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Auditors
Overview of Corporate Financial Information
Quality Assurance & Review
Summary of Rules on Granting Approval of Auditors
List of Auditors Approved by the Office of SEC
International Cooperation
Laws Regulations & Guidelines
Accounting Guidelines
Enforcement
Web Link
Independent Audit Oversight
Comment Letters on International Accounting Standards and International Financial Reporting Interpretations
Handbook for approval of foreign auditors

1. Overview of Corporate Financial Information

 

Financial report is essential to investors and one of the most crucial factors to enhance investor confidence in the Thai capital market. Thus, the SEC has always put its best effort to supervise and improve quality of financial report to ensure that public disclosure of financial report is complete, timely, accurate and prepared in compliance with international standards.

 

1. Supporting Accounting Profession to be in line with International Standards

To raise the quality of financial information contained in the financial statements of the company raising fund through the capital market, the SEC supports the improvement of Thai accounting standards in conformity with the International Financial Reporting Standards (IFRSs) prescribed by the International Accounting Standards Board (IASB) and the Thai auditing standards in conformity with the International Standards on Auditing (ISAs) determined by the International Auditing and Assurance Standards Board (IAASB).

 

2. Auditor Supervision

The SEC has put its continuing effort on auditor supervision as the auditor’s role of independent professional is fundamental to investor confidence in publicly disclosed corporate financial information. The Securities and Exchange Act of 1992 requires that the auditor in the capital market be approved by the SEC so that the SEC will be capable of monitoring the quality of audit work performed by such auditor to be in line with international supervisory framework whereby the audit quality control on both corporate and engagement levels will be considered.

 

3. Monitoring on Financial Report of Business in Capital Market

The SEC requires preparation and disclosure of financial information in the financial statements of companies raising fund through the capital market be in conformity with the accounting standards and the IFRSs. In addition, the financial statements must be reviewed (quarterly financial statements) or audited (annual financial statements) by an SEC-approved auditor which are monitored and reviewed by the SEC on a quarterly basis to ensure that investors will obtain credible and reliable financial information. In cases where the SEC finds that the financial statements contain incorrect information, it will order the company to rectify such financial statements and publicly disclose the order via the SEC website. From time to time where the SEC finds suspicious transactions in the course of its review on the financial statements, the SEC will order the company to have a special audit on such financial statements and report the result of such audit to the SEC. The information concerning the special audit must also be disclosed on the SEC website.

2. Quality Assurance & Review

 

 Increasingly, complicated transactions in the financial market especially those in connection with listed firms and intermediaries such as securities houses have been known to have gigantic impacts even on the global market. To ensure the financial statements of those entities conform to accounting standards, audit work no longer relies only on individuals but also a team of knowledgeable and competent engagement partner and audit staff working together under a reliable audit quality assurance system of the audit firm.

 

In response to the aforesaid, the SEC has revised rules on granting approval of auditors in its continuing efforts to enhance audit quality of financial statements of entities under the SEC oversight to ensure confidence on financial reporting disclosed to the public. The SEC requires the auditor in the capital market to work with the audit firm equipped with audit quality assurance which will support the Thai capital market and accounting professions to gain more investor confidence and better facilitate Thai companies in raising funds abroad.

 

Independent Audit Inspection Activities Report 2014

Independent Audit Inspection Activities Report 2013

Independent Audit Inspection Activities Report for the 1st Cycle 1 October 2010 - 31 December 2012

 Independent Audit Inspection Activities Report 1 October 2010 - 31 December 2011 

3. Summary of Rules on Granting Approval of Auditors

 
The SEC has revised the rules on approval of auditors by prescribing additional qualifications and prohibited characteristics of auditors, as well as prescribing that the auditor to be approved by the SEC must be attached to audit firms having audit quality control system in accordance with the prescribed standard. The rules summarized as followed will particularly address audit quality control on both corporate and engagement levels: The Notification of the Office of the Securities and Exchange Commission No. SorShor. 39/2553 Re: Approval of Auditors in the Capital Market
 

Filing of Application

Auditor wishing to file an application for approval with the SEC must file [Form 61-1] and the following documents:

1.  certification of auditor;
2.  applicant’s personal record;
3.  certification of audit firm’s leader;
4.  audit firm’s record;
5.  certification of audit firm;
6.  application fee of 50,000 baht.  

 

In considering the application, the SEC may notify the applicant to clarify, take action or submit additional documents and evidence within the period of time prescribed by the SEC. The SEC will notify the applicant of the result of its consideration within 30 days from the date on which the complete documents and evidence have been received.

 

Period of Approval Validity: 5 years

 

Qualification of Approved Auditor

 

Individual Qualifications

1. being a certified public accountant (CPA);
2. being a leader of an audit firm or equivalent or being a partner of an audit firm or equivalent;
3. being attached to only one audit firm
4. not possessing any prohibited characteristics as prescribed by the SEC

 

Audit Firm Qualifications

1. having audit quality control system which is in compliance with the International Standards on Quality Control 1 (ISQC 1)
2. having at least five full-time CPAs and assistant auditors

 

Prohibited Characteristics of Auditors

1. being put under receivership by the court’s order; or being an insolvent, incompetent or quasi-incompetent person;

2. being suspended or having been suspended from CPA status during the past three years or having been revoked approval;

3. being suspended or revoked approval as auditor in the capital market or whose application being suspended from the SEC consideration;

4. being named in a complaint by the SEC or a regulatory body of financial institutions or subject to any legal proceedings following such criminal complaint or having been sentenced to imprisonment by the court’s final judgment except in the cases where the term of imprisonment or the suspension of sentence has lapsed for a period of not less than 3 years in connection with the commission of the following offences:

dishonest acts in relation to accounting professions;

an offence regarding documents or accounts as specified, for example, by Section 312 of the Securities and Exchange Act of 1992;

an offence regarding performance of audit work as specified, for example, by Section 287 of the Securities and Exchange Act of 1992;

an offence regarding unfair practices in trading securities.

 

5. not having the following prohibited behaviors:

lack of professional ethics or violation of or non-compliance with the regulations under the law governing accounting professions and other additional regulations prescribed by the law governing securities and exchange, or aiding or abetting thereof;

intentionally presenting false statements in material matters, or concealing material facts that should have been stated in any documents subject to be disclosed to the public or filed with the Securities and Exchange Commission, the Capital Market Supervisory Board or the SEC Office; or aiding or abetting thereof;

dishonest or deceitful acts; or aiding or abetting thereof.

 

If the aforesaid behaviors occurred more than 10 years ago or such behavior is not so serious that the person should not be entrusted to perform duty as auditor of businesses in the capital market, the SEC may disregard such facts as a cause for consideration of prohibited characteristics of such auditor.

 

Post-Approval Duties

 

1.  Complying with the specified rules:

 performing an audit work in giving opinions on financial statements with accountability in accordance with the professional code of ethics, regulations under the law governing accounting professions, and other additional regulations prescribed by the law governing securities and exchange;

preparing a summary of types of auditor’s report in a specified form [Form 61-4]

providing explanation or submitting any other information or taking any other steps as requested by the SEC.

 

2. Additional duties of the audit firm’s leader:

 performing an audit work in giving opinions on financial statements with accountability in accordance with the professional code of ethics and regulations;

 providing the audit quality control system in compliance with International Standards on Quality Control 1 (ISQC 1);

monitoring subordinate auditors who are attached to the audit firm to perform an audit work in accordance with the professional code of ethics, regulations under the law governing accounting professions, and other additional regulations prescribed by the law governing securities and exchange;

 cooperating with and facilitating the SEC ’s representative in inspecting the audit quality control system

 providing explanation or submitting any other information or taking any other steps as requested by the SEC .

 

Termination of Approval

1. the auditor notifies the SEC of the intention to terminate the performance of duty as an SEC-approved auditor
2. the auditor has not performed an audit work or affixed signature in giving opinions on the auditing in relation to the capital market during any period of two consecutive years;
3. the auditor or the attaching audit firm lacks any specific qualifications;
4. the auditor possesses any prohibited characteristics;
5. the approval is revoked or suspended for the remaining approval period.

4. List of Auditors Approved by the Office of SEC

List of Auditors Approved by the Office of SEC  

5. International Cooperation

International Cooperation

 6. Laws Regulations & Guidelines​

 

1. The Notification of the Office of the Securities and Exchange Commission No. SorShor. 39/2553 Re: Approval of Auditors in the Capital Market

● Form 61-1 (Application for Approval of Auditor)

Form 61-2 (Certification and Consent of Audit Firm)

Form 61-3 (Notification for Change of Audit Firm)

Form 61-4 (Summary of Types of Auditor’s Report)

 

2. The Notification of the Office of the Securities and Exchange Commission No. SorBor. 40/2553 Re: Determination of Fees for Filing Registration Statement, Registration and Filing of Other Applications (No. 24)

 

3. The Notification of the Office of the Securities and Exchange Commission Re: Application for Waiver of Auditor Rotation

  Form 56-Auditor (Application for Waiver of Auditor Rotation)        

  Form for Evaluation of Auditor’s Independence

  Certification of Auditor’s Independence in Performing Audit Work

  SEC circular

 

4. The Notification of the Capital Market Supervisory Board No. ThorChor. 11/2552 RE: Rules, Conditions and Procedure for Disclosure of Information Relating to Financial Status and Operating Results of Issuing Company in relation to Disclosure of Information on Significant Trading of Securities during Accounting Period.

 

5. The Notification of the Capital Market Supervisory Board No. ThorChor 19/2552 Re: Rules, Conditions and Procedures for Disclosure of Information Relating to Financial Status and Operating Results of Issuing Company in relation to Disclosure of Information on Significant Trading of Securities during Accounting Period.


6. Guidance to audit committees on evaluation of quality of work performed by auditors

7. Accounting Guidelines

      

1.  Publication No. Or Chor. 6/2004(2547) Re: Preparation of consolidated financial statements

Preparation of financial statements for Subsidiaries and Associates of listed company

Guideline for Preparation of consolidated financial statements

2.   Accounting guideline for property, plant and equipment classified as non-operating asset.

3.  Accounting Guideline for Allowance for Doubtful Debts of Consumer Finance Business.

4.  Illustrative Examples of Disclosure

5.  Accounting Guideline for Guarantee Obligation 

6.  Accounting Guideline for Investments in Subsidiaries and Associates

7.  Accounting Guideline for Intangible Assets acquired by related party transactions

8.  Accounting Guideline for Revenue Recognition for Real Estate Business

9.  The Disclosure Guideline on Capital Reserves For Treasury Stock

10.  Legal Opinion of the Council of State Re: Treasury Stock

11.  Accounting Guideline for Investments in Subsidiaries and Associates in case of Reciprocal Holdings

12.  Accounting Guideline for Real Estate Business in case of purchasing an incomplete construction project to further development

13.  Accounting Guideline for the reduction of capital to compensate for the accumulated loss of the public limited company

14.  Accounting Guideline for a correction of a prior period error for the reduction of capital to compensate for the accumulated loss of the public limited company which not in accordance with generally accepted accounting principles

15.  Circular No. SEC. Chor Sor. (Wor) 3/2549) Re: Accounting Guideline for a correction of a prior period error for the reduction of capital to compensate for the accumulated loss of the public limited company which not in accordance with generally accepted accounting principles

16.  Notification of the Federation of Accounting Professions No.8/2550 Re: Accounting for compensation of the accumulated loss of the public limited company

17.  Accounting Guideline for Investments in Subsidiaries and Associates and Consolidated Financial statements

18.  Illustrative Examples of Management Discussion and Analysis for a change in accounting policy for Investments 

19.  Accounting Guideline for Leasehold

20.  Accounting Guideline for business combination under common control

21.  Accounting Guideline for Capitalization of borrowing costs as part of the cost of asset

Letter No. SEC.Chor. 1881/2551

Letter No. SorWorBorChor. 2542/2552  

8. Enforcement ​

Enforcement

9 Web Links

● Guide to Quality Con​trol for Small-and Medium-Sized Practices, Second Edition  

 
Organization
Website
The Federation of Accounting Professions (FAP)
 
The Department of Business Development, Ministry of Commerce
 
The Revenue Department, Ministry of Finance
 
International Federation of Accountants
 
International Forum of Independent Audit Regulators (IFIAR)
 
Financial Accounting Standards Board (FASB)
 
International Accounting Standard Board (IASB)
 
 
 

10. Independent Audit Oversight

 

The collapse of Enron in 2001 and dubious accounting practices employed by listed companies found in various jurisdictions raised serious concerns among capital market regulators on the quality of financial statements and more stringent quality control on audit work has been imposed to regain confidence and prevent recurrence of the problematic issue. In response to the said incidents, the International Organization of Securities Commissions (IOSCO), in 2002, issued “Principle of Auditor Oversight,” which emphasizes the independence of regulators from the accounting profession. The Principle was aimed at providing a guideline for IOSCO members to implement their supervisory frameworks.

 

Later in 2006, a number of independent audit regulators established in the course of the implementation of IOSCO’s Principle of Auditor Oversight co-founded the International Forum of Independent Audit Regulators (IFIAR) as an international forum that brings together independent audit regulators from different jurisdictions.

 

Thailand participated in the World Bank’s assessment on accounting and auditing standards. The result of the assessment was publicized in 2008 as the Reports on the Observance of Standards and Codes: Accounting & Auditing modules (AA-ROSC). One of the World Bank’s recommendations was that Thailand should establish an independent audit regulator to perform the function of quality assurance and review of the audit firms, and while such independent audit regulator has yet to be established, the SEC should perform the function in relation to public entities, listed companies.

 

To support competitiveness of Thai listed companies and improvement of financial statements to conform to the international standards, the SEC, in 2010, revised the rules on approval of auditors by prescribing that the auditor to be approved by the SEC must be attached to audit firms that have audit quality control system in accordance with the prescribed standard. Later in September, the SEC became a member of the International Forum of Independent Audit Regulators (IFIAR). The SEC participation in the Forum will contribute to the international recognition in supervision on auditors in Thailand and give the SEC an opportunity to share insights and practical experiences of independent audit regulatory activities.​​​

​​​​​​​

11. Comment Letters on International Accounting Standards and International Financial Reporting Interpretations

  

●​ Comments on Exposure Draft ED 9 Joint Arrangements 
●​ Comments on IFRIC Draft Interpretation D23 – Distributions of Non-cash Assets to Owners 
●​ ​Comments on Exposure Draft of Proposed Improvements to International Financial Reporting Standards 
●​ Comments on Exposure Draft of Proposed Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Exposures Qualifying for Hedge Accounting 
●​ Comments on Discussion Paper Preliminary Views on Insurance Contracts 
●​ Comments on IFRIC Draft Interpretation D21 - Real Estate Sales 
●​ Comments on IFRIC Draft Interpretation D22 - Hedges of a Net Investment in a Foreign Operation 
●​ Comments on exposure Draft of a Proposed IFRS for Small and Medium-sized Entities   
●​ Comments on Exposure Draft of Proposed Amendments to IAS 24 Related Party Disclosures-State-controlled Entities and the Definition of a Related Party 
●​ Comments on Discussion Paper - Fair Value Measurements 
●​ Comments on Exposure Draft of proposed Amendments to IFRS 1 First-Time Adoption of International Financial Reporting Standards - Cost of and investment in a Subsidiary
●​ Comments on discussion Paper Preliminary Views on an improved Conceptual Framework for Financial Reporting: The Objective  of Financial Reporting and Qualitative Characteristics of Decision-useful Financial Reporting Information
●​ ​Comments on IFRIC Draft Interpretation D20  Customer Loyalty Programmes
●​ Comments on IFRIC Draft  Interpretation D19  IAS19 - The Asset Ceiling: Availability of Economic Benefits and Minimum Funding Requirements 
●​ Comments on exposure Draft of Proposed Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements: Financial Instruments Puttable at Fair Value and Obligation Arising on Liquidation 
●​ Comments on exposure Draft of Proposed Amendments to IAS 23 Borrowing Costs
●​ Comments on exposure Draft of Proposed Amendments to IAS 1 - Presentation of Financial Statements - A Revised Presentation 
●​ Comments on exposure Draft  ED8: Operating Segments 
●​ Comments on IFRIC D18: Interim Financial Reporting and Impairment 
●​ ​Comments on IAS 27: Consolidated and Seperate Financial Statements   
 

 

Handbook for approval of foreign auditors
 
1. Relevant laws and regulations
 
    1.1 Section 61 Section 89 and Section 199 of the Securities and Exchange Act B.E. 2535 (1992) 
    1.2 Notification of the office of the Securities and Exchange Commission No. SorShor. 30/2558 Re: Approval of Foreign Auditors in the Capital Market   Thai / English   
    1.3 Notification of the office of the Securities and Exchange Commission No. SorShor. 39/2553 Re: Approval of Auditors in the Capital Market  Thai / English   
    1.4 Notification of the office of the Securities and Exchange Commission No. SorShor. 9/2558
Re: Approval of Auditors in the Capital Market (No. 2)
  Thai / English 
    1.5 Notification of the office of the Securities and Exchange Commission No. SorMor. 29/2558
Re: Application Fee  Thai / English
 
 
2. Introduction
 
Whereas Section 61 Section 89 and Section 199 of the Securities and Exchange Act B.E. 2535 (1992) and the Notification of the Capital Market Supervisory Board relating to the Rules, Conditions and Procedures for Disclosure regarding Financial and Non-financial Information of Securities Issuer stipulate that the auditor who audits and certifies financial statements of foreign entity whose securities are publicly offered in Thailand market must be approved by the SEC. Therefore, the SEC hereby issues the regulations on approval of foreign auditors in the Capital Market as follows;
 
Foreign auditors who wish to be approved from the SEC shall file the application form together with supporting documents as per checklists to the SEC. In considering the application, the SEC has two approval systems as follows;
 
(1) Fast Track: auditors who
            (a) are under supervision by an audit oversight authority that has same auditor oversight standard as that of the SEC, and
            (b) have experience in auditing and certifying financial statements of entities whose securities are publicly traded in main board of foreign stock exchange,
             shall be granted the approval as foreign auditors in the capital market
without full inspection prior to approval 
 
(2) Normal: auditors who do not meet the Fast Track qualifications will be inspected by the SEC prior to approval. The inspection may include, but not limited to
           
(a) checking the basic individual qualifications of the applicant i.e. having extensive audit experience, holding a CPA license, not possessing prohibited characteristics and prohibited behaviors,
            (b) inspecting audit works performed by the applicant to ensure the compliance with the ISAs, and
            (c) inspecting the audit firm’s quality control system to ensure compliance with the ISQC 1.
 
3. Checking whether applicant’s qualification meet with Fast Track Approval Conditions
 
Foreign auditor to be approved by the SEC under fast track approval system shall hold all of the following qualifications;
 
(1) being an auditor who, in accordance with foreign laws, is eligible to perform audit and certify financial statements of a foreign entity whose securities are publicly traded in the main board of a foreign stock exchange, and have experience relating to the audit of such foreign entity
 
(2) being under supervision of following regulators;
 
4. Approval Process
 
    (1) Fast Track
    (2) Normal
Last updated on 24 October 2017
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