Referral to the FSMA’s Sanctions Committee
As part of its supervision, the BAOB can decide to refer matters to the FSMA’s Sanctions Committee. No further appeal is possible from that decision.
To handle the measures and penalties in respect of the audit profession, a specific chamber has been established within the Sanctions Committee. That chamber is made up of six magistrates and two other members with expertise in audit matters. Each sanction dossier must be handled by a subset made up of at least three of the members of the Sanctions Committee.
If such a decision is taken, the BAOB initiates a procedure that can lead to the imposition of administrative measures ranging from a reprimand through withdrawal of the status of auditor to administrative fines. The administrative measures and fines that the Sanctions Committee can impose are defined in Article 59 of the Law of 7 December 2016 on the organization of the profession and the public oversight of auditors.
In the light of its power to refer matters to the Sanctions Committee, the BAOB is particularly attentive to deficiencies that may have an impact on users of financial information or that affect the audit of listed companies or of entities with major social or financial impact, and to deficiencies relating to ethical rules and recurring deficiencies. The BAOB ensures that auditors have performed sufficient and appropriate audit activities to be able to form an adequate opinion of the financial statements.
Reprimands
Under Article 57, § 5 of the Law of 7 December 2016 on the organization of the profession and the public oversight of auditors, the BAOB may reprimand an auditor in cases where it has been established that the auditor has committed breaches but these do not justify the imposition of a compliance deadline.
Where the BAOB is considering issuing a reprimand to the auditor in question, the auditor is entitled to present his or her response in writing before the BAOB takes a final decision on the alleged breaches and the measure it is considering based on those breaches.
Compliance deadlines
Where the BAOB imposes a compliance deadline on an auditor under Article 57, § 1, first paragraph of the Law of 7 December 2016 on the organization of the profession of and the public oversight of auditors, the auditor must take the necessary measures to remedy the deficiencies identified and ensure compliance with the relevant provisions.
The auditor must demonstrate to the BAOB that the deficiencies have been duly remedied by submitting, by a set deadline, the details of the measures taken as well as the relevant supporting documents.
For deficiencies for which a compliance deadline has been imposed, the BAOB may assess the correct implementation and application of the relevant legal and regulatory provisions by means of a new inspection.
If the auditor remains in default after the expiry of the compliance deadline, the BAOB may, under Article 57, § 1, third paragraph of the Law of 7 December 2016, and after having heard or summoned the auditor, communicate its opinion regarding the findings, impose an incremental penalty payment or order the auditor to refrain from exercising all or a specific part of his or her professional activities for a specified period of time.
Orders
Where the BAOB imposes an order on an auditor under Article 116/2, § 1 of the Law of 18 September 2017 on the prevention of money laundering and the financing of terrorism and limiting the use of cash, the auditor must take the necessary measures to remedy the deficiencies identified and ensure compliance with the relevant provisions.
The auditor must demonstrate to the BAOB that the deficiencies have been duly remedied by submitting, by a set deadline, the details of the measures taken as well as relevant supporting documents.
For deficiencies for which an order has been imposed, the BAOB may decide to assess the correct implementation and application of the relevant legal and regulatory provisions by means of a new inspection.
If the auditor who is the subject of an order remains in default after the expiry of the set deadline, the BAOB may, under Article 116/2, § 2 of the aforementioned Law of 18 September 2017, and after having heard or summoned the auditor to present his or her arguments, impose an incremental penalty payment or order the auditor to refrain from exercising all or a specific part of his or her professional activities from a specified period of time.
Recommendations
Where the BAOB issues a recommendation under Article 52, § 6, second paragraph of the Law of 7 December 2016 on the organization of the profession and on the public oversight of auditors, the auditor must take the necessary measures to remedy the deficiencies identified and ensure compliance with the relevant provisions.
On order to demonstrate to the BAOB that the deficiences that were the subject of the recommendation have been addressed appropriately, the auditor must submit, by a set deadline, the details of the measures as well as the relevant supporting documents.
Failure by the auditor to comply with the recommendation issued to him or her may, where appropriate and depending on the severity of the deficiencies identified, give rise to the imposition of measures as referred to in Article 57 and/or administrative measures or pecuniary sanctions as referred to in Article 59 of the aforementioned Law of 7 December 2016.