The audit and financial reporting requirements of Pakistan are summarized by type of company..
- Listed Public Companies
- Public Unlisted and Private Companies
- Banks
- Non-Banking Financial Institutions
- Listed Insurance Companies
appointment of auditors requirements are as follows:
Qualification of auditors
Auditors must be members of the
Institute of Chartered Accountants of Pakistan (ICAP). A firm where all of its
partners are members of the ICAP, can be appointed as an auditor and act in
firm's name. The private companies may appoint auditors who are not members of
the ICAP. The auditors of a listed company must also possess a satisfactory
quality control rating from the ICAP.
Independence
Independence is required by the
Companies Ordinance, 1984. An auditor cannot be a director or officer of the
company, be a partner or employee of a director or officer, or be indebted to
the company. The firm of external auditors auditing a listed company or any
partner in the firm and their spouse and minor children are prohibited to hold,
purchase, sell or take any position in shares of the listed company or any of
its associated companies or undertakings.
Appointment of Auditors
The first auditors of the company
are appointed by the directors of the company within 60 days from the date of
incorporation of the company. For subsequent years, the auditors are appointed
at each annual general meeting of the company and hold office till the
conclusion of next annual general meeting. Where appointment of auditors is not
made at any annual meeting the Securities and Exchange Commission of Pakistan
(SECP) may, upon application of any shareholder of the company, appoint the
auditors and fix their remuneration and in case of causal vacancy, the
directors may fill any casual vacancy within 30 days. Otherwise the SECP may
appoint the auditors and fix their remuneration as well. For public sector
companies, two auditors are normally appointed.
The auditors once appointed cannot
be removed or changed except in next annual general meeting. However, a notice
proposing the change must be sent by a shareholder to the company at least 14
days before the meeting and the company must communicate this notice to the
retiring auditors and give notice to all of its shareholders at least seven
days before the meeting.
Auditing Standards
Members of the ICAP are required to
observe the pronouncements of the International Federation of Accountants, as
long as these do not conflict with Pakistani laws.
