On Auditing Activities

The present law determines the legal basis for carrying out the auditing activity on the territory of the Republic of Belarus, establishes the rights and duties of the auditing organizations and auditors, and also regulates the relations arising at the course of state regulation of auditing activity.

Article 1. Definition of the Auditing Activity

Auditing activity—an entrepreneurial activity on independent check (audit) of the accounting and accounting (financial) reports and of other documents of the organizations, their separate subdivisions, economic groups, bank groups, bank holdings, simple partnerships (participants of the contract on mutual activity), individual entrepreneurs (further—audited persons), and at necessity also (or) on check of their activity that shall be reflected in the accounting (financial) reports, for the purposes of expression of opinion on validity of the accounting (financial) reporting and compliance of the financial (economic) transactions made with the legislation.

For the purposes of the present Law:

the terms “bank group” and “bank holding” have the meaning defined respectively by indent 2 and 3 of part one of Article 35 of the Bank Code of the Republic of Belarus;

under validity of the accounting (financial) reports the extent of precision is meant the data of the accounting (financial) reports that allow the user of the accounting (financial) reports make, on the basis of their data, right conclusions about the results of the economic activity, financial and property state of the audited persons and take grounded decisions based on those conclusions;

under the users of the accounting (financial) reports are meant the founders (participants, owners of the property) of the audited person, investors, creditors, audited persons, other natural and legal persons, and also state bodies and other legal subjects interested in information on audited person in the cases provided by legislation.

Audit does not replace the state control over the financial and economic activity of the audited persons carried out in accordance with legislation.

The present Law does not cover the organization and performance of internal control over financial and economic activity (internal audit).

Article 2. Audit and Services Accompanying the Audit

Auditing organizations and auditors carrying out the activity as individual entrepreneurs (further—auditors-individual entrepreneurs) conduct the audit of the following:

validity of the annual accounting (financial) reports;

validity of the consolidated reports on the activity of a bank group, bank holding;

accuracy of the reflection of the transactions on the accounts of business accounting;

purposeful usage of the credits and investments;

financial state of the investor (initiator of the investment project);

financial state of the securities issuer;

formation of the statutory fund, the origin of monetary funds of the founders (participants) of the organization, being contributed to its statutory fund;

validity of the tax declaration (calculation);

of the composition and value of an enterprise as a property complex;

value of fixed assets being in the ownership, economic management or operative administration of the audited person;

other indications of the financial and economic activity of the audited persons.

Auditing organizations and auditors-individual entrepreneurs may render services accompanying the audit on:

drawing up the accounting (financial) reports;

estimation of the value of the enterprise as a property complex, and also of another property;

organization, renewal and conducting the accounting;

drawing up the declarations on income and property;

analysis of the financial and economic activity;

consulting on questions connected with performing financial (economic) transactions, formation of result of economic activity and drawing up business (financial) reports;

managing consulting including the one connected with the restructuring of the organization;

informational service provision;

automation of the accounting and introduction of information technologies;

estimation of the entrepreneurs risks;

elaboration and analysis of the investments projects and drawing up of business plans;

conducting the marketing research;

training of the specialists in the spheres connected with auditing activity.

Legislative acts may establish also other services accompanying audit.

The order for conducting the audit is determined by legislation and also by the statutes and other documents of the audited persons in the cases provided by legislation.

Services accompanying the audit are rendered with the observance of the requirements of the legislation made to the accompanying services.

Services accompanying the audit can be rendered regardless of conducting the audit.

Article 3. Obligatory Audit

Obligatory audit—is the audit, the obligatoriness of conducting of which is established by the present Law and other legislative acts.

Legal persons with a share in the state ownership, in which departmental control and revision service has conducted revisions of financial or economic activity, are freed from conducting the obligatory annual audit. The President of the Republic of Belarus may establish other cases of exempting of the audited persons from conducting obligatory audit.

Annually, the obligatory audit of validity of annual accounting (financial) reports is conducted in:

open joint-stock companies;

banks, non-bank credit and financial organizations;

exchanges;

commercial organizations with foreign investments;

insurance organization, insurance brokers;

resident of the Park of high technology;

the organization carrying out guaranteed indemnification of bank deposits of natural persons;

other organizations and individual entrepreneurs in which the volume of proceeds from the realization of goods (performing works, providing services) for the preceding accounting year is more than 600 thousand Euro.

The obligatory audit of validity of annual accounting (financial reports) in collective farms (agricultural productive cooperatives) and peasant’s (farmer’s) households is not conducted.

In the event when the controlling bodies conduct checks (revisions) of financial and economic activity of the persons specified in indents 2 – 6, 8 and 9 of part 3 of this Article, those persons are exempted from conducting the obligatory audit of validity of accounting (financial) reports in the part checked by the given bodies.

The audited persons concerning which the obligatory audit has been conducted shall eliminate the violations of legislation detected by the auditor and introduce respective changes into accounting (financial) reports, within 30 calendar days from the date of receipt of the auditor’s report on validity of annual accounting (financial) reports.

Article 4. Auditor

Auditor—a natural person having the higher economic and (or) legal education and working record at his specialization of not less than three years and also meeting the qualification requirements established by the legislation to the auditors and having he qualification diploma of auditor.

Auditor has the right to carry out the auditing activity as auditor-individual entrepreneur and also as an employee of auditing organization.

Article 5. Auditing Organization

Auditing organization – a commercial organization carrying out auditing activity and rendering the services accompanying audit.

The staff of the auditing organization shall contain not less than three auditors.

Not less than 50 percent of employees of the auditing organization shall be the citizens of the Republic of Belarus permanently residing on the territory of the Republic of Belarus and in cases, if the head of the auditing organization is a foreign citizen—not less than 75 percent.

Only auditor can be the head of auditing organization.

Article 6. Limitation of the Right to Carry out the Auditing Activity

The right to carry out the auditing activity belongs to auditing organizations and auditors—individual entrepreneurs having the special permits (licenses) on carrying out of such activity. Licensing of auditing activity is carried out in accordance with the legislation on licensing.

Auditing organizations and auditors—individual entrepreneurs are prohibited to carry out other kinds of entrepreneurs activity except for the auditing activity, rendering services accompanying the audit, teaching and scientific activity.

A persons convicted of committing crimes against property and the order of carrying out economic activity, that is not cancelled or removed in the order established by law, does not have the right to carry out the auditing activity.

For conducting audit of accounting (financial) reports and (or) other documents the audited person, containing the data constituting state secrets, it is necessary to obtain an access permit towards state secrets in the order established by legislation. If accounting (financial) reports or other documents of the audited person contain the data constituting state secrets, the audit of such person may not be conducted by auditing organization founders (participants, owners of the property) of which are foreign citizens, stateless persons or citizens of the Republic of Belarus permanently residing abroad and (or) foreign and international legal persons (organization not being legal persons), foreign states and their administrative and territorial units in the person of authorized bodies unless otherwise provided by legislative acts.

Article 7. Associations of the Auditing Organizations or Auditors

Auditing organization or auditors for the purposes of coordination of their activity and also for representation and protection of their property interests can create the associations of auditing organization or auditors in order established by legislation.

Article 8. Independence of the Auditing Organizations and Auditors-Individual Entrepreneurs

Influence in any form on the auditing organization, its employees and also on an auditor-individual entrepreneur for the purposes of obstructing to conducting the independent audit is not allowed.

The audit can be conducted:

by the auditors being the founders (participants, owners of the property) of the audited persons, their heads, accountants and other persons bearing responsibility for organization and conducting the business accounting and drawing up of accounting (financial) reports;

by the auditors being in close affiliations or affinity with the founders (participants, owners of the property) of the audited persons, their officials, accountants and other persons bearing responsibility for organization and conducting the business accounting and drawing up of the accounting (financial) reports;

by the auditing organizations, the heads, auditors and other officials of which are the founders (participants, owners of the property) of the audited persons, their officials, accountants and other persons bearing responsibility for organization and conducting the business accounting and drawing up of accounting (financial) reports;

by the auditing organizations, the heads, auditors and other officials of which being in close affiliations or affinity with the founders (participants, owners of the property) of the audited persons, their officials, accountants and other persons bearing responsibility for organization and conducting the business accounting and drawing up of the accounting (financial) reports;

by the auditing organization in relation to the audited persons being its founders (participants, owners of the property) in relation to the audited persons for which the auditing organization is the founder (participant, owner of the property), in relation to the branch and dependent organizations and also affiliated societies and representations of organization mentioned in the present indent and in relation to organizations having the common founders (participants, owners of property) with the auditing organization;

by the auditing organizations and auditors which have rendered the audited person the services on renewal and conducting of business and (or) taxation accounting for the period of renewal and conducting of business and (or) taxation accounting, drawing up accounting (financial) reports.

The order of payment and the amount of money reward of the auditing organizations and auditors for conducting the audit including the obligatory one and (or) rendering the services accompanying the audit are determined by the contract on rendering the auditing services and cannot be regarded dependent from fulfillment of any demands of the audited persons on content of the conclusions that can be made in the result of audit.

Article 9. Contract on Rendering the Auditing Services

Under the contract on rendering the auditing services the auditing organization or the auditor—individual entrepreneur on one side (executor) are obliged to render the auditing services (conduct the audit and (or) carry out the services accompanying the audit) at the order of other side (consumer) and the consumer is obliged to pay for those services.

Consumers can be the auditing persons and other persons in accordance with legislation.

The contract on rendering the auditing services is concluded in simple written form and includes the following terms:

subject of the contract;

time periods of fulfillment of auditing services;

cost of the auditing services rendered;

rights and duties of the parties;

liability of the parties for non-fulfillment or improper fulfillment of obligations provided by the contract;

other terms regarding which at request of one of the parties the agreement shall be achieved.

Article 10. Rights of the Auditing Organizations and Auditors—Individual Entrepreneurs

The auditing organizations and auditors—individual entrepreneurs at conducting the audit have the right to:

determine the forms and methods of conducting the audit on their own;

check the registers of business and (or) taxation accounting, accounts and other documentation on financial and economic activity, actives and obligations, factual presence of money assets, securities and other property and their compliance with the data of business accounting and accounting (financial) reports of the audited person;

engage on the contractual basis in accordance with legislation at conducting the audit for the check of the certain questions requiring the specific knowledge, the persons having the special specialization in case, if in the staff list of the auditing organization the specialists in such sphere are not present;

receive form the officials of the audited persons the explanations in oral and (or) written form on the questions appearing in the course of rendering the auditing services;

refuse to conduct the audit or express in audit conclusion of its opinion of validity of the accounting (financial) reports in cases of not presenting by the audited person of documents necessary for conducting the audit and (or) revealing in the course of audit the circumstances that have or may have significant influence on the opinion on validity of the accounting (financial) reports of the audited person and compliance of the order of conducting the business accounting with legislation;

enjoy other rights not contradicting to legislation and arising form the nature of legal relations determined by the contract on rendering the auditing services.

Article 11. Duties of Auditing Organizations and Auditors—Individual Entrepreneurs

Auditing organizations and auditors—individual entrepreneurs are obliged:

to fulfill the requirements of legislation at carrying out of auditing activity (rendering the services accompanying the audit);

to conduct the register of the contracts on rendering the auditing services rendered;

to qualitatively conduct the audit and (or) render services accompanying the audit;

to inform the consumer on impossibility of its participation in conducting the audit at presence of the circumstances provided by part two article 8 of the present Law;

to provide the safety of the documents received;

to inform the founders (participants, owners of the property) of the audited persons at the course of conducting the audit in written form the information proving the violation of legislation in the result of which damages (harm) to the natural persons and (or) legal person and (or) state are caused or may be caused at great or especially great amount;

to transfer the audit resolution in term established by the contract on rendering the auditing services;

to fulfill in accordance with legislation other duties including those arising form the nature of legal relations determined by the contract on rendering the auditing services and by the statute and other documents of the audited organization.

Article 12. Liability for Drawing up of Knowingly False Auditor’s Report

Drawing up of knowingly false auditor’s report entails the liability established by the present Law and other legislation. For the purposes of the present Law the knowingly false auditor’s report means auditor’s report drawn up without conducting audit or not corresponding to its results. Knowingly false auditor’s report is recognized as such only on the basis of the court ruling.

Article 13. Rights of the Audited Person and Consumer

Audited person, consumer on their own chose the auditing organization or auditor-individual entrepreneur for rendering auditing services, if otherwise is not provided by legislation.

Audited person, consumer has the right to:

receive form auditing organization and (or) auditor the information on the acts of legislation on which their remarks and conclusions are based;

refuse form the services rendered by the auditing organization or auditor-individual entrepreneur in cases of non-fulfillment or improper fulfillment by them of their obligations or demand the replacement of auditor from the auditing organization;

inform on the violations of legislation on auditing activity made by the auditing organization and (or) auditor to the Ministry of Finance of the Republic of Belarus, National Bank of the Republic of Belarus, committee of Sate Control of the Republic of Belarus and other authorized state bodies;

enjoy other rights not contradicting the legislation and arising from the natural of legal relations determined by the contract on rendering the auditing services.

Article 14. Duties of the Audited Person, Consumer

The audited person, consumer is obliged:

to create the auditor the conditions for timely and quality conducting the audit and present all necessary documents to him;

to give the explanations upon the requests of the auditor in oral and (or) written form;

to eliminate the violations of legislation and the order of conducting of business and (or) taxation accounting and (or) drawing up of the accounting (financial) reports revealed by the auditor and to introduce respective changes in the accounting (financial) reports, including with the observance of time limits in the cases provided by legislative acts;

to timely pay the services of auditors in accordance with the contract on rendering the auditing services including in case when the conclusions of the auditor’s reports do not agree with the position of the employees of the audited person, consumer and also in case of not full fulfillment by the auditors of the work because of reasons not depending on them;

to fulfill in accordance with legislation other duties arising from the natural of legal relations determined by the contract on rendering the auditing services.

Fulfillment of the requirements of the auditor arising form the contractual terms on rendering the auditing services is obligatory for audited person, consumer.

To the audited person, consumer is prohibited to interfere with the actions of the auditor on the questions concerning the methodology of conducting the audit.

Article 15. Liability of the Audited Person, Consumer

The audited person, consumer bare responsibility for fullness and validity of the documents and other information presented to the auditing organization, auditor—individual entrepreneur.

The conduct of the audit does not free the audited person from the liability for violation of the order of carrying out of the economic activity and incompliance of the presented accounting (financial) reports with the requirements of legislation.

Article 16. Auditor’s Report

Auditor’s report is an official document drawn up as a result of the audit and intended for the users of accounting (financial) reports.

The rules of drawing up the auditor’s report are established by the Ministry of Finance of the Republic of Belarus.

Article 17. Auditing Secret

Auditing organizations, auditors, persons engaged by them to conducting the audit in accordance with legislation are obliged to keep the secret on economic transactions of the audited persons and persons to which the services accompanying the audit were rendered.

Republican bodies of state management carrying out the regulation of the auditing activity, other persons that have received in accordance with legislation the access to the information being the auditing secret are obliged to keep the confidentiality in relation to such information.

Auditing organizations, auditors, persons engaged by them to conducing the audit are obliged to provide the safety of information and documents received and (or) drawn up at the course of carrying out the auditing activity and do not have the right to pass this information and document to third persons or disclose them without a written consent of the audited persons except for the cases provided by legislation.

In case of disclosure of information being the auditing secret by the auditing organization, auditor, republican bodies of state management carrying out the regulation of the auditing activity and (or) other persons having received the access them, the audited person or the person to which accompanying the audit and also the auditing organizations or auditor—individual entrepreneur has the right to demand the person guilty to compensate the damaged (harm) caused.

Documents being at disposal of auditing organization or auditor—individual entrepreneur and containing the information on transactions of the audited persons and persons with which the contract on rendering the auditing services has been concluded, are presented only under the decision of court to the persons authorized by the given decision, and also the officials and (or) state bodies in cases provided by legislation.

Auditing organizations, auditors, persons engaged by them to conducting the audit shall provide the protection to the state secrets and other information protected in accordance with legislation that became known to them in connection with conducting the audit and (or) rendering the services accompanying the audit.

Article 18. Rules of Auditing Activity. Control over Quality of the Work of Auditing Organizations and Auditors—Individual Entrepreneurs

The rules of auditing activity—the unified requirements to the order of carrying out the auditing activity including to planning and documentation of audit, elaboration of the working documentation of auditor, auditor’s report and also to estimation of the quality of conducting the audit and (or) rendering the services accompanying the audit and to the professional training of the auditors and estimation of their qualification.

Rules of auditing activity are divided into:

republican rules of auditing activity;

internal rules of auditing activity of association of auditing organization or auditors;

rules of auditing activity of auditing organization auditor—individual entrepreneur.

Republican rules of auditing activity are obligatory for auditing organizations and auditors—individual entrepreneurs, and also for audited persons.

Association of the auditing organizations or auditors has the right, if it is provided by its statute, to establish for its members the internal rules of auditing activity of association of the auditing organizations or auditors, that cannot contradict the republican rules of auditing activity. At that the requirements of the internal rules of auditing activity of association of the auditing organizations or auditors may not be lower than the requirements of the republican rules of auditing activity.

Auditing organization or auditor—individual entrepreneur is entitled, and in the cases established by legislation is obliged, to establish the rules of auditing activity for this auditing organization or auditor—individual entrepreneur that cannot contradict the republican rules of auditing activity. At that the requirements of the rules of auditing activity of auditing organization or auditor—individual entrepreneur cannot be less than the requirements of republican rules of auditing activity or internal rules of auditing activity of the association of auditing organization or auditors, to which they are members.

Control over quality of the work of auditing organization and auditors—individual entrepreneurs is carried out in accordance with the rules of internal control established by them over quality of the auditing services rendered. The requirements made to the rules of internal control over quality of the auditing services rendered are regulated by the republican rules of auditing activity.

Article 19. Attestation for the Right to Receive the Qualification Diploma of Auditor

Attestation for the right to receive the qualification diploma of auditor is a check of knowledge of natural persons candidates to receive such diploma of auditor in the form of qualification exams. Persons who have successfully passed the examinations receive the qualification diploma of auditor.

Qualification diploma of auditor is issued without limitation of the term of its validity.

Compulsory requirements to the natural persons candidates to receive the qualification diploma of auditor are the following:

presence of the documents on higher economic and (or) legal education issued by the establishments ensuring the obtainment of higher education, having the state accreditation;

presence of the work experience at the specialization relevant to economic or legal education not less than 3 years;

absence of conviction, not cancelled or removed, of committing crimes against the property and the order of carrying out economic activity.

The auditor is obliged not less than once in two years, starting form the year next to the year of reception of the qualification diploma of auditor, improve his qualification in the organization carrying out the improvement of qualification and retraining of the staff and having the state accreditation according to their programs of improvement of qualification of auditors agreed with the Ministry of Finance of the Republic of Belarus.

The order of conducting the attestation for the right to receive the qualification diploma of auditor is determined by the Council of Ministers of the Republic of Belarus.

Article 20. Grounds and Order of Annulment of the Qualification Diploma of Auditor

Qualification diploma of auditor is annulled in cases, if:

the auditor has applied for the annulment of the qualification diploma;

qualification diploma of auditor is received with the usage of the forged documents;

the auditor at conducting the audit systematically violates the requirements established by legislation or he has made a major violation of the order of carrying out of auditing activity;

the fact of drawing up by the auditor of the frivolous auditor’s report is established;

in other cases determined by the Council of Ministers of the Republic of Belarus.

At violation by the auditor of the requirements on improvement of qualification established by the article 19 of the present Law the qualification diploma of auditor can be annulled.

Motivated decision on annulment of qualification diploma of auditor is taken by the Ministry of Finance of the Republic of Belarus.

The annulment of the qualification diploma of an auditor upon the application of the auditor is made by the Ministry of Finance of the Republic of Belarus free of charge within 10 days from the day of receipt of the application of the auditor with enclosure of the qualification diploma of the auditor.

The person whose qualification diploma has been annulled has the right to appeal the decision of the Ministry of Finance of the Republic of Belarus on annulment of the qualification diploma of auditor in court within 3 months form the day of reception of such decision on its annulment.

The person whose qualification diploma has been annulled under the grounds provided by the indents 4 and 5 of part one of the present article has the right to pass the qualification examinations to receive the qualification diploma of auditor not earlier than after 3 years form the day of taking the decision on its annulment, and under the ground provided by part two of the present article—not earlier than after a year form the day of taking the decision on annulment of the qualification diploma of auditor.

Article 21. Control over Observance of Legislation on Auditing Activity

The control over observance by auditing organizations and auditors – individual entrepreneurs of the legislation on auditing activity is carried out by the Ministry of Finance of the Republic of Belarus, with the exception of control over the observance of legislation on auditing activities in banks, non-bank credit and financial organizations, bank groups, bank holdings, which is carried out by the National Bank of the Republic of Belarus.

Control over the implementation of the present Law and other acts of legislation on auditing activity is carried out the Committee of State Control of the Republic of Belarus.

Article 22. Powers of the Ministry of Finance of the Republic of Belarus in the Sphere of State Regulation of Auditing Activity

In the sphere of state regulation of auditing activity, the Ministry of Finance of the Republic of Belarus:

establishes the republican rules of auditing activity;

adopts the normative legal acts in the sphere of carrying out the auditing activity (except for the auditing activity in banks and non-bank credit and financial organizations, bank groups, bank holdings);

conducts the attestation for the right to obtain the qualification diploma of the auditor;

issues special permits (licenses) on carrying out auditing activity (except for the auditing activity in banks and non-bank credit and financial organizations);

carries out within its competence the explanation of legislation on auditing activity.

The Ministry of Finance of the Republic of Belarus represents the interests of the Republic of Belarus in the international organizations on the questions of auditing activity in the order established by legislation.

Article 23. Powers of the National Bank of the Republic of Belarus in the Sphere of State Regulation of Auditing Activity

In the sphere of state regulation of auditing activity, the National Bank the Republic of Belarus:

adopts the normative legal acts in the sphere of carrying out the auditing activity in banks and non-bank credit and financial organizations, bank groups, bank holdings;

conduct the assessment of the conformity of auditors with qualification requirements toward the specialists carrying out audit in the banks and non-bank credit and financial organizations;

establishes the order of licensing and issues special permits (licenses) on carrying out auditing activity in banks and non-bank credit and financial organizations.

Article 24. Correlation of the legislation of the Republic of Belarus on Auditing activity and Norms of International Law

The Republic of Belarus recognizes the priority of generally recognized principles of international law and provide the compliance of legislation of the Republic of Belarus on auditing activity with them.

Provisions of the international treaties of the Republic of Belarus that have entered into force are the part of the legislation on auditing activity in force on the territory of the Republic of Belarus, are subject to direct implementation except for the cases, when it results from the international treaty that for implementation of such norms the adoption of interstate normative legal act is required.