MORNBFI Vol. 1 - Planters Development Bank

APP. Q-3009.12.31Category B and C under BSP, and insurancebrokers under IC. Once accredited/selectedby any one (1) of them, the above-mentionedspecial requirements shall no longer beprescribed by the other regulators.For corporations which are required tosubmit financial statements to differentregulators and are not covered by the mutualrecognition policy of this MOA, thefollowing guidance shall be observed:a. The external auditors of UBs whichare listed in the Exchange, should beselected/accredited by both the BSP andSEC, respectively; andb. For insurance companies and banksthat are not listed in the Exchange, theirexternal auditors must each be selected/accredited by BSP or IC, respectively. Forpurposes of submission to the SEC, thefinancial statements shall be at least auditedby an external auditor registered/accreditedwith BOA.This mutual recognition policy shallhowever be subject to the BSP restrictionthat for banks and its subsidiary and affiliatebank, QBs, trust entities, NSSLAs, theirsubsidiaries and affiliates engaged in alliedactivities and other FIs which under speciallaws are subject to BSP consolidatedsupervision, the individual and consolidatedfinancial statements thereof shall be auditedby only one (1) external auditor/auditingfirm.6. The selection of external auditorsand/or auditing firm shall be valid for aperiod of three (3) years. The SES shall makean annual assessment of the performanceof external auditors and/or auditing firm andwill recommend deletion from the list evenprior to the three (3)-year renewal period, ifbased on assessment, the external auditors’report did not comply with BSPrequirements.E. QUALIFICATION REQUIREMENTThe following qualification requirementsare required to be met by the individualexternal auditor and the auditing firm at thetime of application and on continuing basis,subject to BSP’s provisions on the delistingand suspension of accreditation:1. Individual external auditora. General requirements(1) The individual applicant must beprimarily accredited by the BOA. Theindividual external auditor or partnerin-charge of the auditing firm must have atleast five (5) years of audit experience.(2) Auditor’s independence.In addition to the basic screeningprocedures of BOA on evaluating auditor’sindependence, the following are requiredfor BSP purposes to be submitted in the formof notarized certification that:(a) No external auditor may be engagedby any of the covered institutions under Item"B" hereof if he or any member of hisimmediate family had or has committed toacquire any direct or indirect financialinterest in the concerned covered institution,or if his independence is consideredimpaired under the circumstances specifiedin the Code of Professional Ethics for CPAs.In case of a partnership, this limitation shallapply to the partners, associates and theauditor-in-charge of the engagement andmembers of their immediate family;(b) The external auditor does not have/shall not have outstanding loans or anycredit accommodations or arranged for theextension of credit or to renew an extensionof credit (except credit card obligationswhich are normally available to other creditcard holders and fully secured auto loansand housing loans which are not past due)with the covered institutions under Item "B"at the time of signing the engagement andduring the engagement. In the case ofpartnership, this prohibition shall apply tothe partners and the auditor-in-charge of theengagement; and(c) It shall be unlawful for an externalauditor to provide any audit service to acovered institution if the coveredQ RegulationsAppendix Q-30 - Page 4Manual of Regulations for Non-Bank Financial Institutions