Based on the provisions of the Banking Law promulgated by Royal Decree 114/2000 and its amendments,
Decision BG/6128/125/3/04/5 of the Board of Governors of the Central Bank of Oman issued at its meeting held on 21 March 2004,
and the Basel Committee Core Principles for Effective Banking Supervision on the relationship with external auditors,
and in pursuance of public interest,
it is hereby decided
Article I
Licensed banks shall not enter into a contract with audit firms except after the approval of the central bank.
Article II
Licensed banks shall submit to the central bank a list of the names of audit firms they wish to enter into a contract with, ranked in the order of preference they see fit, at least two months before the date of the shareholders’ general meeting for local banks or the approval of the competent authorities of the head office for foreign banks. The central bank may demand a change of firms mentioned in the aforementioned list from the licensed bank based on reasons that justify this.
Article III
Audit firms nominated by licensed banks for contracting are subject to the following conditions:
(a) It must be registered with the Ministry of Commerce and Industry.
(b) Its work experience in the field of auditing must not be less than five years.
(c) The number of its qualified professional staff must not be less than five auditors. its annual meeting, and to ensure that its external auditors meet with the central bank according to predetermined dates. The central bank shall approve the aforementioned lists and data after fulfilling the previous procedures.
(d) It must be competent and reputable in the field of accounting and auditing on banks and financial institutions. It must also not have been banned from practising the profession or punished by any punishment for committing professional or audit-related errors by the government, its units, public authorities and establishment, or any judicial or professional authority.
(e) The firm must not have interests with the licensed bank that nominates it as its external auditor, whether due to membership of the board of directors, shareholding in the bank, or employment with it during the two years preceding the nomination.
Article IV
Licensed banks shall submit a brief overview to the central bank of the qualifications and experiences of the partners in audit firms and the number of qualified auditors in the field of accounting and auditing. They shall also submit all details about the firms, their competency, work experience, and technical systems.
Article V
Licensed banks have the right to determine the contract period with external auditors, provided that the period does not exceed four consecutive financial years. It is not permitted to enter into a contract with the same firm before the lapse of two years from the expiry date of the aforementioned contract period.
Article VI
Licensed banks are responsible for obtaining correct audit reports for their financial information. The central bank is not liable for the failure or negligence of audit firms whose appointment it has approved in the performance of their legal duties or obligations.
Article VII
The central bank may, by virtue of a reasoned decision, terminate the contract between the audit firm and the licensed bank if the public interest so requires.
The central bank shall notify the licensed bank in writing of the reasoned contract termination decision, and the licensed bank shall notify the audit firm of this decision. The licensed bank shall also implement the decision within 30 days from the date it is notified of it and enter into a contract with another audit firm in accordance with the provisions provided in this regulation.
Article VIII
Licensed banks shall submit to the central bank the financial statements and information audited by independent auditors before presenting them to the general meeting at its annual meeting. They shall also ensure that their auditors meet with the central bank at predetermined dates. The central bank shall approve the aforementioned statements and information after the completion of the preceding procedures.
Article IX
The central bank may communicate directly with the external auditors of licensed banks whenever it considers this necessary to achieve financial integrity or whenever it is necessary to do so.
Article X
The external audit of banks must focus on the extent of their compliance with the provisions, regulations, and preventive control issued by the central bank.
Article XI
Licensed banks shall oblige their external auditors, under the contracts entered into with them, to notify the central bank of matters related to the management of the bank, gross violations committed by the bank, adverse changes in the risks faced by its business, and any other matters that have an impact on the supervisory tasks.
Article XII
With the exception of the services required by the audit profession, licensed banks are prohibited from requesting their external auditors to provide consultancy services to them.
Article XIII
Licensed banks and external auditors shall attend the tripartite meetings held by the central bank to discuss topics related to auditing, the application of accounting standards, and the development of unified accounting systems and practices.
Article XIV
The executive president of the central bank is hereby authorised to issue the instructions necessary to implement the provisions of this regulation.
Article XV
This regulation must be published in the Official Gazette, and comes into force thirty days after the date of its publication.
Issued on: 29 Muharram 1425
Corresponding to: 21 March 2004
Dr Ali bin Mohammed bin Moosa
Minister of Health
Deputy Chairman of the Board of Governors
Published in Official Gazette 770 issued on 3 July 2004.