Financial Reporting Act 2013

Fana Fana Chambers Guide to the Financial Reporting Act, 2013

Introduction

The Financial Reporting Act, 2013 establishes the framework for financial reporting, auditing, accounting standards, corporate governance standards and professional regulation of accountants and auditors in The Gambia. The Act established The Gambia Institute of Chartered Accountants (GICA) and the Gambia Financial Reporting Oversight Board to improve transparency, accountability and confidence in financial reporting.

For businesses and investors, the Act is important because it determines:

• Who may prepare and audit financial statements.

• What accounting standards must be followed.

• How public interest entities are regulated.

• How auditors are supervised and disciplined.

• What financial reporting obligations companies must meet.

1. Why the Financial Reporting Act Matters

Objective of the Act

The Act was enacted to:

• Establish the accountancy profession under a modern regulatory framework.

• Register chartered accountants and auditors.

• Set accounting, auditing and corporate governance standards.

• Establish independent financial reporting oversight.

The Act seeks to improve investor confidence by ensuring that financial statements are prepared and audited according to internationally recognised standards. ss.5, 49, 67-70.

2. The Gambia Institute of Chartered Accountants (GICA)

Establishment of the Institute

Sections 4 to 6

The Act establishes The Gambia Institute of Chartered Accountants as the professional body responsible for regulating accountants and auditors in The Gambia. ss.4-6.

Key Functions

The Institute is responsible for:

• Registering chartered accountants.

• Registering practising auditors.

• Issuing practising certificates.

• Maintaining professional registers.

• Establishing professional ethics requirements.

• Conducting disciplinary proceedings.

• Overseeing professional education and training. s.6.

Why Businesses Should Care

When engaging an auditor or accountant, businesses should ensure that the professional is registered with the Institute and holds a valid practising certificate. ss.27, 33.

3. Who May Practice as an Accountant or Auditor?

Practising Certificates

Sections 27 and 33

A person may not practice or hold himself or herself out as:

• A Chartered Accountant; or

• A Practising Auditor,

unless he or she holds a valid practising certificate issued by the Institute. ss.27(1), 33.

Penalty

A person practising without a practising certificate commits an offence and is liable to:

• A fine of up to D20,000;

• Imprisonment for up to 2 years;

• Or both. s.27(2).

Investor Consideration

Investors conducting due diligence should verify that audit reports have been prepared by properly registered and licensed practitioners.

4. Registration of Chartered Accountants

Professional Qualification Requirements

Section 28

To become a chartered accountant, a person must:

• Meet international education standards.

• Possess prescribed professional qualifications.

• Have at least three years of practical experience.

• Demonstrate good character.

• Successfully complete professional assessments. s.28(1)-(3).

Continuing Professional Development

Registered chartered accountants must comply with continuing professional development requirements and maintain professional competence. s.28(4).

5. Registration of Practising Auditors

Auditor Licensing Requirements

Section 29

Only persons registered as practising auditors may conduct audits. s.29(8).

Applicants must:

• Be registered chartered accountants.

• Meet qualification requirements prescribed by the Institute.

• Demonstrate competence.

• Participate in professional development programmes.

• Submit to quality assurance reviews. s.29(3).

Why This Matters

The Act ensures that individuals signing audit opinions possess appropriate expertise and are subject to professional regulation.

6. Audit Firms

Registration of Member Firms

Section 32

Every firm providing accounting or auditing services must register with the Institute as a member firm. s.32(1).

To qualify:

• Partners must be registered with the Institute.

• At least two partners must be practising auditors.

• Professional indemnity insurance must be maintained.

• The firm must agree to disciplinary oversight. s.32(3).

Business Consideration

Businesses should prefer audit firms that maintain strong quality assurance systems and professional indemnity cover.

7. Professional Conduct and Ethics

Professional Misconduct

Section 39

The Act identifies various forms of professional misconduct including:

• Unauthorised practice.

• Improper solicitation of clients.

• Breach of confidentiality.

• Conflicts of interest.

• Negligence.

• Failure to obtain sufficient audit evidence.

• False statements.

• Criminal conduct.

• Breaches of professional standards. s.39(1).

Sanctions

The Discipline Committee may:

• Issue a caution.

• Suspend registration.

• Withdraw practising certificates.

• Remove a person's name from professional registers.

• Impose fines of up to D50,000. s.38(9).

8. Auditor Independence

Independence Requirements

Sections 45 and 46

Auditors must act independently and avoid relationships that impair objectivity. ss.45-46.

An auditor must withdraw from an engagement where:

• A conflict of interest exists.

• Professional independence is compromised.

• Objectivity cannot be maintained. s.46.

Investor Importance

Auditor independence is fundamental to ensuring investors can rely upon published financial statements.

9. Auditor Reporting Responsibilities

Auditor Opinions

Section 41

Auditors may only issue an unqualified opinion where they are satisfied that:

• Proper accounting records have been maintained.

• Necessary information has been obtained.

• Financial statements fairly represent the entity’s affairs.

• Audit procedures have been completed without restriction. s.41(1).

Reporting Deadlines

Audit opinions and reports should generally be issued within four weeks after completion of the assignment. s.42(1).

10. Material Irregularities

Reporting Serious Financial Problems

Sections 43 and 44

Where an auditor discovers a material irregularity which may cause financial loss to:

• The company;

• Shareholders;

• Creditors; or

• Other stakeholders,

the auditor must notify management and require corrective action. s.43(1).

If satisfactory action is not taken, the matter must be reported to the Institute. s.43(2).

Examples

Material irregularities may include:

• Fraud.

• Misappropriation of funds.

• Serious accounting misstatements.

• Financial misconduct affecting investors or creditors. s.43.

11. The Financial Reporting Oversight Board

Independent Oversight

Sections 48 and 49

The Act establishes the Gambia Financial Reporting Oversight Board as the regulator responsible for oversight of financial reporting and audit quality. ss.48-49.

Functions

The Board:

• Supervises the auditing profession.

• Oversees quality assurance reviews.

• Monitors compliance with corporate governance standards.

• Monitors public interest entities. s.49.

Investor Significance

The Board provides an additional layer of public oversight beyond professional self-regulation.

12. Public Interest Entities (PIEs)

What Is a Public Interest Entity?

Sections 2 and 57

Public Interest Entities include:

• Listed companies.

• Banks.

• Deposit-taking institutions.

• Insurance companies.

• Pension funds.

• Public enterprises.

• Other large entities prescribed by the Board. s.2.

Registration Requirement

Public Interest Entities must register annually with the Board. s.57(2).

13. Auditors of Public Interest Entities

Special Registration Requirements

Sections 58 to 64

A person cannot audit a Public Interest Entity unless registered by the Board as a Registered Auditor. s.58(1).

Applicants must:

• Be practising auditors.

• Be fit and proper persons.

• Demonstrate adequate quality assurance procedures.

• Meet Board rules and standards. s.58(4).

Why This Matters

Public companies, banks, insurers and large entities are subject to heightened audit scrutiny because of their economic importance.

14. Accounting Standards

IFRS Compliance

Section 67

The Standards Committee is responsible for adopting accounting standards based on:

• International Financial Reporting Standards (IFRS).

• IFRS for SMEs.

• Public Sector Accounting Standards.

• Islamic finance reporting standards. s.67(1).

Business Impact

Every chartered accountant preparing financial statements must comply with standards adopted by the Standards Committee. s.67(3).

15. Auditing Standards

International Audit Standards

Section 68

Auditing standards adopted in The Gambia must be consistent with International Standards on Auditing (ISA). s.68(1).

Practising auditors and registered auditors must comply with:

• Auditing standards.

• Rules and regulations issued under the Act. s.68(3).

16. Corporate Governance Standards

Governance Requirements

Section 70

The Standards Committee may issue corporate governance standards that Public Interest Entities must follow. s.70(1)-(3).

Investor Significance

Governance standards improve:

• Board accountability.

• Risk management.

• Internal control systems.

• Shareholder protection. s.70.

17. Compliance with Financial Reporting Standards

Mandatory Compliance

Sections 72 and 81

Where any law requires a financial statement to be prepared, that statement must comply with standards adopted under the Financial Reporting Act. ss.72, 81.

Where another law conflicts with the Financial Reporting Act on financial reporting matters, the Financial Reporting Act prevails. s.81(2).

18. Monitoring and Regulatory Reviews

Financial Statement Monitoring

Sections 73 and 74

Government authorities and the Board may review financial statements to determine compliance with the Act. ss.73-74.

The Board may request information from:

• Directors.

• Officers.

• Employees.

• Auditors.

• Audit firms. s.74(3).

Offence

Failure to provide requested information may result in:

• A fine up to D10,000;

• Imprisonment up to one year;

• Or both. s.74(5).

Key Takeaways for Businesses and Investors

For Businesses

✅ Ensure financial statements comply with IFRS-based standards. s.67.

✅ Engage only properly registered auditors. ss.29, 58.

✅ Maintain strong internal controls and governance systems. ss.70, 72.

✅ Cooperate with reviews by regulators and the Oversight Board. ss.73-74.

For Investors

✅ Verify that audited financial statements are prepared under recognised standards. ss.41, 67, 68.

✅ Consider whether the company is a Public Interest Entity and therefore subject to enhanced oversight. ss.2, 57-58.

✅ Review auditor independence and governance disclosures carefully. ss.45-46, 70.

✅ Treat compliance with the Financial Reporting Act as a key indicator of corporate transparency and financial credibility. ss.72-74.