Cap. 281 Art. 18AProhibition of the provision of non- audit services.

(1) An auditor or an audit firm carrying out the statutory audit of a public-interest entity, or any member of the network to which the auditor or the audit firm belongs, shall not directly or indirectly provide to the audited entity, to its parent undertaking or to its controlled undertakings within the European Union any prohibited non-audit services in:

(a) the period between the beginning of the period audited and the issuing of the audit report; and

(b) the financial year immediately preceding the period referred to in paragraph (a) in relation to the services listed in sub-article (2)(e).

(2) For the purposes of sub-article (1), prohibited non-audit services shall mean:

(a) tax services relating to:

(i) preparation of tax forms;

(ii) payroll tax;

(iii) customs duties;

(iv) identification of public subsidies and tax incentives unless support from the auditor or the audit firm in respect of such services is required by law;

(v) support regarding tax inspections by tax authorities unless support from the auditor or the audit firm in respect of such inspections is required by law;

(vi) calculation of direct and indirect tax and deferred tax;

(c) bookkeeping and preparing accounting records and financial statements;

(d) payroll services;

(e) designing and implementing internal control or risk management procedures related to the preparation and, or control of financial information or designing and implementing financial information technology systems;

(f) valuation services, including, valuations performed in connection with actuarial services or litigation support services;

(g) legal services, with respect to:

(i) the provision of general counsel;

(ii) negotiating on behalf of the audited entity; and

(iii) acting in an advocacy role in the resolution of litigation;

(h) services related to the audited entity’s internal audit functions;

(i) services linked to the financing, capital structure and allocation, and investment strategy of the audited entity, except providing assurance services in relation to the financial statements, such as the issuing of comfort letters in connection with prospectuses issued by the audited entity;

(j) promoting, dealing in, or underwriting shares in the audited entity;

(k) human resources services, with respect to:

(i) management in a position to exert significant influence over the preparation of the accounting records or financial statements which are the subject of the statutory audit, where such services involve: - searching for or seeking out candidates for such position; or - undertaking reference checks of candidates for such positions;

(ii) structuring the organisation design; and

(iii) cost control.

(3) By way of derogation from sub-article (2), the services referred to in paragraphs (a)(i), (a)(iv) to (a)(vii) and (f) of the said sub-article may be provided, provided that the following requirements are complied with:

(a) they have no direct or have immaterial effect, separately or in the aggregate on the audited financial committee referred to in Article 11 of the Audit Regulation; and

(c) the principles of independence laid down in the Code of Ethics issued by the Board are complied with by the auditor or the audit firm.

(4) An auditor or an audit firm carrying out statutory audits of public-interest entities and, where the auditor or the audit firm belongs to a network, any member of such network, may provide to the audited entity, to its parent undertaking or to its controlled undertakings non-audit services other than the prohibited non-audit services referred to in sub-articles (1) and (2), subject to the approval of the audit committee after it has properly assessed threats to independence and the safeguards applied in accordance with the Code of Ethics issued by the Board.

(5) (a) When a member of a network to which the auditor or the audit firm carrying out a statutory audit of a public-interest entity belongs provides any of the non-audit services, referred to in sub-articles (1) and (2), to an undertaking incorporated in a third country which is controlled by the audited public-interest entity, the auditor or the audit firm concerned shall assess whether his, her or its independence would be compromised by such provision of services by the member of the network.

(b) If his, her or its independence is affected, the auditor or the audit firm shall apply safeguards where applicable in order to mitigate the threats caused by such provision of services in a third country. The auditor or the audit firm may continue to carry out the statutory audit of the public-interest entity only if he, she or it can justify, in accordance with Article 6 of the Audit Regulation and the Code of Ethics issued by the Board, that such provision of services does not affect his, her or its professional judgement and the audit report.

(c) For the purposes of this sub-article:

(i) being involved in the decision-taking of the audited entity and the provision of the services referred to in sub-article (2)(b), (c) and (e) shall be deemed to affect such independence in all cases and to be incapable of mitigation by any safeguards.

(ii) provision of the services referred to in sub-article (2), other than paragraphs (b), (c) and (e) thereof, shall be deemed to affect such independence and therefore to require safeguards to mitigate the threats caused

(2) The Board may issue rules prescribing the use of electronic signatures as defined in point 1 of Article 2 of Directive 1999/93/ EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures.