BPAB is constituted by the Bermuda Public Accountability Act 2011 (the “Act”), including subsequent amendments thereto in 2015, 2017 and 2020.
The procedures of BPAB are further set out in subordinate legislation made pursuant to the Act containing Rules and Regulations.
Section 32 of the Act and Rule 13 in Part 4 of the Bermuda Public Accountability (General) Rules 2015 (the “Rules”) specifically covers “Inspections and Investigations” providing for the inspections at least once in every three year period for each of the registered PIE public accountants. Under the Act and Rules, BPAB may at any time determine that a special inspection is required, or where applicable, an investigation.
Inspection Activity
Inspections are assessments of the compliance of each PIE public accountant with the provisions of the Act and Regulations, the professional standards and rules, and the quality control policies of the PIE public accountant, in connection with the issuance of audit reports on the financial statement of PIEs.
Under the Rules, either the Compliance Committee, or any person or entity authorized by BPAB to participate in the inspection, may take such steps and perform such procedures as BPAB determines to be necessary or appropriate. These include document requests and oral interviews.
Rule 12 of the Rules provides that each member firm (and its professionals, partners and employees) are obliged to cooperate with inspections and comply with all BPAB demands and requests.
Inspection Reporting
Inspections result in the production of inspection reports as per Section 14 of the Rules which is to set out any weaknesses in the PIE public accountant’s system of quality controls, any significant deficiencies in any audit engagement reviewed, and recommendations for improvement with regard to the PIE public accountant’s system of quality controls.
Following an inspection under Rule 13, the Compliance Committee will first produce a draft inspection report containing the findings of the inspection. Within 30 days of receiving the Compliance Committee’s draft report, the member firm shall respond to the recommendations contained in the draft report. Upon considering the member firm’s responses, the Compliance Committee may make such amendments as it thinks fit and/or finalize the draft report.
Remedial Action
Upon finalization of an inspection report, Rule 15 provides that the Compliance Committee shall commence remedial action in respect of any weaknesses, deficiencies and recommendations. Upon commencing remedial action, the member firm is required to submit evidence or otherwise demonstrate that it has remedied matters identified in the report, no later than 12 months after the date of the final report.
Where the member firm fails to adequately address all or any of the weaknesses, deficiencies or recommendations to the satisfaction of the Compliance Committee, the Compliance Committee shall publish its findings.
Investigation Activity
Where the Compliance Committee considers that a violation event has occurred, it may i) issue an order for an investigation under Rule 16 of the Rules; ii) may commence review proceedings; or iii) invoke its powers under Rule 24 where the Committee may give a violation event notice setting out the requirements, restrictions or penalties the Committee proposes to impose on such PIE public accountant.
Violation Events Notice
Violation Event Notice November 2020
Review Proceedings
Review proceedings are a quasi-judicial process that entails empaneling four members of any professional agency or entity of good repute situated locally or international and selected by BPAB. These four independent adjudicators are entitled to determine a firm’s liability for non-compliance.
Refer to the Legislation section of the website for further details. Click here to access Legislation page.