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Location: Central Bank of Bahrain Volume 1—Conventional Banks > Part A > High Level Standards > AU Auditors and Accounting Standards > AU-1 Auditor Requirements > AU-1.5 Licensee/Auditor Restrictions
  • AU-1.5 Licensee/Auditor Restrictions

    • [This Subsection was deleted in April 2019].

      • AU-1.5.1

        [This Paragraph was deleted in April 2019].

        Deleted: April 2019
        Amended: January 2011
        October 2007

    • Outsourcing to Auditor

      • AU-1.5.2

        Section OM-3.7 generally prohibits conventional bank licenseesG from outsourcing their internal audit function to the same firm that acts as their external auditor. However, the CBB may allow short-term outsourcing of internal audit operations to a conventional bank licensee'sG external auditor, to meet unexpected urgent or short-term needs (for instance, on account of staff resignation or illness). Any such arrangement will normally be limited to a maximum period of one year and is subject to the CBB prior approval.

        Amended: January 2011
        October 2007

    • Other Relationships

      • AU-1.5.3

        Conventional bank licenseesG and their auditor must comply with the restrictions contained in Article 217 (c) of the Commercial Companies Law (Legislative Decree No. (21) of 2001), as well as in Article 61(d) of the CBB Law.

        Amended: January 2011
        October 2007

      • AU-1.5.4

        Article 217(c) of the Commercial Companies Law prohibits an auditor from (i) being the chairman or a member of the Board of DirectorsG of the company he/she audits; (ii) holding any managerial position in the company he/she audits; and (iii) acquiring any shares in the company he/she audits, or selling any such shares he/she may already own, during the period of his audit. Article 61(d) of the CBB Law prohibits an auditorG from (i) being the chairman or a member of the Board of DirectorsG of the company he/she audits; (ii) holding any managerial position in the company he/she audits; and (iii) acquiring any shares in the company he/she audits, or selling any such shares he/she may already own, during the period of his audit. Furthermore, the auditorG must not be a relative (up to the second degree) of a person assuming management or accounting duties in the company.

        Amended: October 2014
        October 07

      • AU-1.5.5

        The restrictions in Paragraph AU-1.5.3 apply to overseas conventional bank licenseesG as well as Bahraini conventional bank licenseesG .

        Amended: October 2011
        October 2007

      • AU-1.5.6

        A partner, DirectorG or manager on the engagement team of auditing a conventional bank licenseeG may not serve on the Board or in a controlled functionG of the licenseeG , for two years following the end of their involvement in the audit, without prior authorisation of the CBB.

        October 07

      • AU-1.5.7 [deleted]

        [This Guidance was deleted in January 2011].

    • Definition of 'Auditor'

      • AU-1.5.8

        For the purposes of Section AU-1.5, 'auditor' means the partners, DirectorsG and managers on the engagement team responsible for the audit of the conventional bank licenseeG .

        October 07

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