CMVM
skip
Language
pageBackground
Legislation
​This does not dispense with the need to consult the original Portuguese version published in the Official Gazette

CMVM Regulation No. 6/2000 Repealed

CMVM Regulation No. 06/2000
Auditors

Information of an economic and financial nature requires control and evaluation by competent, independent and impartial bodies. To carry out this activity, auditors must register with the Portuguese Securities Market Commission. To this end, this regulation establishes the rules applicable to registration with the CMVM and the performance of the specific functions imposed by the introduction of professional codes of practice for market agents, in accordance with the recognised and accepted international standards.

The Portuguese Securities Code has established the possibility of chartered accountants operating as sole practitioners registering as auditors, in addition to firms of chartered accountants. Corporate status has therefore ceased to be an absolute requirement for registration. This legislation has made it necessary to adapt the requirements for registration with the CMVM to the need to ensure equality of treatment, whether the auditing services are carried out by an individual auditor or by an auditing firm.

This innovation, combined with experience gathered over the last few years, has made it possible to clarify and specify particular conditions in order to achieve an improvement in the application of this regulation. International experience has also contributed to a significant degree of modernisation of audit practice, with greater accountability now being demanded of practitioners, particularly in terms of independence and the resolution of conflicts of interests.


The Association of Chartered Accountants has been consulted.

Therefore,

pursuant to the provisions of article 11 and for the purposes of article 8 to article 10 of the Portuguese Securities Code, the Executive Board of the Portuguese Securities Market Commission has approved the following regulation:

Article 1
Audited Information

1 - For the purposes of article 8 of the Portuguese Securities Code, financial information contained in the following specific accounting documents shall be subject to a report or opinion drawn up by an auditor registered with the CMVM:

a) Management reports;

b) Balance sheets, profit and loss statements and their respective schedules;

c) Cash flow statements and their respective schedules.

2 - The provisions of the preceding paragraph shall apply to consolidated financial information where the organisation in question is legally obliged to produce such information.

Article 2
Contents of Auditor's Report or Opinion

1 - In addition to complying with the criteria in articles 7 and 8 of the Portuguese Securities Code, the information contained in reports or opinions drawn up by auditors registered with the CMVM must:

a) Be technically accurate, concise and systematically arranged;
b) Make express reference to all facts and incidents occurring between the date to which the financial information relates and the date on which the report or opinion is issued which are, or should be, known to the auditor and are likely to affect the information in the accounting documents in a significant manner.

2 - In the case of collective investment undertakings, the auditor's report or opinion must state the auditor's opinion on the matters referred to in article 34 of Decree-Law no. 276/94 of 2nd November and article 37 of Decree-Law no. 294/95 of 17th November, respectively, with regard to securities investment funds and to property investment funds.

Article 3
General Duties of the Auditor

1 - The auditor shall comply with all the technical inspection and auditing standards approved or recognised by the Ordem dos Revisores Oficiais de Contas (the Association of Chartered Accountants).


2 - The report and opinion must conform to the model versions approved by the CMVM after consultation with the Association of Chartered Accountants, which satisfy all the requirements laid down in the preceding articles.


3 - In his/her report, the auditor must provide an acceptable degree of certainty, expressing his/her opinions in a positive way.


4 - In his/her final opinion, the auditor may provide a moderate degree of certainty, expressing opinions in a negative way.

Article 4
Drawing up the Report or Opinion

1 - The report or opinion must be drawn up by an auditor registered with the CMVM and, if drawn up by a firm of auditors, must be signed by a partner in the firm with more than 5 years' experience in the profession, or by the statutory auditor if drawn up by an auditor operating as a sole practitioner.


2 - For the purposes of article 9(2) of the Portuguese Securities Code, the auditor must prove to the CMVM that it offers guarantees of reliability that are at least equivalent to those required for registration with the CMVM as an auditor.


3 - Auditors regulated by a quality control system that satisfies the recommendations issued by the European Union shall be considered to be subject to checks on qualification in their country of origin.


4 - The recognised international standards are the auditing standards issued by the International Auditing Practices Committee of the International Federation of Accountants (IFAC).

Article 5
Duty of Information

Auditors providing services to the issuers of securities admitted to trading on the stock exchange must immediately inform the CMVM of any facts relating to the said issuers which come to their knowledge while carrying out their tasks and which may:

a) Constitute a felony or a misdemeanour provided for in a law or regulation to be enforced by the CMVM;
b) Affect the continuity of the issuer's activities;
c) Justify the expression of reservations, a refusal to give an opinion, an adverse opinion, or render it impossible to issue a report or opinion.

Article 6
Registration of Auditors

1 - Only auditing companies qualified to carry out their activity in Portugal, whose enrolment in the Association of Chartered Accountants is not suspended, and which are equipped with the human, material and financial resources necessary to guarantee their suitability, independence and technical competence may be registered with the CMVM as auditors.


2 - For the purposes of the preceding paragraph auditors must fulfil at least the following requirements:

a) Firms must have no less than three full-time chartered accountants/auditors working exclusively for them;
b) Auditors operating as sole practitioners or, in the case of firms of auditors, one of the partners who is a chartered accountant, must have at least five years of effective professional experience and must have been practising exclusively for at least three years;
c) They must have net assets of not less than € 50,000;
d) Firms of auditors must have a business volume of not less than € 250,000, except for sole practitioners, whose overall total fees earned must be no less than € 150,000;
e) Clients may not represent more than 15% of the total annual business volume of a firm or of the total annual fees of a sole practitioner or a lower limit defined in accordance with the Code of Ethics and Professional Conduct of the Association of Chartered Accountants;
f) They must hold a professional indemnity insurance policy with a sum insured of not less than € 2,500,000;
g) They must have an adequate knowledge of financial instruments and how the securities market operates;
h) They must show evidence that they have at their disposal sufficient organisational, human and material resources for performing the functions allocated to them by the Portuguese Securities Code and its supplemental regulations.

3 - For the purposes of paragraph 2 a) above, those auditors who satisfy the requirements laid down in article 49(5) of Decree-Law no. 487/99 of 16th November shall be considered to work exclusively for one employer.


4 - For the purposes of paragraph 2 h) above, the following, in particular, shall be considered sufficient resources:

a) Possession of an organisation that ensures that the procedures involved in the auditing services to be provided under the Portuguese Securities Code are subject to internal quality control and quality control by the Ordem dos Revisores Oficiais de Contas (the Association of Chartered Accountants), exercised in conformity with the IFAC and European Union recommendations;
b) Specialised staff members with a minimum qualification of a bachelor's degree, who, in addition to the statutory auditors, must represent no less than a ratio of one for every 15 points awarded to the auditor according to the terms defined for the purposes of determining specific incompatibilities as provided in article 76 of Decree-Law no. 487/99 of 16th November and Schedule I thereto and rounded down to the nearest unit;
c) Permanent offices equipped with the necessary information technology resources to enable the auditing work to be carried out appropriately;
d) Adequate documentation and publications with provision for constant updating, modernisation and specialist training.

Article 7
Contents of the Application for Registration

1 - Auditors must apply directly to the executive council of the CMVM for registration. The application must include the following information/documents:

a) a certificate issued by the Association of Chartered Accountants less than 60 days prior to the date of the application confirming that the auditor is fully exercising his professional capacity, pursuant to article 5 o) of Decree-Law no. 487/99 of 16th November;
b) a solemn declaration by the statutory auditor to the effect that the requirements stipulated in paragraph 2 a) and b) of the preceding article are satisfied;
c) a search in the disciplinary records relating to the auditor or any of the persons employed by him issued by the Association of Chartered Accountants less than 60 days prior to the date of application;
d) a certificate of search in the police records relating to partners in the firm of statutory auditors, or to auditors practising alone, and likewise to auditors employed by a firm of statutory auditors or by a statutory auditor practising alone;
e) the academic and professional curricula of the auditing firm's partners or the individual auditor and also of all chartered accountants/auditors employed by them, together with copies of all annual reports drawn up for the last financial year, in conformity with the provisions of article 452 of the Commercial Company Code, and of the corresponding legal certification of the accounting documents;
f) in the case of a firm of statutory auditors, a copy of the partnership agreement in force on the date of application and an indication of the issue of the Diário da República (Portuguese legal gazette) in which it was published;
g) the applicant's curriculum, indicating, in particular, its clients, a description of the points used, as well as specific details of all clients for which the fees charged exceed half of the percentage referred to in paragraph 2 e) of the preceding article relating to overall annual total fees or business volume;
h) a detailed description of the organisational, human and material resources at the auditor's disposal, with specific reference to equipment, permanent office, personnel and other resources that guarantee the fulfilment of the conditions defined in paragraph 4 of the preceding article;
i) copies of any contracts for services made between the auditor and freelance workers, including any entered into pursuant to article 49, 1 c) of Decree-Law no. 487/99 of 16th November;
j) documentary evidence of the auditor's legitimate use of its equipment and permanent office;
l) a copy of the insurance contract referred to in paragraph 2 f) of the preceding article;
m) management reports and accounts of the auditing firm for the last three financial years or for those years that have passed since the formation of the firm if less than three years before, or, in the case of individual auditors, a copy of Schedule B to the auditor's personal income tax declarations for the last three years.

2 - The applicant must respond to any requests for information or clarification relating to registration with the CMVM within the allotted time limit; failure to comply with this rule will result in the rejection of the application.


3 -On completion of the application process, the CMVM, before reaching a decision, must request an opinion from the Association of Chartered Accountants. The latter shall be considered to be in agreement with the granting of registration if it does not state its opinion within 30 days of the date of receipt of the said request.


4 - Notification by the CMVM of the granting or rejection of registration must be given by the same within 45 days of the date of receipt of the application, together with all due information/documents.

Article 8
Matters Subject to Additional Registration

1 - The following alterations to the documents referred to in paragraph 1 of the preceding article must be added as notes to the register of auditors:

a) alterations to the partnership agreement of a firm of statutory auditors;
b) alterations to the professional address of statutory auditors operating as sole practitioners;
c) the signing or termination of contracts with statutory auditors pursuant to article 49 1 c) of Decree-Law no. 487/99 of 16th November;

2 -Requests for the endorsement of notes to the register must be submitted by the interested parties within 15 days of the date on which the corresponding alterations take effect; the request shall take the form of an application to the CMVM consisting of all the documents necessary for this purpose.

Article 9
List of Auditors Registered with the CMVM

1 - The registers of auditors and additional notes shall be published in both the CMVM bulletin and that of the regulated market in which the audited companies' securities are admitted to trading.


2 - On a half-yearly basis, by reference to 1 January and 1 July of each year, the CMVM shall publish in its bulletin an updated list of auditors registered pursuant to these regulations and whose registration has neither been suspended nor cancelled.


3 - The list referred to in the preceding paragraph shall be arranged in chronological order starting with the earliest registration and shall indicate the name of the auditing firm or individual auditor, the firm's registered office or the business address of the individual auditor, and the names of the firm's partners.

Article 10
Matters of which the CMVM must be notified.

1 - Firms of auditors registered with the CMVM must forward the following information/documents to the latter within 30 days of the date of approval of the annual accounting:

a) management report, balance sheet, profit and loss statement, and schedules to the balance sheet and profit and loss statement;
b) a copy of the minutes of the general meeting that approved the accounts;
c) a complete list of clients, with express reference to those for which the auditor provides the services listed in article 8 of the Portuguese Securities Code and stating the fees charged to each as a percentage of the overall total if the said percentage exceeds that mentioned in article 7, 1 g) hereof;
d) a list of the full names of all staff members with an indication of those who have a bachelor's or master's degree;
e) any alterations whatsoever to the documents referred to in article 7(1) that are not subject to the endorsement of a note.

2 - Registered auditors operating as sole practitioners must forward to the CMVM, by 31 May at the latest, a copy of Appendix B to their personal income tax declarations together with the documents referred to in sub-paragraphs c) and d) of the preceding paragraph.

Article 11
Conflict of Interests

1 - Without prejudice to the rules on incompatibility outlined in Decree-Law no. 487/99 of 16th November, auditors registered with the CMVM and auditors under contract to them, and also their partners, in the case of firms, may not benefit from private advantages nor hold, either directly or through an intermediary, any securities whatsoever issued by entities to whom they provide the services referred to in article 8 of the Portuguese Securities Code or by any other organisations with which they are in a parent-subsidiary or group relationship according to article 21 of the Portuguese Securities Code.


2 - The preceding paragraph shall apply to the spouses of statutory auditors and to partners in firms of statutory auditors.

Article 12
Suspension and Cancellation

1 - A registration shall be cancelled if:

a) false declarations are made or the registration was achieved through illicit means;
b) any of the requirements necessary for the granting of registration cease to be fulfilled;
c) any other event should occur, which, according to the law, must necessarily result in the cancellation of registration or suspension from the list referred to in article 127 of Decree-Law no. 487/99 of 16th November;
d) the auditor is affected by any of the grounds of incompatibility provided for in the preceding article;
e) the work produced by the auditor does not, according to the reasoned opinion of the CMVM and a preceding opinion from the Association of Chartered Accountants, reach the standards of quality required for the purposes of article 8 of the Portuguese Securities Code.

2 - A registration can also be suspended or cancelled at the request of the auditor when it wishes to cease or temporarily suspend the activities provided for in the Portuguese Securities Code.


3 - When the nature of the fact or situation determining the cancellation of the registration does not significantly affect the technical qualification, moral repute or independence of the auditor and can be remedied within a reasonable period of time, the CMVM may merely suspend a registration for a period it considers adequate; however, in the cases given in paragraph 1 d) and e) above, the period of suspension shall not be shorter than 6 months.


4 - The suspension or cancellation of a registration shall be are determined by the executive council of the CMVM; an appeal against its decision may be brought in the administrative Courts of law in accordance with the general terms and conditions for such appeals.


5 - The suspension or cancellation of a registration shall be published in accordance with the terms of article 14(1).

Article 13
Entry into Force

1 - This regulation shall enter into force on 1March 2000.


2 - Those auditors already registered with the CMVM on the date on which this regulation comes into force shall have a period of 18 months to adapt to the requirements contained in articles 6 and 7 hereof.

 

Lisbon, 8 February 2000 -- José Nunes Pereira, Chairman