Enquiry:

ABC is a public company limited by shares and is listed on all the Stock Exchanges of Pakistan.

The Bank tenders for various consultancy in which the auditors of the bank have also been participating in the past. We would like to know if there is any bar on the auditors of the bank applying for and being given consultancy contracts or would it be considered as conflict of interest.

Opinion:

Your attention is drawn to clause 31-C of the Listing Regulations which is reproduced below for reference:

31-C (i) No Listed company shall, appoint or continue to retain any person as an auditor who is engaged by the company to provide services that are prohibited.

(i)    A listed company shall also not appoint or continue to retain any person as an auditor, if a person associated with the auditor is, or has been, at any time during the preceding three months engaged as a consultant or advisor or to provide any services that are prohibited. (underlining is ours)

The list of prohibited services as given in the listing regulations may be consulted and are not being reproduced here.

In view of the above, the Committee is of the opinion that consultancy contract in respect of prohibited services can not be given to the auditors of the bank.

(July 2009)