest editions, insofar as they do not contravene Kuwaiti laws.

Article 9

The auditor shall take out insurance against professional risks with licensed insurance companies, and may choose between the insurance tiers set out in Article (3), and shall be obliged to disclose the insurance policy to his audit clients.

Article 10

The auditor shall develop his professional capabilities and pursue continuous training in accordance with the Handbook of International Education Pronouncements issued by the International Federation of Accountants, according to the latest editions. The Association shall organise the mechanism and manner of developing auditors after its approval by the Ministry, provided that it submits an annual report thereon to the Competent Department.

Article 11

Full-Time Practice of the Profession:
An auditor entered in the Register of Practising Members of the Profession may carry out activities that do not conflict with the rules of conduct and ethics of the Profession, in accordance with the following controls:
1- These activities shall be professional activities complementary to the nature of his work.
2- These activities shall be non-accounting economic activities of the audit clients, such as owning securities, owning farms and real estate, and participating in companies.
In all cases, he shall disclose the nature of his activity to his clients and to the Competent Department by providing them with the types of activities and the companies in which he participates and the names of his partners in those companies.

Article 12

An auditor may not audit the accounts of companies, establishments or any of the related parties in which he has a direct or indirect interest, in particular companies and establishments where the auditor is a relative up to the fourth degree of a member of the Board of Directors, the chief executive officer or the chief financial officer.
Subject to International Accounting Standard No. (24) and any amendments thereto, an auditor shall be deemed related to the company in the following cases:
1- If he controls, directly or indirectly, the audit client company, or the audit client company is a subsidiary of it.
2- If he is a member of a Board of Directors in the same group of which the audit client company is a part.
3- If he is a member of the Board of Directors of the audit client company or a member of the executive management of that company.
4- If he is a relative of the audit client referred to in Clause (1) or (4) of this Article.
5- If the audit client company is under the control, joint control or significant influence of the persons referred to in Clause (3) or (4) of this Article, whether directly or indirectly.

Article 13

An auditor, whether an individual or a partner in a professional company entered in the Register of Professional Companies, may not sign an auditor’s report unless he has participated in or supervised the work on the audit clients.

Chapter Four – Inspection and Judicial Police Powers

Article 14

The Competent Department shall inspect auditors to verify the quality of professional performance and to ensure that they perform their professional obligations in accordance with the International Standards on Auditing, except for the work of auditors registered under Law No. (7) of 2010 on the Establishment of the Capital Markets Authority and the Regulation of Securities Activities in respect of audit and review work for persons licensed to carry on securities activities, Kuwaiti companies listed on the Stock Exchange, collective investment schemes and special purpose companies licensed by the Authority.
The person carrying out the inspection may — after conducting the inspection — take the following measures:
1- Compile and collate the preliminary observations after completing the inspection and discuss them with the auditor who was inspected.
2- Prepare a preliminary report on the results of the field inspection and present it to the auditor who was inspected, so that he may reply to and comment on the observations in the report, within ten working days from the date of his receipt of the report.

Article 15

Employees of the Competent Department at the Ministry of Commerce who are designated by a decision of the Minister shall have the capacity of judicial police officers to establish offences committed in violation of the provisions of this Law and the decisions issued in implementation thereof. Auditors shall enable the judicial police officers to exercise their powers in detecting offences.

Article 16

The judicial police officers in the Competent Department shall investigate and search for offences committed in violation of the provisions of the Law and the decisions issued in implementation thereof, after receiving reports and complaints, whether written or oral, and verifying their accuracy, and shall also proceed to the place that is the subject of the report and carry out inspection work to detect and ascertain whether or not the offence has occurred — it being immaterial in this respect whether the reports are from a known source or from an unknown person — and shall gather the evidence and circumstantial evidence that help to establish the offences.

Article 17

A judicial police officer, when conducting a periodic inspection, may request all the information he considers necessary for his work and may inspect the records, books, documents and data, and shall have the right to summon witnesses — if any — record their particulars and capacities, and hear their statements.

Article 18

Where an offence is discovered during an administrative inspection, a judicial police officer may:
1- Seize documents and hold the papers he considers to be evidence of the offence committed by the auditor subject to inspection; the auditor shall provide the judicial police officer with the particulars and documents he requests for this purpose.
2- Prepare a preliminary report on the results of the field inspection and present it to the auditor who was inspected, so that he may reply to and comment on what the judicial police officer has found by way of observations, within ten working days from the date of his receipt of the report.

Article 19

The judicial police officer shall draw up an official record establishing all the procedures he has carried out from the moment he proceeded to the auditor, examined the documents, questioned the violators, summoned witnesses — if any — and heard their statements on the violations observed, and establishing cases of non-compliance and non-cooperation. This record shall state the day, date, time and place where it was drawn up, the name of the person who drew it up and his signature, the signatures of the witnesses, and a summary of the facts of these violations. The record shall be submitted to the Competent Department in preparation for submitting it to the Undersecretary for referral to the Investigation Committee.

Article 20

An auditor, his assistants or his subordinates may not refuse to provide the documents or information requested by the judicial police officer on the ground of their confidentiality or of orders from his subordinates to refuse to provide them.

Article 21

No person may engage in, incite or assist in any conduct that leads to preventing the judicial police officer from exercising his powers, whether by destroying documents or refusing to provide them, giving false or misleading information, or refusing to provide any assistance within his ability to provide to the judicial police officer.

Article 22

Judicial police officers shall — during their work and after leaving it — maintain the confidentiality of the information and data of which they have become aware by virtue of their work, except in cases where the law permits their disclosure.

Chapter Five – General Provisions

Article 23

The roll of practising and non-practising auditors at the time this Law enters into force shall be transferred, with the same registration numbers, to the Registers referred to in Article (2).
Existing auditors shall regularise their status in accordance with the provisions of this Law within one year from the date of issue of the Executive Regulations, by notifying the Competent Department of whether or not they practise the Profession.

Article 24

These Regulations shall come into force from the day following the date of their publication in the Official Gazette, and the officials, each within his competence, shall implement them.

Annex (A)
Fees Prescribed for Auditors

No.	Fee	Type of Transaction
1	KWD 200	Registration application
2	KWD 150	Issuance of licence
3	KWD 200	Renewal of licence
4	None	Change of category from (B) to (A)
5	KWD 60	Change of address
6	KWD 60	Replacement of lost document
7	KWD 50	Registration for the registration examination, per subject
8	KWD 50	Grievance against the result of the registration examination, per subject
9	KWD 20	Certificate of passing the registration examination
10	KWD 300	Upon submitting an application to appoint an external auditor
11	KWD 30	Attestation
12	KWD 20	To-whom-it-may-concern certificate
13	KWD 60	Complaint against auditors
14	KWD 60	Change of the name of an auditor’s office
15	KWD 60	Temporary suspension of an auditor’s licence
16	KWD 60	Permanent suspension of an auditor’s licence / cancellation of the licence

Issued on 29 January 2020 and published in the Official Gazette Kuwait Al-Youm on 9 February 2020.