Title  VI: On Auditors and Clasification of Risks

Chapter I: External Auditors

Obligation of Registering

Sect. 81.- The external auditors of people subject to this Law will register in the Superintendence, for what they will fulfill the following requirements:

1. To be registered in the Professional Registration of Auditors kept by the Council of Surveillance of Public Accounting and Audit;
2. To certify professional experience in the exercise of external audit of at least three years;
3. Not to have been convicted on crimes against the Public patrimony or Treasury;
4. Not to be indebted in the Salvadoran financial system with credits with bad-debt reserves of fifty percent or more of the balance.

Being corporations, the previous requirements will be demanded from: administrators, people in charge of leading the audits and those who sign the corresponding reports. ⁽²⁾

Independence from Audited Corporations

Sect. 82.- The external auditors will be independent from the audited corporations, not being allowed, in consequence, to own directly or through other person or entity any of their shares; neither to depend economically on a single client in such a way that their professional independence be compromised.

They won't be able to be members of the Board of Directors of the corporations audited by them neither to hold credit relationships of any type with them.

Exercise of the audit

Sect. 83.- In order to register, external auditors will certify professional practice of at least three years and not to have been convicted by crimes against the public patrimony or treasury.

They won't be able to perform audits in those corporations regulated by this Law in which their spouses or their relatives within the second degree of consanguinity and first of affinity are majority shareholders.

The Superintendence will specify the minimum audit requirements that the external auditors must meet with respect to entities pointed out in this Law, as well as for the presentation of consolidated financial statements, in case the issuer belongs to a corporate group. It will also have powers to verify the execution of these minimum requirements.

Sect. 84.- Being external audit corporations, the administrators of the corporation, the persons to whom the corporation designates to manage a certain audit work and those who sign the corresponding reports, will meet the same requirements and be subject to the same obligations demanded in the previous Section .

Powers and Obligations

Sect. 85.- External auditors are authorized to check all books, records, documents and antecedents of corporations regulated by this Law, even those of their branches, being the obligation of the former and the latter to grant them all necessary facilities to perform their work.

Sect. 86.- External auditors must examine the general balance, the income statement, the statement of retained earnings and the cash flow and issue their professional and independent opinion about these financial statements, and they will as minimum:

1. Examine with diligence if the different types of operations carried out by the corporation are reasonably reflected in the accounting and financial statements;
2. To point out to higher management of the corporation the deficiencies that they detect regarding the adoption of accounting practices and the maintenance of an effective accounting system;
3. To inform if the financial statements have been prepared according to the accounting principles generally accepted by the Superintendence, in conformity with this Law; ⁽²⁾
4. To use norms and audit procedures that guarantee that the exam of the accounting records and financial statements are reliable and provide enough judgment elements to support the content of the opinion; and
5. To maintain during a period not shorter than five years, from the date of the respective opinion, all work papers that served as base to issue the opinion.

Accounting principles and norms

Sect. 87.- To technically determine the generally accepted accounting principles, the Superintendence will consider the internationally recognized ones and those accepted by some of the main Salvadoran associations of accounting professionals that it determines, without prejudice of considering other principles or additional accounting norms specified by the Superintendence itself. ⁽²⁾

REFORMS:
(2) D.L. No. 925, Published in the Official Newspaper No. 25, Volume 334 of February 7, 1997.