Major Changes to Framework of MIRA Registered Auditors
The Maldives Inland Revenue Authority (“MIRA”), on 5 April 2018 published Tax Ruling B-63 (Submission of Financial Statements and Appointment of Auditors) which supersedes Ruling B-57 and changes some requirements for auditor registration and renewal and, disclosure requirements of auditors.
A new disclosure requirement introduced by the Ruling now requires registered auditors to report non-compliance of tax laws to the MIRA. Failure to do so can result in the registered auditors license being either suspended or revoked. Also, similar to the requirement under B57, registered auditors are still required to ascertain whether a person maintains adequate business records in accordance with Section 27 of the Tax Administration Act (“TAA”). In addition to that, registered auditors are also required to check whether their client is compliant with Section 16(g), which stipulates how electronic records should be maintained, and Section 16(h), which requires maintaining records of transactions conducted via the internet of the Business Profit Tax (“BPT”) Regulation.
The ruling now permits audits to be conducted by following ,where necessary, the International Standards on Assurance Engagements (ISAE) issued by International Auditing and Assurance Standards Board.
The new ruling introduces several changes to the requirements to qualify as a Category A, Category B or Category C auditor. Category A firms are no longer required to have a practicing certificate issued by the Auditor General’s Office. In addition to this, the audit partner of a Category A firm is no longer required to have been registered in Category B for a minimum of 3 years. A noticeable change to Category B firms is the removal of the requirement that 50% of the partners of a Category B firm should be Maldivian. Similar to Category A firms, Category B firms no longer required to have a practicing certificate issued by the Auditor Generals Office and the audit partner of a Category B firm is no longer required to have been registered in Category C for a minimum of 2 years. The ruling also permits individuals to be registered as Category B auditors, provided they fulfil the requirements set out in the Ruling. The ruling further permits Foreign persons to register as Category C auditors and may act as the audit partner of a Category C firm. Furthermore, auditors registering as either a Category A, B or, C firm are required have an audit partner whose relationship with the partnership is disclosed to the MIRA. Though several new qualification and experience requirements have been changed for Category A, B and, C auditors, those requirements do not apply to auditors already registered with the MIRA on the date of the Ruling.
Auditors registered with the MIRA under this ruling are required to register for tax, regardless of whether they fulfil the criteria set out in Tax Ruling A11. Furthermore, partnerships or individuals that apply to register as an auditor, or if a registered auditor wants to renew their license, they are required to clear all dues to the MIRA. This includes all dues of the partners of a partnership registered as an auditor with the MIRA.
The ruling now requires registered auditors to attend a Continuing Professional Development program conducted by the MIRA. The Continuing Professional Development Program, for which attendance is mandatory, must be completed by individuals and, audit partners of the firms registered under the Category’s stipulated in the Ruling.
The ruling also expands the powers of the licensing committee granting the committee the power to take action against registered auditors who do not complete the Continuing Professional Development Program. The licensing committee also has the power to call for audit working papers that show the details of the substantive procedures performed by the auditor and any other documents held by an auditor in relation to an audit.
