* Financial Statements Review Committee imposes a penalty tariff, which came into effect in 2007. The tariff is divided into three categories. Categories of penalty differentiate the severity of non-compliances.
The categories of tariff are as follows:
Category 1 prescribes the minimum action. This category relates to housekeeping issues, which require tidying up of the financial statements. It requires members who are responsible for the preparation of the financial statements to take necessary action on the financial statements and members who are responsible for reporting on them to be informed of the action.
Category 2 applies when there are substantial numbers of non-compliances with disclosure requirements of the approved accounting standards. It requires members who are responsible for the preparation of the financial statements or for reporting on the financial statements to take the necessary corrective action. Members will be given a warning letter and will be informed that the financial statements of the company could be put under surveillance for up to two (2) consecutive years.
Category 3 applies when there are major non-compliances with the requirements of the approved accounting standards and auditing standards involving material reporting discrepancies and/or deficiencies, caused by the member’s failure to discharge his/her professional responsibilities with diligence and due care and/or the firm’s weaknesses in the system of quality control.
Under category 3, action to be taken on members who are responsible for the preparation or for reporting on the financial statements could Include referring the members to the Investigation Committee or Practice Review Committee of the institute and/or other regulatory bodies for appropriate action or serving the members with warning letters or reprimands, or other appropriate measures. The financial statements of the company concerned could be put under surveillance for up to four (4) consecutive years.