Law No. 103 of 2019 on the Practice of the Auditing Profession

Law No. 103 of 2019
on the Practice of the Auditing Profession

Chapter One
Definitions

Article 1

In applying the provisions of this Law, the following words and expressions shall have the meaning assigned to each of them:
The State: the State of Kuwait.
The Ministry: the Ministry of Commerce and Industry.
The Minister: the Minister of Commerce and Industry.
The Competent Department: the department of the Ministry concerned with auditing affairs.
The Profession: the profession of auditing.
The Register: a register at the Ministry in which auditors practising and not practising the Profession are registered.
Registration: the entry in the Register recording the registration of auditors.
The Registration Committee: the Auditors Registration Committee at the Ministry.
The Auditor: the natural or juristic person registered in one of the registers and issued a valid licence to practise the Profession.
The Licence: the document issued in accordance with the provisions of this Law, which entitles its holder to practise the Profession.
The Investigation Committee: the Investigation Committee at the Ministry.
The Grievances Committee: the Grievances Committee at the Ministry.
The Association: the Kuwait Accountants and Auditors Association.

Chapter Two
Practice of the Profession

Article 2

To practise the profession of auditing, the natural or juristic person shall be registered in the register of auditors practising the Profession.

Article 3

The following registers shall be established at the Ministry:
– The register of auditors practising the Profession.
– The register of auditors not practising the Profession.
– The register of professional companies.
The Executive Regulations shall specify the form of each register, the system of registration therein and the data required to be entered therein.

Article 4

A natural person to be registered in the Register shall satisfy the following:
1- Be of Kuwaiti nationality; citizens of the States of the Cooperation Council for the Arab States of the Gulf are excepted from this, subject to reciprocity.
2- Have full legal capacity.
3- Hold a university degree in accounting from a university recognised and accredited in the State.
4- Be of good conduct and reputation.
5- Not have previously been sentenced to a felony penalty or convicted of a crime involving dishonour or breach of trust, unless he has been rehabilitated.
6- Not have previously been subjected to the penalty of striking off the Register, unless five years have elapsed since the date of enforcement of the penalty.
7- Have practical experience in auditing of not less than five years after obtaining the university degree; the Executive Regulations shall specify the fields of work in which such experience is acquired.
8- Be a member of the Association.
9- Pass the examination for practising the Profession; a decision of the Minister shall be issued forming the examination committee and specifying the rules, procedures and conditions of this examination, the dates on which it is held, the level required to pass it and the procedures for grievances against its results.
A juristic person to be registered in the Register shall satisfy the following:
(a) All partners shall be licensed and registered in the register of those practising the Profession.
(b) The juristic person shall hold an insurance policy against the risks of the Profession; the Executive Regulations shall specify the value of the policy and its tiers.

Article 5

Auditors licensed to practise the Profession may establish professional companies among themselves in accordance with the provisions of the aforementioned Law No. (1) of 2016, for the purpose of practising the Profession in accordance with the provisions of this Law.

Article 6

The Registration Committee shall be formed by a decision of the Minister for a renewable term of three years, chaired by the Undersecretary of the Ministry or whoever deputises for him, with two members specialised in the Profession nominated by the Association, a member from the Competent Department, and a representative of the Legal Sector of the Ministry.
The secretariat of the Committee shall be undertaken by one of the employees of the Competent Department, chosen by the Chairman of the Committee, without the right to vote.
The Committee shall meet at the invitation of its Chairman, and its meeting shall not be valid unless at least three of its members, including the Chairman, are present.
The decisions of the Committee shall not be valid unless issued with the approval of the absolute majority of its members present; in the event of a tie, the side with which the Chairman voted shall prevail.

Article 7

The application for registration shall be submitted to the Competent Department on the form prepared for that purpose, accompanied by all data and documents proving that the conditions set out in this Law are met, and shall be referred to the Registration Committee immediately upon its submission.

Article 8

The Registration Committee shall decide on the application for registration within thirty days from the date of its receipt, complete with all the prescribed data and documents; if the applicant is required to complete data or submit other documents, the aforementioned thirty-day period shall begin from the date on which the requested data are completed or the requested documents are submitted in full.
The applicant for registration shall be notified of the reasoned decision of acceptance or rejection within fifteen days from the date of its issuance.

Article 9

The Executive Regulations shall specify the amount of the fees for registration and for the issuance and renewal of licences.

Article 10

Upon approval of the application for registration, the Competent Department shall enter its data in the Register and grant the applicant a licence to practise the Profession.
This Licence shall be valid from the date of his registration for a term of five years, and shall be renewed for the terms specified by the Executive Regulations.

Article 11

Before commencing work, the Auditor shall take the following oath before the Minister or whomever he authorises: (I swear by Almighty God to perform my work with all honesty and truthfulness, to respect the laws in force in the State, to preserve the secrets of the Profession and not to disclose the secrets of my clients or any information entrusted to me by virtue of my work except within the limits required by the applicable laws and regulations, to respect the rules, conduct and ethics of the Profession, and to adhere to the International Standards on Auditing applied in the State).
Minutes of the aforementioned oath shall be drawn up, signed by the Auditor and deposited in his file at the Competent Department.

Article 12

Where auditors request to cease practising the Profession, the Competent Department shall submit a memorandum to the Registration Committee to suspend the Licence and to enter the auditor in the register of those not practising the Profession, in accordance with what the Executive Regulations specify.

Article 13

Except for auditors registered in accordance with the aforementioned Law No. (7) of 2010, the Competent Department shall inspect auditors to verify the quality of professional performance and ensure that they carry out their professional obligations in accordance with the International Standards on Auditing.
The employees of the Department appointed by a decision of the Minister to monitor the implementation of the provisions of this Law and the decisions issued in implementation thereof shall have the capacity of judicial police officers.
The employees of the Department shall, during their work and after leaving it, preserve the confidentiality of the information and data of which they have become aware by virtue of their work, except in the cases in which the law permits such disclosure.
Without prejudice to any more severe penalty prescribed by another law, whoever violates the provisions of the preceding paragraph shall be punished by imprisonment for a term not exceeding one year and a fine not exceeding one thousand dinars, or by either of these two penalties, together with dismissal from office.
The Executive Regulations shall regulate the systems and controls necessary for the manner of carrying out the work and procedures of judicial police officers.

Chapter Three
Rights and Duties of the Auditor

Article 14

The Auditor shall comply with the following:
1- Applying the International Standards on Auditing in accordance with the rules issued by the International Federation of Accountants, insofar as they do not conflict with the provisions and laws of the State.
2- Following the rules of conduct and ethics of the Profession and the technical rules relating thereto in accordance with international standards.
3- Implementing the rules issued regarding his work by the relevant regulatory authorities, and complying with the duties specified under the laws and regulations.
4- Notifying the Competent Department of any change or amendment to his address or to the data stated in the application for registration or the documents attached thereto, within thirty days from the date on which the change or amendment occurs; the change of address or other data may not be relied upon before the Competent Department prior to notifying it of the amendment.
5- Practising the Profession in person, or through a professional company in which he is a partner, or through his own office or one of the licensed offices, within six months from the date of obtaining the Licence; otherwise he shall be transferred to the register of those not practising; this period may be renewed for a similar period if necessary, subject to the approval of the Registration Committee.
6- Notifying the Competent Department upon ceasing to practise the Profession, temporarily or permanently, for any reason whatsoever, within thirty working days from the date of cessation; if the cessation is for a temporary period, the reasons for the cessation and its duration shall be stated.
7- Providing his clients, whenever they so request, with the names of the clients to whom he has provided his services.
8- Devoting himself fully to practising the Profession; nevertheless, he may carry out work that does not conflict with the rules of conduct and ethics of the Profession, in accordance with what the Executive Regulations specify.
9- Coupling his personal name with his registration number in the Register in all his printed matter, correspondence and reports issued by him; he may not delegate another person to sign, and the Licence shall be displayed in a prominent place in his office.
10- Settling all transactions and obligations in the event of ceasing to practise his profession permanently or for a period that would result in harm to clients or third parties.
11- Keeping the records, files and working papers of his clients, in paper or electronic form, for a period of not less than ten years from the date of the engagement, even if he ceases to practise the Profession; in the event of lawsuits being filed, he shall keep the papers, files and documents until the final judgment in the lawsuit is issued, whichever is longer.
12- Providing any information requested by the regulatory authorities about the companies whose accounts he audits, within the limits required by the laws in force in the State of Kuwait.
13- Taking out insurance against professional risks with licensed insurance companies, in accordance with what the Executive Regulations specify.
14- Developing his professional capabilities and ensuring continuous training in accordance with the relevant standards issued by the International Federation of Accountants and in accordance with what the Executive Regulations specify in light of these standards.

Article 15

The Auditor is prohibited from the following:
1- Being a partner in more than one office or professional company.
2- Owning shares in the companies whose accounts he audits during the period of his audit, or during the two years following the end of the period of his audit.
3- Auditing the accounts of companies in which he has a direct or indirect interest, in the following cases:
– If he is a partner or founder in the company whose accounts he audits, or a member of its board of directors, or performs any administrative work therein.
– If he is an employee of the company whose accounts he audits or of any of its related parties, according to the definition specified by the Executive Regulations.
– If he is related by blood or marriage, up to the fourth degree, to whoever supervises the management of the company or its accounts, in accordance with what the Executive Regulations specify.
4- Disclosing any information about matters that should remain confidential by their nature or under special instructions, or publishing the same by any means, except with the written permission of the company whose accounts he audits, without prejudice to the provisions of Clause (12) of Article (14) of this Law.
5- Undertaking tasks that affect his independence and conflict with the Profession.
6- Providing any advisory services to the same client during the same period in which he audits its accounts.
7- Setting fees as a percentage of the results of the financial position.
8- Accepting gifts or hospitality from audit clients that would create a self-interest.
9- Engaging in any profession that conflicts with the profession of auditing, and in particular carrying out the following work:
(a) Advisory work and non-accounting expertise for audit clients.
(b) Promotional work for the incorporation of companies for audit clients.
(c) Bookkeeping and the preparation of final accounts and balance sheets for audit clients.
(d) Carrying out acts that breach the ethics of the Profession.

Article 16

The Auditor shall be liable for the professional errors he commits and for the accuracy of the data contained in his report, and shall be obliged to pay compensation for them.

Article 17

The Auditor may decline to continue auditing the accounts during the period of his appointment, at a suitable time, by a reasoned written request submitted to the management of the entity to which he is appointed, with a copy thereof notified to the Ministry.
The Executive Regulations shall regulate the controls and procedures for declining and for discharging the Auditor’s liability in this case.

Chapter Four
Discipline and Penalties

Article 18

A committee to investigate violations attributed to auditors shall be formed by a decision of the Minister for a term of three years, renewable once, chaired by the competent Assistant Undersecretary of the Ministry or whoever deputises for him, with a member specialised in the Profession nominated by the Association, and a representative of the Legal Affairs Sector of the Ministry.
The secretariat of the Committee shall be undertaken by one of the employees of the Competent Department, chosen by the Chairman of the Committee.

Article 19

The Undersecretary of the Ministry shall refer the Auditor to the Investigation Committee if a violation of any provision of this Law, a violation of the principles of the Profession, the commission of gross negligence or an act involving dishonour or breach of trust is attributed to him, or if it becomes apparent that he practises the Profession despite having lost one of the conditions set out in this Law.
The Committee shall conduct the investigation into the violation after summoning the Auditor to appear before it at least fifteen days before the date set for the session, by registered letter with acknowledgement of receipt stating a summary of the violations attributed to him and the date and place of the session.
The Auditor may present his defence orally or in writing, in person, or appoint someone from the Association to represent him, or through a lawyer.
The Committee may order him to appear in person, and it may investigate the violations attributed to him or delegate one of its members to do so; the Committee, or whoever it delegates for the investigation, may summon witnesses to appear so that their statements may be heard.
If the Auditor fails to appear despite being summoned, his matter shall be referred to the Minister to take whatever action he deems appropriate in his regard.
The Investigation Committee shall submit a report with its recommendations to the Minister for the issuance of a decision thereon.

Article 20

The Minister shall punish the Auditor with one of the following disciplinary penalties:
1- Warning.
2- A fine of not less than 500 Kuwaiti dinars and not more than 5,000 Kuwaiti dinars.
3- Suspension from practising the Profession for a period not exceeding three years.
4- Striking the registration off the Register.
The penalty shall be published in the Official Gazette at the Auditor’s expense once it becomes final.

Article 21

The Auditor may file a grievance against the disciplinary decision within two months from the date of becoming aware of it.
The grievance shall be submitted to the Grievances Committee by a written request or by registered letter with acknowledgement of receipt; if the grievance is submitted within the time limit, the Committee may suspend the enforcement of the decision under grievance until a final decision is made thereon.

Article 22

The Minister shall form a committee for grievances against disciplinary decisions for a term of three years, renewable once, chaired by a counsellor of the Court of Appeal delegated by the Minister of Justice, and with the membership of two persons specialised in the Profession, provided that neither of them is a member of the Investigation Committee.
The secretariat of the Committee shall be undertaken by one of the employees of the Competent Department.

Article 23

The Chairman of each of the Investigation Committee and the Grievances Committee shall notify the Competent Department and the Association of the decisions taken.

Article 24

If a decision is issued by the Minister imposing on the Auditor the penalty of suspension from practising the Profession, the Competent Department shall notify the companies with which he carries out audit work of the same, and the company may request the General Meeting to appoint an auditor in place of the suspended auditor.
The suspended auditor may not resume his work with the company after the end of the suspension period until the General Meeting has approved the company’s accounts, unless the company has dispensed with his services.

Article 25

A person whose registration has been struck off in accordance with the provisions of this Law may apply for re-registration after the lapse of five years from the date of enforcement of the striking-off decision, and the Registration Committee shall examine and decide on this application in accordance with the registration conditions set out in this Law.

Article 26

The Competent Department shall notify the competent authorities in the States of the Cooperation Council for the Arab States of the Gulf of the penalty of suspension or striking off the registration, and of the court judgments issued against any person from these States licensed to practise the Profession.

Article 27

The Auditor may not be held disciplinarily accountable for any violation he committed if five years have elapsed since its occurrence.

Article 28

Without prejudice to any more severe penalty prescribed by another law, the following shall be punished by imprisonment for a term not exceeding one year and a fine not exceeding one thousand dinars, or by either of these two penalties:
(a) Whoever practises the Profession without his name being registered in the Register.
(b) Whoever practises the Profession after being suspended from practising it or after his registration has been struck off.
(c) Any person not registered in the Register, or whose registration has been struck off, who uses publications that would give the false impression that he has the right to practise the Profession.
(d) Whoever procures the registration of his name in the Register by giving incorrect data or by submitting certificates that do not conform to the facts; in this case the court shall order the closure of the company or office and the striking of the registration off the Register.
(e) Any licence holder or auditor who refuses to provide the information and data requested by the employees of the Department for inspection purposes, or who provides information or data that he knows to be incorrect.
In all cases, the operative part of the final judgment shall be published in the Official Gazette and in two daily newspapers at the expense of the convicted person.
The penalty shall be doubled in the event of recidivism within five years from the date of the previous judgment.

Article 29

Any person summoned to give testimony before the Investigation Committee or the Grievances Committee who refuses to give it without an acceptable excuse shall be punished by a fine not exceeding one hundred dinars.

Chapter Five
General Provisions

Article 30

The provisions of this Law shall not apply to financial controllers who are employees of the Government and of public corporations and public authorities.

Article 31

The roll of auditors practising and not practising the Profession upon the entry into force of this Law shall be transferred with the same registration number.
Existing auditors shall regularise their status in accordance with the provisions of this Law within one year from the date of issuance of the Executive Regulations, in accordance with the rules and procedures specified by these Regulations.

Article 32

The aforementioned Decree-Law No. (5) of 1981 is hereby repealed, as is every other provision contrary to the provisions of this Law; the regulations and decisions in force shall continue to apply insofar as they do not conflict with its provisions.

Article 33

The Minister shall issue the Executive Regulations and the decisions necessary for the implementation of this Law within six months from the date of its publication in the Official Gazette.

Article 34

The Prime Minister and the Ministers, each within his competence, shall implement this Law, which shall come into force from the date of its publication in the Official Gazette.

Issued on 28 July 2019 and published in the Official Gazette Kuwait Al-Youm on 4 August 2019.