Authorised Public Accountants Act
Passed 10 February 1999,
(RT1 I 1999, 24, 360),
entered into force 1 July 1999,
amended by the following Acts:
11.02.2003 entered into force 08.03.2003 - RT I 2003, 23, 133;
19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375;
16.06.2002 entered into force 01.08.2002 - RT I 2002, 57, 357;
05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336;
29.01.2002 entered into force 04.03.2002 - RT I 2002, 21, 117.
Chapter 1
General Provisions
§ 1. Scope of application
(1) This Act determines the requirements for auditors, the bases for passing the examination of professional competence, the legal bases for the professional activities of auditors and the organisation of the Board of Auditors.
(2) This Act does not apply to the audit activities of the State Audit Office nor the auditors of the State Audit Office.
(29.01.2002 entered into force 04.03.2002 - RT I 2002, 21, 117)
(3) The provisions of the Administrative Procedure Act (RT I 2001, 58, 354; 2002, 53, 336; 61, 375; 2003, 20, 117) apply to administrative proceedings prescribed in this Act, taking account of the specifications provided for in this Act.
(19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
§ 2. Auditors and auditing
(1) An auditor is:
1) a natural person who has obtained the qualification of an auditor and is entered in the list of auditors;
2) a company of auditors entered in the list of auditors (hereinafter firm of auditors).
(2) The provisions of this Act which directly regulate the activities of firms of auditors extend to firms of auditors.
(3) The professional activities of an auditor are auditing, business consultancy and performance of other functions assigned to auditors by legislation.
(4) Auditing means the examination of financial statements and the provision of an opinion pertaining thereto according to the auditing rules. Auditors have the right to perform audits.
(5) The auditing rules include requirements for auditing and professional ethics based on the standards of the International Federation of Accountants. The auditing rules shall be prepared by the management board of the Board of Auditors and approved by a regulation of the Minister of Finance.
§ 3. Board of Auditors
(1) The Board of Auditors is a self-governing professional association of Estonian auditors which organises the professional activities of auditors and protects the rights of auditors.
(2) The members of the Board of Auditors are all auditors who are natural persons and have been entered in the list of auditors.
Chapter 2
Board of Auditors
Division 1
Legal Status and Competence of Board of Auditors
§ 4. Legal status of Board of Auditors
(1) The Board of Auditors is a legal person in public law established by this Act.
(2) The Board of Auditors shall operate pursuant to this Act, the statutes approved by the general meeting of the Board of Auditors, the resolutions adopted by the bodies of the Board of Auditors, the generally recognised rules and practice of international law and professional activities of auditors, and good morals.
(3) The Board of Auditors shall be dissolved on the basis of an Act.
(4) The Board of Auditors shall be registered in the state register of state and local government agencies pursuant to the procedure provided for in the statutes of the register.
(16.06.2002 entered into force 01.08.2002 - RT I 2002, 57, 357)
§ 5. Assets of Board of Auditors
(1) The assets of the Board of Auditors are formed from:
1) obligatory membership fees paid by auditors;
2) fines imposed as disciplinary penalties;
3) income received from investment of the assets of the Board of Auditors;
4) donations;
5) other income.
(2) The amount of obligatory membership fee shall be established by the management board of the Board of Auditors pursuant to the procedure prescribed by the statutes of the Board of Auditors.
(3) The Board of Auditors shall not secure the obligations of other persons or grant loans.
§ 6. Competence and functions of Board of Auditors
The competence and functions of the Board of Auditors include:
1) co-ordination of the professional activities of auditors, preparation, publication and introduction of the auditing rules and methodological recommendations;
2) maintenance of the list of auditors;
3) supervision of the professional activities of auditors and compliance with the auditing rules;
4) organisation of in-service training of auditors;
5) administration of the assets of the Board of Auditors;
6) review of complaints concerning auditors;
7) resolution of other professional matters of auditors.
§ 7. Bodies of Board of Auditors
(1) The bodies of the Board of Auditors are the general meeting, the management board and the audit committee.
(2) Upon election of the bodies of the Board of Auditors, the members of the management board are elected first and then the members of the audit committee are elected.
Division 2
General Meeting of Board of Auditors
§ 8. General meeting
(1) The general meeting is the highest body of the Board of Auditors and consists of all auditors who are natural persons.
(2) The general meeting shall:
1) approve the statutes of the Board of Auditors;
2) determine the number of members in the management board and the audit committee;
3) elect the members of the management board and the audit committee of the Board of Auditors;
4) approve the annual report and the budget of the Board of Auditors;
5) grant consent to the auditing rules;
6) resolve the complaints filed with the Board of Auditors against the management board of the Board of Auditors;
7) elect the representatives of the Board of Auditors in the auditors professional qualifications committee;
8) approve the requirements for activity reports;
9) decide other issues prescribed by law and the statutes of the Board of Auditors.
§ 9. Annual general meeting
(1) The management board shall call an annual general meeting at least once a year but not later than within six months after the end of the financial year.
(2) The management board shall notify the auditors of the time and place of an annual general meeting at least one month before the meeting is held.
§ 10. Extraordinary general meeting
(1) The management board shall call an extraordinary general meeting:
1) on its own initiative;
2) on the proposal of the audit committee;
3) on the proposal of the Minister of Finance;
4) at the request of at least one-sixth of the auditors.
(2) The management board shall notify the auditors of the time and place of an extraordinary general meeting at least two weeks before the meeting is held.
(3) If the management board does not call an extraordinary general meeting within one month after receiving a proposal from the auditors, the audit committee or the Minister of Finance, the auditors, the audit committee or the Minister of Finance have the right to call a general meeting.
§ 11. Adoption of resolutions
(1) The general meeting has a quorum if more than one-half of the auditors participate. If less than one-half of the auditors participate in a general meeting, the management board shall, within two weeks, call a new general meeting which has a quorum regardless of the number of participants.
(2) The resolutions of the general meeting are adopted by open vote unless the general meeting decides otherwise.
(3) In the adoption of resolutions, each auditor shall have one vote.
(4) A resolution is deemed to be adopted if at least one-half of the votes represented at the general meeting are in favour unless a greater majority requirement is prescribed by law or the statutes of the Board of Auditors.
Division 3
Management Board of Board of Auditors
§ 12. Management board
(1) The management board is a permanent body of the board of auditors and organises the activities of the Board of Auditors.
(2) The members of the management board shall be elected from among the auditors for a term of three years.
(3) A member of the management board shall not be a member of the audit committee.
(4) The statutes of the Board of Auditors may prescribe more specific rules of procedure of the management board.
§ 13. Competence and functions of management board
The management board shall:
1) direct the Board of Auditors;
2) administer the assets of the Board of Auditors;
3) prepare the programme of the examination of professional competence (hereinafter examination) and submit the programme to the Minister of Finance for approval;
4) prepare the budget of the Board of Auditors and submit it to the general meeting for approval;
5) decide the remuneration of the employees of the Board of Auditors within the limits of the operating expenses prescribed in the budget approved by the general meeting;
6) decide the making of expenditure necessary for the activities of the Board of Auditors to the extent of and according to the budget approved by the general meeting;
7) establish the amount of the membership fee of the Board of Auditors;
8) organise the accounting of the Board of Auditors;
9) prepare the auditing rules and submit the rules to the general meeting of the Board of Auditors for consent and then to the Minister of Finance for approval;
10) exercise supervision over the professional activities of and compliance with the requirements of professional ethics by the members of the Board of Auditors;
11) decide the referral of an auditor to an additional examination and specify the term for the taking of the additional examination;
12) decide the suspension, resumption and termination of the professional activities of an auditor;
13) submit a resolution specified in clause 12) of this section to the auditors professional qualifications committee (hereinafter professional qualifications committee) for consent;
14) organise the in-service training of auditors;
15) resolve the complaints filed with the Board of Auditors against the professional activities of auditors;
16) prepare the requirements for activity reports and submit the requirements to the general meeting for approval;
17) perform other functions connected with managing the Board of Auditors.
§ 14. Resolutions of management board
(1) The management board has a quorum if more than one-half of the members of the management board are present.
(2) A resolution of the management board is adopted if more than one-half of the persons present vote in favour.
(3) A member of the management board shall not participate in voting if a resolution concerning the member is adopted.
(4) Minutes shall be taken of the meetings of the management board. The requirements for the taking of the minutes, the information to be recorded in the minutes, the procedure for signing the minutes and documenting dissenting opinions shall be provided for in the statutes of the Board of Auditors.
§ 15. Chairman of management board
(1) The members of the management board shall elect from among themselves the chairman of the management board who shall organise the work of the management board and represent the Board of Auditors in all legal acts.
(2) The chairman of the management board shall enter into, amend and terminate the employment contracts of the employees of the Board of Auditors.
§ 16. Liability of members of management board
(1) The members of the management board shall be solidarily liable for any damage wrongfully caused to the Board of Auditors or to auditors by violation of law or the requirements of the statutes of the Board of Auditors, or by failure to fulfil their obligations.
(2) A member of the management board shall be relieved of liability to the Board of Auditors if he or she maintained a dissenting opinion in the adoption of a resolution which was the basis for an illegal activity, and the dissenting opinion has been recorded in the minutes.
Division 4
Auditing, Reporting and Supervision of Board of Auditors
§ 17. Audit committee
(1) The audit committee shall audit the economic activities and administration of the Board of Auditors.
(2) A member of the audit committee shall not be a member of the management board or be employed by the Board of Auditors.
(3) The audit committee shall be elected for a term of four years.
(4) The audit committee adopts resolutions by a majority of the votes of the members in favour.
§ 18. Accounting
The Board of Auditors shall organise accounting pursuant to the Accounting Act (RT I 2002, 102, 600), other legislation and the statutes of the Board of Auditors.
(11.02.2003 entered into force 08.03.2003 - RT I 2003, 23, 133)
§ 19. Financial year and reporting
(1) The financial year of the Board of Auditors is the calendar year.
(2) Within three months after the end of the financial year, the management board shall submit an annual economic activity report to the audit committee for review and provision of an opinion. The audit committee shall review the annual economic activity report and submit an opinion to the management board within three months.
(3) Within six months after the end of the financial year, the management board shall submit the annual report together with the opinion of the audit committee to the general meeting for approval.
§ 20. State supervision of activities of Board of Auditors
(1) State supervision over the activities of the Board of Auditors shall be exercised by the Minister of Finance. State supervision means the monitoring of the observance of law and other legislation and adherence to the statutes of the Board of Auditors by the Board of Auditors.
(2) Copies of all resolutions of the general meeting of the Board of Auditors shall be sent to the Minister of Finance. The Minister of Finance has the right to demand other documents of the bodies of the Board of Auditors, except documents which contain professional secrets of auditors. The management board of the Board of Auditors shall decide whether a document of a body of the Board of Auditors contains a professional secret.
(3) If a resolution of a body of the Board of Auditors is in conflict with law, the Minister of Finance is required to file a protest to that effect with an administrative court.
Chapter 3
Auditor
§ 21. Requirements for auditors
(1) A natural person:
1) who has active legal capacity;
2) whose level of education corresponds at least to a bachelor’s degree recognised by the state;
3) who has an impeccable reputation;
4) who has received theoretical training necessary to engage in the professional activities of auditors and has three years of practical work experience under the supervision of an auditor;
5) who has passed the examination
(2) A citizen of a foreign state who has obtained the qualification of an auditor in a foreign state may practise as an auditor in Estonia if he or she has pursuant to this Act passed an examination on the legislation which is currently in force in Estonia and necessary for the work of an auditor, and has a work permit in Estonia. The requirements specified in clauses (1) 2) and 4) of this section do not apply to citizens of foreign states.
(3) The following may not practise as auditors:
1) persons whose professional activities as an auditor have been terminated on the basis of this Act;
2) persons who have been convicted of an intentionally committed criminal offence pursuant to criminal procedure;
3) persons who are bankrupt;
4) persons who are active in an area which is incompatible with good auditing practice;
5) persons who are not of good repute.
§ 22. Obtaining qualification of auditor
(1) In order to obtain the qualification of an auditor, an applicant must pass an examination. Examinations shall be conducted by the professional qualifications committee.
(2) A person who has passed the examination shall be issued a professional licence of an auditor by the professional qualifications committee after the person has taken the auditor’s oath of office and has been entered in the list of auditors.
(3) The format of the professional licence of an auditor shall be established by the Minister of Finance.
§ 23. Professional qualifications committee
(1) The professional qualifications committee shall be formed by the Government of the Republic for a term of three years and shall consist of nine members who are experts on auditing.
(2) The following members belong to the professional qualifications committee:
1) a representative of the State Audit Office;
2) a representative of the Bank of Estonia;
3) three representatives appointed by the Minister of Finance;
4) four representatives elected by the Board of Auditors.
(3) The rules of procedure of the professional qualifications committee shall be established by the Minister of Finance.
(4) The professional qualifications committee has a quorum if at least seven members of the committee are present.
(5) The expenditure of the professional qualifications committee shall be covered from the state budget.
§ 24. Competence and functions of professional qualifications committee
The professional qualifications committee shall:
1) administer examinations to persons who apply for the qualification of an auditor and auditors whom the management board of the Board of Auditors has referred to an additional examination;
2) administer the oath of office of auditors and issue professional licences to auditors;
3) decide whether an auditor referred to an additional examination has passed the examination;
4) grant consent to the resolutions of the management board of the Board of Auditors concerning the suspension, resumption or termination of the professional activities of an auditor.
§ 25. Examination
(1) Persons who apply for the qualification of an auditor and auditors referred to an additional examination shall take the examination.
(2) In order to take the examination, the following shall be submitted to the professional qualifications committee:
1) an application;
2) a copy of an identity document;
3) a curriculum vitae;
4) a description of professional activities;
5) a copy of a document certifying education;
6) (Repealed - 19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
7) a confirmation from the auditor or auditors under the supervision of whom the person who applies for the qualification of an auditor underwent practical training.
(21) Persons who apply for the qualification of an auditor and auditors referred to an additional examination shall pay the state fee before submitting an application to the professional qualifications committee in order to take the examination.
(19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
(3) The examination shall be conducted in Estonian and consist of a theoretical and practical part. The persons specified in subsection 21 (2) may take the examination in English.
(4) The programme of the examination shall be approved by the Minister of Finance on the proposal of the management board of the Board of Auditors.
(5) Examinations shall be conducted as needed but not less frequently than once a year. The professional qualifications committee shall specify the time and place of the examination and the term for the submission of documents specified in subsection (2) of this section.
(6) The professional qualifications committee shall send a copy of the report of examination results to the management board of the Board of Auditors.
§ 26. Oath of office of auditors
(1) In order to obtain the qualification of an auditor, a person shall take the following written oath of office before the professional qualifications committee:
“I swear to perform in a conscientious and accurate manner the functions which the professional activities of an auditor require. I am aware that the professional activities of an auditor involve liability.”
(2) A person who takes the oath shall sign the text of the oath and indicate the date of taking the oath.
(3) The professional qualifications committee shall send the signed text of an oath of office to the management board of the Board of Auditors.
§ 27. Retention of qualification of auditor
(1) In order to retain the qualification of an auditor, an auditor shall submit an activity report to the management board of the Board of Auditors at least once every three years at the time specified by the management board of the Board of Auditors. An activity report shall be prepared pursuant to good auditing practice and contain a thorough overview of the professional activities of the auditor.
(2) If it becomes evident from the acts or omissions of an auditor that he or she has lost the professional competence required in the work of an auditor, the management board of the Board of Auditors shall, by a resolution, refer the auditor to an additional examination. The term for the taking of the additional examination by the auditor shall be specified by a resolution of the management board.
§ 28. Suspension and resumption of professional activities of auditors
(1) The professional activities of an auditor in Estonia shall be suspended by a resolution of the management board of the Board of Auditors at the consent of the professional qualifications committee, if the auditor:
1) for health or other reasons, cannot practise as an auditor for more than six consecutive months;
2) is a suspect, an accused or an accused at trial in a criminal matter and, therefore, cannot practise as an auditor;
3) is referred to an additional examination by a resolution of the management board.
(2) The professional activities of an auditor in Estonia shall be resumed by a resolution of the management board of the Board of Auditors at the consent of the professional qualifications committee if the circumstances provided for in clause (1) 1) or 2) of this section cease to exist.
(3) The professional activities of an auditor who has been referred to an additional examination shall be resumed by a resolution of the management board of the Board of Auditors on the basis of the report of the professional qualifications committee.
(4) An auditor is required to immediately notify the management board of the Board of Auditors in writing of any circumstances provided for in clauses (1) 1) and 2) of this section which hinder the performance of the functions of the auditor.
(5) As a disciplinary punishment, the professional activities of an auditor may be suspended by a resolution of the management board of the Board of Auditors.
(6) A notation in the list of auditors shall be made concerning the suspension of the professional activities of an auditor.
(7) If the professional activities of an auditor are suspended for more than two years, he or she shall be referred to an additional examination by a resolution of the management board of the Board of Auditors. The term for the taking of the additional examination by the auditor shall be specified by a resolution of the management board.
§ 29. Termination of professional activities of auditor
(1) The professional activities of an auditor shall terminate:
1) as of 1 January of the year following the year during which the auditor attains 70 years of age, or
2) upon the death of the auditor.
(2) The professional activities of an auditor shall be terminated:
1) on the basis of a corresponding application from the auditor, or
2) upon a severe breach of the professional ethics of auditors or the requirements for auditing, or
3) upon damage to the reputation of auditors by unlawful or unethical activities, or
4) upon submission of false information to obtain the qualification of an auditor or to be entered in the list of auditors, or
5) upon failure to comply with the requirements established for auditors by law, or
6) upon conviction for an intentionally committed criminal offence, or
7) upon failure to perform the obligations of a member of the Board of Auditors without good reason, including failure to pay the membership fee of the Board of Auditors, or
8) upon failure to submit an activity report within the term or to the extent specified by the management board of the Board of Auditors, or
9) upon failure to pass an additional examination within the term specified in a resolution of the management board of the Board of Auditors.
(3) The management board of the Board of Auditors shall decide on the termination of the professional activities of an auditor and shall revoke the resolution of the professional qualifications committee to issue the professional licence.
(4) The resolution of the management board specified in subsection (3) of this section shall be approved by the professional qualifications committee. The resolution shall enter into force when the auditor is notified thereof.
(19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
§ 30. Consequences of termination of professional activities of auditor
(1) Upon termination of the professional activities of an auditor, the auditor loses the right to practise as an auditor in Estonia.
(2) Upon termination of the professional activities of an auditor, the documents concerning the professional activities of the auditor shall remain with the firm of auditors. If an auditor whose professional activities terminate or are terminated is the sole shareholder of a firm of auditors or operates as a sole proprietor, or if the activities of a firm of auditors are terminated, the documents shall be submitted to the management board of the Board of Auditors.
(3) Upon termination of the professional activities of an auditor, the professional licence of the auditor shall be submitted to the management board of the Board of Auditors.
(19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
Chapter 4
Firm of auditors
§ 31. Firm of auditors
(1) A firm of auditors may operate as a general partnership, limited partnership, private limited company or public limited company.
(2) The provisions of law concerning the corresponding types of companies apply to firms of auditors unless otherwise prescribed by law.
(3) A firm of auditors operating as a public limited company may issue only registered shares. The partnership agreement of a firm of auditors operating as a general partnership or limited partnership shall be entered into in writing.
(4) At least three-fourths of the votes represented by the shares of a firm of auditors shall belong to auditors or firms of auditors and the majority of the members of the management board shall be auditors.
(5) A firm of auditors may operate as an auditor only if the firm of auditors is entered in the list of auditors.
§ 32. Restrictions on activities of firms of auditors
(1) The area of activity of a firm of auditors may include only the professional activities of auditors and other activities related thereto, and the performance of other functions assigned to auditors by legislation.
(2) Before the entry of a firm of auditors in the list of auditors or before the amendment of an area of activity in the list of auditors, the firm of auditors shall submit an application to the management board of the Board of Auditors in order to obtain an opinion concerning the compliance of the area of activity with subsection (1) of this section.
(3) The management board of the Board of Auditors shall respond to an application within one month.
§ 33. Auditor in charge
(1) Upon entry into a contract with a client (§ 43), a firm of auditors shall appoint an auditor in charge from among the auditors who operate in the firm of auditors and are natural persons.
(2) An auditor or auditors who perform a contract with a client and the auditor in charge shall sign the auditor’s report and other documents.
Chapter 5
List of auditors
§ 34. List of auditors
(1) The management board of the Board of Auditors shall maintain the list of auditors. The list shall be public.
(2) The following shall be entered in the list with regard to an auditor who is a natural person:
1) the name and personal identification code of the auditor;
2) the residence of the auditor;
3) the address of the place of business and the telecommunication numbers of the auditor;
4) information concerning the education of the auditor;
5) the date of issue of the professional licence to the auditor;
6) the time and basis for the suspension, resumption or termination of the professional activities of the auditor.
(19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
(3) The following shall be entered in the list with regard to a firm of auditors:
1) the business name of the firm;
2) the registry code of the firm;
3) the seat and address of the firm;
4) the area(s) of activity of the firm;
5) the names and residences of the members of the management board of the firm;
6) the names and residences or seats of the shareholders of the firm;
7) the type of the firm;
8) the names and residences of auditors operating in the firm;
9) the merger, division, transformation or dissolution of the firm.
§ 35. Entry of auditors in list
(1) A person who has passed the examination shall be entered in the list of auditors within one month after taking the examination, on the basis of a report on the examination results provided by the professional qualifications committee.
(2) In order to be entered in the list of auditors, a person shall, within two weeks after passing the examination, submit an application to the management board of the Board of Auditors, setting out the residence, the address of the place of business and the telecommunication numbers of the person and shall annex the following documents to the application:
1) (Repealed - 19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
2) a curriculum vitae;
3) a confirmation from the auditor or auditors under the supervision of whom the person applying for the qualification of an auditor underwent practical training;
4) a copy of a document certifying education.
(3) In order to be entered in the list of auditors, a firm of auditors shall submit an application to which the following documents and information shall be annexed:
1) (Repealed - 19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
2) the articles of association;
3) a copy of the share register or the list of shareholders or the partnership agreement;
4) the names and residences of auditors operating in the company;
5) the opinion of the management board of the Board of Auditors specified in § 32 of this Act.
(31) Before entry in the list, the management board of the Board of Auditors shall verify the information in the commercial register regarding the firm of auditors.
(19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
(4) An auditor or a firm of auditors entered in the list shall ensure the correctness of the information submitted.
§ 36. Deletion of auditor from list
(1) An auditor shall be deleted from the list of auditors on the bases provided for in subsection 29 (1) of this Act if the professional activities of the auditor terminate, or on the basis of a resolution of the management board of the Board of Auditors provided for in subsection 29 (3) of this Act which has been approved by the professional qualifications committee if the professional activities of the auditor are terminated.
(19.06.2002 entered into force 01.08.2002 - RT I 2002, 61, 375)
(2) If a firm of auditors does not comply with § 31 of this Act and other requirements of this Act, the firm of auditors shall be deleted from the list of auditors on the basis of a resolution of the management board of the Board of Auditors.
Chapter 6
Professional Activities of Auditors
§ 37. Bases for professional activities of auditors
An auditor shall be independent and impartial in the professional activities of auditor and shall operate solely pursuant to law, the auditing rules, the requirements of professional ethics, and the resolutions and recommendations of the bodies of the Board of Auditors.
§ 38. Maintenance of professional secrets
(1) An auditor shall maintain the confidentiality of information which has become known to the auditor in the course of the professional activities of the auditor. The obligation shall remain in force also after the termination of the professional activities of an auditor and shall extend to the members of the professional qualifications committee and the management board of the Board of Auditors, assistants of auditors, employees of firms of auditors and the Board of Auditors and to other persons to whom a professional secret of an auditor has become known in the performance of their duties.
(2) Disclosure of information is deemed not to be a violation of professional secrecy if such information is disclosed:
1) to the management board of the Board of Auditors in order to retain the qualification of an auditor;
2) in the course of disciplinary proceedings;
3) to a court on the basis of a court ruling or court judgment;
4) to a preliminary investigation authority in connection with a criminal proceeding;
5) to the State Audit Office for the performance of its duties.
(29.01.2002 entered into force 04.03.2002 - RT I 2002, 21, 117)
§ 39. Restrictions on activities of auditors
(1) An auditor shall not operate in an area of activity which may influence the auditor’s impartiality or is incompatible with good auditing practice.
(2) An auditor shall submit an application to the management board of the Board of Auditors in order to obtain an opinion concerning the compliance of an area of activity with subsection (1) of this section.
(3) The management board of the Board of Auditors shall respond to an application within one month.
§ 40. Proprietary liability of auditors
(1) If mandatory auditing is prescribed by law, an auditor or a firm of auditors shall be liable for any damage wrongfully caused to a client or a third party as a result of violation of an obligation arising from the professional activities of the auditor or the firm of auditors. Any agreement on the restriction of liability of an auditor is void.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(2) Several auditors or firms of auditors shall be solidarily liable for any damage wrongfully caused to a client or a third party jointly by the auditors or firms of auditors.
(3) The limitation period for the claims specified in this section is five years.
§ 41. Documents concerning professional activities of auditors
Auditors and firms of auditors shall preserve the documents concerning the professional activities for seven years.
§ 42. Professional liability insurance of auditors
(1) In order to ensure compensation for damage caused as a result of the professional activities of an auditor, the auditor shall enter into a professional liability insurance contract for the entire duration of the professional activities of the auditor.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
(2) The management board of the Board of Auditors shall establish the minimum amount of indemnity and the essential terms and conditions of the professional liability insurance contract.
(3) An insurer has the right of recourse against an auditor if an indemnity is paid to compensate for damage caused by an intentional unlawful act of the auditor.
§ 43. Contracts with clients
An auditor or a firm of auditors and a client shall enter into an agreement concerning the auditor who performs the contract and the auditor in charge, their obligations, the type and amount of their remuneration, and the liability of the auditor and the client. The agreement shall be entered into in writing if the client so requests.
(05.06.2002 entered into force 01.07.2002 - RT I 2002, 53, 336)
§ 44. Supervision of activities of auditors
(1) Supervision over the activities of auditors shall be exercised by the management board of the Board of Auditors.
(2) The management board of the Board of Auditors has the right to examine documents relating to the professional activities of auditors and receive information from auditors necessary for the examination.
§ 45. Disciplinary proceedings against auditors
(1) If an auditor fails to comply or complies inadequately with this Act, other legislation regulating the activities of auditors, or the resolutions of the Board of Auditors, the management board of the Board of Auditors has the right to bring disciplinary proceedings against the auditor.
(2) Disciplinary punishments include:
1) admonition;
2) reprimand;
3) fine;
4) suspension of the professional activities of an auditor for a period of three months to one year;
5) termination of the professional activities of an auditor.
(3) A fine shall not be less than the minimum monthly wage established by the Government of the Republic and applicable at the time the fine is imposed or more than one-twelfth of the income in the preceding year of the auditor who is punished. A fine shall be paid to the Board of Auditors and shall be included in the income of the Board of Auditors.
(4) Disciplinary procedure and the procedure for the imposition and contestation of disciplinary punishments shall be provided for in the statutes of the Board of Auditors.
Chapter 7
Implementation of Act
§ 46. Entry into force of Act
This Act enters into force on 1 July 1999.
§ 47. Formation of Board of Auditors
(1) Upon the entry into force of this Act, auditors who hold a valid professional licence of an auditor issued by the Auditing Board shall form the Board of Auditors and shall be entered in the list of auditors.
(2) The Minister of Finance shall call the first general meeting of the Board of Auditors within three months after the entry into force of this Act. The first general meeting shall elect the management board of the Board of Auditors and the members of the audit committee who assume office as of the moment of the election, and the representatives in the professional qualifications committee.
§ 48. Formation of professional qualifications committee
The professional qualifications committee shall be formed by the Government of the Republic within one month after the formation of the Board of Auditors.
§ 49. Application of Act to auditors to whom professional licence of auditor has been issued prior to entry into force of this Act
(1) Auditors to whom a professional licence of auditor has been issued prior to the entry into force of this Act shall submit activity reports in compliance with the requirements provided for in § 27 of this Act during the term specified by the management board of the Board of Auditors but not later than two years after the entry into force of this Act.
(2) Requirements provided for in clause 21 (1) 4) of this Act shall not extend to auditors to whom a professional licence of auditor has been issued prior to the entry into force of this Act.
§ 50. Amendment of Commercial Code
Subsection 328 (2) of the Commercial Code (RT I 1995, 26-28, 355; RT I 1998, 91-93, 1500; 1999, 10, 155; 23, 355; 24, 360; 57, 596; 102, 907; 2000, 29, 172; 49, 303; 55, 365; 57, 373; 2001, 34, 185; 56, 332 and 336; 89, 532; 93, 565; 2002, 3, 6; 35, 214; 53, 336; 61, 375; 63, 387 and 388; 96, 564; 102, 600; 110, 657; 2003, 4, 19; 13, 64; 18, 100) is omitted.
§ 51. Amendment of State Fees Act
Section 1972 is added to the State Fees Act (RT I 1997, 80, 1344; 2001, 55, 331; 56, 332; 64, 367; 65, 377; 85, 512; 88, 531; 91, 543; 93, 565; 2002, 1, 1; 9, 45; 13, 78; 79; 81; 18, 97; 23, 131; 24, 135; 27, 151; 153; 30, 178; 35, 214; 44, 281; 47, 297; 51, 316; 57, 358; 58, 361; 61, 375; 62, 377; 82, 477; 90, 519; 102, 599; 105, 610; 2003, 4, 20; 13, 68; 15, 84; 85; 20, 118; 21, 128) worded as follows:
Ǥ 1972. Application for qualification of auditor
A state fee of 4 000 kroons shall be paid upon application for the qualification of an auditor.”
§ 52. Amendment of Taxation Act
Clause 4) is added to subsection 20 (2) of the Taxation Act (RT I 1994, 1, 5; 1996, 35, 714; 49, 953; 78, 1379; 81, 1447; 1997, 24, 363; 29, 447; 48, 778; 51, 822; 73, 1201; 77, 1313; 1998, 40, 611; 86/87, 1409) worded as follows:
«4) an auditor or a person connected with the professional activities of an auditor, pursuant to subsection 38 (1) of the Authorised Public Accountants Act.”
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RT = Riigi Teataja = State Gazette