Enquiry:

Can a SME / SSE Company doing the business as a stock broker in Stock Exchange can appoint an auditor who is not in the list of QCR Panel?

Opinion:

We invite your attention to the definition of MSE as defined in the Accounting and Financial Reporting Standards for MSEs and SSEs issued by ICAP and notified by the SECP:

“A Medium-Sized Entity (MSE) is an entity that:

(a) is not a listed company or a subsidiary of a listed company;
(b) has not filed, or is not in the process of filing, its financial statements with the Securities and Exchange Commission of Pakistan (SECP) or other regulatory organisation for the purpose of issuing any class of instruments in a public market;
(c) does not hold assets in a fiduciary capacity for a broad group of outsiders, such as a bank, insurance company, securities broker/dealer, pension fund, mutual fund or investment banking entity;
(d) is not a public utility or similar entity that provides an essential public service;
(e) is not economically significant on the basis of criteria as defined in paragraph 3 below; and
(f) is not a Small-Sized Entity (SSE) as defined in paragraph 4 below.”

In view of the clause (c) above the Committee is of the opinion that the Company doing the business as a stock broker falls under the definition of Economically Significant Company and QCR rated firm is required to be appointed as its external auditors.

(November 08, 2013)