Consultation Paper P50-001 Audit & GAAP Orders 2009 .01.14 FINAL
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Consultation Paper P50-001 Audit & GAAP Orders 2009 .01.14 FINAL

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CONSULTATION PAPER NO. 1 2010 COMPANIES (AUDIT) (JERSEY) ORDER 201- COMPANIES (GAAP) (JERSEY) ORDER 201- Orders to be made under the revised Part 16 of the Companies (Jersey) Law 1991 ISSUED JANUARY 2010 CONSULTATION PAPER The Jersey Financial Services Commission (the “Commission”) invites comments on this consultation paper. Responses should be sent directly to the Commission by 15 February 2010. If you require any assistance, clarification or wish to discuss any aspect of the proposal prior to formulating a response, it is of course appropriate to contact the Commission. Responses should be sent to: Andrew Le Brun Director – International & Policy Division Jersey Financial Services Commission PO Box 267 14-18 Castle Street St Helier Jersey JE4 8TP Telephone: +44 (0)1534 822065 Facsimile: +44 (0)1534 822001 Email: a.lebrun@jerseyfsc.org It is the policy of the Commission to make the content of all responses available for public inspection unless specifically requested otherwise. 2 of 26 ISSUED JANUARY 2010 Glossary of terms GAAP means generally accepted accounting principles IFRS means International Financial Reporting Standards IOSCO means the International Organisation of Securities Commissions JSCCA means the Jersey Society of Chartered and Certified Accountants 1market traded company means a Jersey company whose securities are admitted to trading on a ...

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       CONSULTATION PAPER NO. 1 2010   COMPANIES (AUDIT) (JERSEY) ORDER 201- COMPANIES (GAAP) (JERSEY) ORDER 201- Orders to be made under the revised Part 16 of the Companies (Jersey) Law 1991             ISSUED JANUARY 2010
 
CONSULTATION PAPER  The Jersey Financial Services Commission(the Commission) invites comments on this consultation paper.  Responses should be sent directly to the Commission by 15 February 2010. If you require any assistance, clarification or wish to discuss any aspect of the proposal prior to formulating a response, it is of course appropriate to contact the Commission.  Responses should be sent to:  Andrew Le Brun Director  International & Policy Division Jersey Financial Services Commission PO Box 267 14-18 Castle Street St Helier Jersey JE4 8TP  Telephone: +44 (0)1534 822065 Facsimile: +44 (0)1534 822001 Email:a.lebrun@jerseyfsc.org   It is the policy of the Commission to make the content of all responses available for public inspection unless specifically requested otherwise.  
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Glossary of terms   GAAP means generally accepted accounting principles IFRS means International Financial Reporting Standards IOSCO means the International Organisation of Securities Commissions JSCCA means the Jersey Society of Chartered and Certified Accountants market traded company means a Jersey company1 whose securities are admitted to trading on a regulated market in the EU recognized auditor means an auditor of a market traded company responsible individual means a person who is responsible to an audit firm for examining or reporting on the accounts of a market traded company the Audit Order means the Companies (Audit) (Jersey) Order 201-the Audit Rules means rules governing the conduct of the audit of market traded companies the Commission means the Jersey Financial Services Commission the Commission Law means the Financial Services Commission (Jersey) Law 1998 the Companies Law means the Companies (Jersey) Law 1991 the EU means the European Union the GAAP Order means the Companies (GAAP) (Jersey) Order 201-the ICAEW means the Institute of Chartered Accountants in England and Wales the Register means the Register of Recognized Auditors the Regulations means the Companies (Amendment No. 4) (Jersey) Regulations 2009 the revised Part 16 means the revised Part 16 (Accounts and Audit) that Regulation 4 of the Regulations will insert into the Companies Law the Statutory Audit means EU Directive 2006/43/EC Directive
                                                     1With some limited exceptions. See the definition of market traded company in new Article 102 set out in Regulation 4 of the Regulations
COMPANIES LAW  AUDIT & GAAP ORDERS
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 Contents......................................................................................................................................................4 1 EVETICUXEAMYRS MU........................6........................................................................................ 1.1 ....6.........................................................................................................................vier..ewvO 1.2 What is proposed and why?...............................................................................................6 1.3 Who would be affected?......................................................................................................7 2 ........C..N.O.U.S.T.L.A.T.I.O.N........................................................................8................................ 2.1 Basis for consultation...........................................................................................................8 2.2 Responding to the consultation .........................................................................................8 2.3 ..8.ext N........................................................epst..s................................................................. 3 TMOIMEHC N...SSIO.........................................................................................................9............ 3.1 ........9......................ei.wevvrO................................................................................................ 3.2 Commissions functions ......................................................................................................9 3.3  ...............................................................................................................9Guiding principles 4 ................................................................A EHTIDUT........RD O..ER.........1..0................................ 4.1 ......10................................................................................................................nIdortitcu..no 4.2 Article 1 ...............................................................................................................................10 4.3 Article 2 ...............................................................................................................................10 4.4 Article 3 ...............................................................................................................................10 4.5 Article 4 ...............................................................................................................................11 4.6 Article 5 ...............................................................................................................................11 4.7 Article 6 ...............................................................................................................................11 4.8 Article 7 ...............................................................................................................................11 4.9 Article 8 ...............................................................................................................................11 4.10 Article 9 ...............................................................................................................................12 4.11 Article 10 .............................................................................................................................12 4.12  .........................................................................................................12Articles 11, 12 and 13 4.13  ...................................................................................................12Articles 14, 15, 16 and 17 4.14 Articles 18 and 19 ...............................................................................................................13 4.15 31..............................................................................................................................ckabdeeF 5 EHTRO PAAG ..................14.................................................................................RED.................... 5.1 ................................................................................................ntIduroioct..n.................1.4.... 5.2 Article 1 ...............................................................................................................................14 5.3 Article 2 ...............................................................................................................................14 5.4  ...................................................................................................................14Articles 3 and 4 5.5 The GAAP selection criteria .............................................................................................14 5.6 ................................................................Feebdca.k.....................................................15........ 6 COST BENEFIT ANALYSIS ........................................................................................................16 6.1 ................mmarSu....y.....................................61.................................................................... 7 SUMMARY OF QUESTIONS ......................................................................................................17  
Contents
................................................................Gloss................ yrat fosmre......................................................3.
 List of representative bodies who have been sent this consultation paper. ..........................18 APPENDIX B............................................................................................................................................19 Draft Companies (Audit) (Jersey) Order 201- ........ .19 ............................................................... .... APPENDIX C............................................................................................................................................25 Draft Companies (GAAP) (Jersey) Order 201- ...........................................................................25   
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A......A.X DIENPP................................................................................................................................18....
1 1.1 
EXECUTIVE SUMMARY Overview 1.1.1 The Companies (Amendment No. 4) (Jersey) Regulations 2009 (the Regulations) were made by the States on 3 December 2009. The Regulations were made for two main reasons. 1.1.2 The first is to respond to the impact of European Union (EU) Directive 2006/43/EC (the Statutory Audit Directive) on auditors of Jersey companies2whose securities are admitted to trading on a regulated market in the EU (each, a market traded company). 1.1.3 The second reason is to improve the Islands level of compliance with an international standard issued by the International Organisation of Securities Commissions (IOSCOrelating to accounting and auditing matters) (commonly referred to as IOSCO Principle 16). 1.1.4 Regulation 4 of the Regulations will insert into the Companies (Jersey) Law 1991 (the Companies Law) a revised Part 16 (Accounts and Audit) (the revised Part 16approval of the States, Regulation 4 is). Subject to the expected to be brought into force on 5 April 2010 (the same date as equivalent provisions are to be brought into force in Guernsey and the Isle of Man). 1.1.5 More information on the background to the Regulations can be found in the Commissions Consultation Paper No. 1 of 2009, and the subsequent Feedback Paper, both of which are available from the Commissions website. 1.1.6 This consultation paper seeks respondents views on two items of subordinate legislation that will be made under the revised Part 16.3  What is proposed and why? Companies (Audit) (Jersey) Order 201- (the Audit Order) 1.2.1 The revised Part 16 provides for the establishment of a registration and oversight regime for auditors of market traded companies. Such an auditor is referred to as a recognized auditor. The revised Part 16 will also require recognized auditors to follow rules issued by a recognized professional body (such as the Institute of Chartered Accountants in England and Wales (the ICAEWin relation to the audit of a market traded)) governing their conduct company. 1.2.2 The Audit Order will set out what information the Register of Recognized Auditors (the Register) must contain (in substance, as already described in                                                      2With some limited exceptions. See the definition of market traded company in new Article 102 set out in Regulation 4 of the Regulations. 3 Note that one additional item of subordinate legislation will be made under the revised Part 16. An Order will be made to provide the Professional Oversight Board of the United Kingdom with the statutory powers it will need to fulfil the role of independent oversight body in the oversight regime for recognized auditors (as defined in 1.2.1).
1.2 
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1.3 
 
Article 110 in the revised Part 16), what form it must take, and other ancillary matters relating to the keeping of the Register by the Commission. 1.2.3 In addition, the Audit Order will set out what the rules governing the conduct of the audit of market traded companies (the Audit Rules) must contain (in substance, as already described in Article 112 in the revised Part 16). 1.2.4 Finally, the Audit Order will set out certain independence requirements that all auditors must satisfy. These independence requirements are the same as those currently specified in paragraphs (2), (3) and (4) of Article 113C [Disqualification for appointment as auditor] in the existing Part 16 of the Companies Law. (Note that, when issued, the Audit Rules will, in line with the United Kingdom version on which they are based, contain additional independence requirements that recognized auditors must satisfy.) 1.2.5 Subject to Ministerial approval, the intention is that the Audit Order will come into force at the same time as the revised Part 16 does (expected to be on 5 April 2010, as indicated in 1.1.4). Companies (GAAP) (Jersey) Order 201- (the GAAP Order) 1.2.6 The purpose of the GAAP Order is to improve the Islands level of compliance with IOSCO Principle 16. 1.2.7 prescribe which generally accepted accounting principles (It will GAAP) a market traded company shall use when preparing its accounts. 1.2.8 Subject to Ministerial approval, the intention is that the GAAP Order will be brought into force on 5 April 2010. Who would be affected? 1.3.1 The Audit Order will affect recognized auditors and persons who will need to access information on the Register. 1.3.2 The GAAP Order will affect market traded companies, their directors and auditors.  
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