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Appointment of Accountants

Pursuant to section 5 paragraph 2 and section 13 Political Parties Act, the Austrian Court of Audit appoints two accountants out of five suggested by the respective political party or campaigning party for a period of five years. They examine and sign the accountability report of the political party.

As mentioned in its activity report for the year 2012 (series Bund 2012/13, p. 74), the ACA established an advisory board to ensure a consistent and transparent performance of the task pursuant to section 5 par. 2 Political Parties Act. The advisory board, consisting of the president of the Chamber of Public Accountants, the chair of the quality control institution of auditors (or a representative) and two representatives of the ACA, has decided on the following criteria for the selection of the accountants:

Criteria for the selection of accountants

The criteria for the selection of the accountants are defined in section 9 Political Parties Act. Reference is made also to the provisions of the Act on Professions in the Field of Public Accounting (WTBG), Federal Law Gazette (F.L.G.) No. I 58/1999 (as amended by F.L.G. No. I 121/2013). In turn, the Act on Professions in the Field of Public Accounting refers to the provisions of the Law on Court Jurisdiction, Imperial Law Gazette No. 111/1895 (as amended by F.L.G. No. I 158/2013). 

Furthermore, the ACA acts according to the provisions of the grounds for exclusion and partiality pursuant to sections 271 – 271c of the Commercial Code, German Imperial Law Gazette No. 219/1897 (as amended by F.L.G. No. I 50/2013) and of the Austrian Code of Corporate Governance as well as the Austrian Code of Public Corporate Governance on the appointment of accountants. In addition, the relevant provisions of the Act on Audit of Accounts Quality Assurance (A-QSG), F.L.G. No. I 84/2005, as amended by F.L.G. No. I 129/2013, and the directive of the executive board of the Chamber of Public Accountants on the professions of public accounting (WT-ARL 2003), as amended by Official Journal - Chamber of Public Accountants No. I/2011 are taken into account.

Consequently, the following criteria are applied:

Joint office

Pursuant to section 5 par. 2 Political Parties Act, the two accountants appointed by the ACA for five years must not work together in a joint office.

Reappointment

The inadmissibility of the immediate reappointment (section 5 par. 2 Political Parties Act, analogue section 271a par. 1 number 4 Commercial Code) is taken into account by the ACA also with regard to the accountants appointed for the previous period, and according to the provisions of the now invalid Political Parties Act 1975, F.L.G. No. 404/1975 as amended by F.L.G. No. I 56/2012.

Partiality

There must be no reasons, especially no business, financial or personal relationships, for a partiality of the accountants (section 9 par. 1 Political Parties Act, analogue section 271 par. 1 Commercial Code). An auditing firm is considered biased if the accountant signing the audit certificate, or a person with a decisive role in the audit working for them, is biased pursuant to section 271 par. 1 Commercial Code (analogue section 271 par. 4 Commercial Code). Furthermore, persons entitled to exercise the profession are obliged to refuse an auditing mandate, if there is sufficient reason to doubt their impartiality (section 88 par. 2 no. 4 Act on Professions in the Field of Public Accounting, section 19 no. 2 Law on Court Jurisdiction). According to point 80 of the Austrian Code of Corporate Governance, all circumstances that may indicate the risk of partiality and measures taken to protect against such risk in order to ensure an independent audit must be presented in writing.

Participation in accounting or accountability report

Accountants are to be excluded if they have assisted in keeping the accounts or preparing the accountability report to be audited beyond the auditing activities (section 9 par. 2 no. 2 Political Parties Act, analogue section 271 par. 2 no. 4 letter a Commercial Code, section 88 par. 2 no. 5 Act on Professions in the Field of Public Accounting). Pursuant to section 20 par. 1 no. 1 Law on Court Jurisdiction (section 88 par. 2 no. 3 Act on Professions in the Field of Public Accounting) there exist grounds for exclusion in cases in which they are parties themselves, or when they have a relationship with one of the parties as jointly obliged or entitled person or as a person liable to recourse.

Exertion of an office or a function

Accountants are excluded if they hold an office or exercise a function in the political party, or did so during the last three years (section 9 par. 1 no. 1 Political Parties Act).

Binding by professional instructions

Persons entitled to execute the profession are obliged to refuse a mandate that would bind them to the professional instructions of the client when performing their work (section 88 par. 1 Act on Professions in the Field of Public Accounting).

Activity as legal representative, executive board member, shareholder or employee of an excluded accountant/auditing firm

Grounds for excluding accountants are if they are in the position of a legal representative, executive board member or shareholder of a legal entity or a partnership, employee of a natural person or legal entity, if the natural person or legal entity, the partnership or one of their shareholders is not authorised to be an accountant for the reasons defined by law (section 9 par. 2 no. 3 Political Parties Act, analogue section 271 par. 2 no. 2 and 5 Commercial Code).

Participation

Accountants are also excluded if they hold shares in an undertaking related to the political party to be audited, and if they hold at least 20% of the shares or have significant influence on the acquisition, administration and sale of such shares (analogue section 271 par. 2 no 1 Commercial Code).

Personal or economic dependency

Persons entitled to exercise the profession are obliged to refuse an audit mandate if they are not personally and economically independent from the body to be audited or the client – if the client is a third party (section 88 par. 2 no. 1 Act on Professions in the Field of Public Accounting).

Accountants are excluded if, during the last five years, they have received a certain part of their total income from their auditing and advisory activities for the political party to be audited, undertakings related to it or undertakings of which the political party to be audited owns at least 20% of the shares, and if this is to be expected also for the current financial year (analogue section 271 par. 2 no. 7 Commercial Code, section 271a par. 1 no. 1 Commercial Code).   

Direct or indirect influence on the conduct of the business

Persons entitled to exercise the profession are obliged to refuse mandates, if one of the participants has a direct or indirect influence on the other’s conduct of business (section 88 par. 2 no. 2 Act on Professions in the Field of Public Accounting).

Assumption of management tasks

Accountants are excluded if they assumed management or certain other tasks at or for the political party to be audited in the financial year to be audited or until the signing of the audit certificate (analogue section 271 par. 2 no. 4 letter c Commercial Code).

Participation in the internal audit

Another reason for the exclusion of accountants is their participation in the internal audit of the political party to be audited in the respective financial year or until the signing of the audit certificate (analogue section 271 par. 2 no. 4 letter b Commercial Code).

Legal or fiscal advisory services

Accountants are to be excluded if they have provided legal or fiscal advisory services to the political party to be audited in the financial year to be audited which go beyond simply pointing out alternative arrangements, and which directly and not insignificantly influence the financial statements to be audited (analogue section 271a par. 1 no. 2 Commercial Code).

Participation in accounting information systems

Furthermore, accountants are excluded if they have participated during the financial year to be audited in the development, installation and introduction of accounting information systems for the political party to be audited (analogue section 271a par. 1 no. 3 Commercial Code).

Providing valuation services

Accountants are also excluded if they have provided valuation or actuarial services at or for the political party to be audited in the financial year to be audited or until the signing of the audit certificate, and which directly and not insignificantly influence the financial statements to be audited (analogue section 271a par. 2 no. 4 letter d Commercial Code).  

Certificate pursuant to section 15 Act on Audit of Accounts Quality Assurance (A-QSG)

Accountants or auditing firms are excluded if they do not have a certificate pursuant to section 15 Act on Audit of Accounts Quality Assurance (A-QSG) (analogue section 271 par. 2 no. 3 and par. 4 Commercial Code).  

Entry in the public registry pursuant to section 23 Act on Audit of Accounts Quality Assurance

There must exist a valid entry in the public registry pursuant to section 23 Act on Audit of Accounts Quality Assurance as confirmation of the application of a legal quality assurance system (point 80 of the Austrian Code of Corporate Governance).

Insurance

The acceptance of mandates by persons entitled to exercise the profession which are not covered, as regards both the grounds as well as the amount, by their financial loss and liability insurance (D&O insurance), is prohibited (section 88 par. 1 Act on Professions in the Field of Public Accounting).

Family and other close relationships

Pursuant to section 20 par. 1 no. 2 and 3 Law on Court Jurisdiction (section 88 par. 2 no. 3 Act on Professions in the Field of Public Accounting), family and other close relationships provide grounds for exclusion.  

Application of the criteria to accountants

Accountants are excluded if they employ a person at the audit not authorised to conduct the audit according to the legal provisions, or if they work together with an excluded person or if, together, they fulfil certain conditions in the framework of their cooperation (analogue section 271 par. 2 no. 6 Commercial Code, section 271 par. 3 Commercial Code, section 271a par. 2 Commercial Code).

Application of the criteria to auditing firms

An auditing firm is excluded if the auditing firm itself, one of its legal representatives, a shareholder, an associated company or a person employed by it for the audit are not authorised to conduct the audit pursuant to section 9 par. 2 Political Parties Act  (section 9 par. 3 Political Parties Act). Other provisions on exclusions are to be found in the Commercial Code (analogue section 271 par. 4 Commercial Code and section 271a par. 3 Commercial Code).

Other than that, for the appointment of the accountants the Austrian Court of Audit applies the following criteria in consideration of quality and economic aspects:

Fee

The height of the auditing fee is considered in the evaluation - usually fixed fees (without the option of renegotiation) are charged. The composition of the fee as well as a list containing working hours and resources must be annexed to the suggestions of the political party. The appointment of an accountant shall be based on a competitive procurement process (point 14.3.6 Code of Public Corporate Governance).

Performance

The appropriateness of the intended auditing time and the intended personnel deployment (ratio of accountants and assistants) are decisive for the evaluation.

Qualification

The qualification of the accountant as well as of the other auditing personnel (certificates, references) and the extent of the intended procedure are evaluated.

Furthermore, measures for quality assurance of the auditing personnel are evaluated. The report on further training obligations (section 1b Act on Audit of Accounts Quality Assurance) is also taken into account.  

Independence

Also evaluated are measures to assure the independence of the auditing personnel, including the annual confirmation on the internal revision regarding the compliance with the independence provisions (section 24 par. 1 no. 7 Act on Audit of Accounts Quality Assurance).

Concerning the independence, it is also checked that neither the individual accountants nor the auditing firm have given donations to the political party to be audited during the last five years.

A declaration on the compliance with the professional principles, including expert opinions of the Chamber of Public Accountants, must be submitted. 

Efficiency

A confirmation of the assurance of the technical, personal and other organisational requirements for the conscientious exercise of the profession must be submitted (section 7 par. 2 directive on the professions of public accounting (WT-ARL 2003)). 

Indications on the liability must include the height and manner of the limitation of liability that has been concluded.

Confirmation on the fulfilment of the criteria

The ACA points out that the fulfilment of all criteria aforementioned is to be confirmed in the framework of the five suggestions made by the political parties in written form by all accountants (via self-declaration or certificates).