Aggregated News From Investment Management Regulators

CMVM publishes global results of the audit quality control system for 2019/2020


Please complete the required fields.

Today, the CMVM publishes a report with the overall results of the quality control system of the audit activity, concerning the 2018/2019 – the fourth report as the national competent authority for public audit supervision, with the sole responsibility for auditing public interest entities.

The reporting period, which ran from 1 June 2019 to 30 June 2020, was marked by the increase of supervision on specific situations of the audit activity wherein relevant risk factors were identified, as well as by monitoring of the risks arising from the impacts of the covid-19 pandemic that will continue as long as the current circumstances subsist. This approach, which is increasingly focused on closely monitoring developments in the audit activity, is part of the transversal approach adopted by the CMVM in the various areas under its supervision.

The following is highlighted concerning the supervision of the auditors of Public Interest Entities for the 2019/2020 cycle:

• The cancellation of the records with the CMVM, for audit duties of three statutory auditors from one of the largest statutory auditing companies, which occurred at their request in the context of a CMVM action, in order to assess compliance with the suitability requirements, as a condition for maintaining these records;
•  The opening of one on-site supervisory action and the closing of 7 on-site supervisory actions (actions started in the previous cycles), the opening of 138 on-going supervisory actions, and the closing of 39 on-going supervisory actions.
•  10 urgent supervisory actions on 9 auditors, involving 27 audited entities and 84 audit dossiers, following media news on the case called “Luanda Leaks”. As of the present date, 5 of these supervisory actions are underway on 5 auditors.
•  Of the 7 on-site supervisory actions closed in the 2019/2020 cycle, covering two issuers, one credit institution, one insurance company, one public company and two entities that do not qualify as public interest entities, 389 findings were identified , for which recommendations were issued, highlighting 66 situations of greater severity. Of these, 2 are related to the Internal Quality Control System of the statutory auditors (ROC) and/or audit firms (SROC), concerning the execution of the work and the acceptance and continuation of the relationship with the clients and the work) and 64 relate to the audit dossiers, with greater focus on the failure to observe the rules regarding audit evidence and audit documentation.
•  The CMVM also concluded a transversal supervisory action, focused on fulfilling the duty of rotation by auditors in Public Interest Entities. The rotation duty is fundamental to ensure the due independence between auditors and audited entities, constituting as such, a necessary requirement for improving audit quality. The CMVM concluded that for 13 SROC, there was a default in terms of the rotation of the liable partner, for 6 SROC, there was a default in terms of the rotation of the firm and for 5 SROC, there was non-compliance with the rotation of the liable partner and the firm. This analysis took into account the mandates in force on December 31, 2016, 2017 and 2018.
Within the scope of measures to reinforce the audit quality in Portugal, the following should be highlighted:

•  The publication of the Guide for the Application of Audit Quality Indicators in February 2020, which aims to be a tool for promoting audit quality available to the various stakeholders in Portugal and, in particular, auditors and supervisory bodies of audited entities.
• The entry into force, at the beginning of September 2020, of the new model for assessing the suitability of auditors, in terms of repute and experience, for the exercise of regulated duties, which aims to improve the effectiveness of the process and introduce variables that are more robust and in line with market practices. The Guidelines issued by the CMVM on this matter are transversal to most entities subject to the CMVM’s prudential supervision, allowing a proportional and harmonised scrutiny between the different types of entities in relation to which the CMVM is competent to assess the adequacy.
The data in this report shows the CMVM’s contribution to improving the quality of auditing in Portugal, reflecting an increase in the inspection and control of duties by the entities subject to our audit supervision, with an action focused on risk and in protecting investors and the interests of the market and the national economy.

Source Link

Regulator Information

Abbreviation: CMVM
Jurisdiction: Portugal

Recent Articles

Renee Jones to Join SEC as Director of Corporation Finance; John Coates Named SEC General Counsel

The Securities and Exchange Commission today announced that Renee Jones has been appointed Director of the Division of Corporation Finance.

SEC Awards Approximately $3 Million to Two Whistleblowers

The Securities and Exchange Commission today announced an aggregate award of approximately $3 million to two whistleblowers whose information and assistance led to a successful SEC enforcement action

Havilland Bank (clone of FCA authorised firm)

Fraudsters are using the details of firms we authorise to try to convince people that they work for a genuine, authorised firm. Find out...

Wittan Invest / Wittan Investment Trust Service (Clone of FCA authorised firm)

Fraudsters are using the details of firms we authorise to try to convince people that they work for a genuine, authorised firm. Find out...

Circular 04/2018 (VA) – Financial Conglomerate Solvency

You have the option below to allow a unique web analytics cookie to be stored on your browser, enabling the operator of the website to collect and analyse various types of statistical data.

Get the latest from Regulatory.News in your inbox!