Urgent amendments to Bahrain’s law regulating external auditors was approved by Parliament yesterday.
MPs believe the move would tighten oversight, raise professional standards and reinforce confidence in the kingdom’s financial system.
The government-drafted legislation amends Decree-Law No (15) of 2021 on External Auditors and was referred to Parliament by His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince and Prime Minister.
It has now been sent to the Shura Council for review.
At the heart of the reforms is the abolition of the existing Disciplinary Board and its replacement with a more powerful Auditors’ Accountability Board. The new body will investigate violations and impose penalties on auditors who breach professional or legal obligations.
The board will be chaired by a High Civil Court judge, joined by another judge nominated by the Supreme Judicial Council, a government representative and two professional specialists – a structure designed to enhance independence, expertise and governance.
The law also introduces a graduated penalty system, ranging from warnings and written reprimands to mandatory training programmes of up to three years, licence restrictions, fines of up to BD100,000, temporary bans, suspension for up to three years and permanent licence revocation.
Industry and Commerce Minister Abdulla Fakhro said the amendments were the result of three years of consultations with all concerned parties and were essential to strengthening governance in the audit sector.
“This legislation raises auditing standards in line with international practices and ensures proper organisation of the market and the services it provides,” Mr Fakhro said.
“It also gives high priority to Bahraini auditors and supports our reforms to combat money laundering in accordance with global measures.”
The amendments impose stricter professional rules, prohibiting conflicts of interest, creditor-debtor relationships outside normal business dealings, and consultancy services that breach international audit standards. Auditors must also fully comply with anti-money laundering and counter-terrorism financing laws.
Authorities will gain expanded inspection powers, while audit firms will face tighter requirements, including Bahraini ownership, qualified partners, a minimum of 10 years’ accounting experience for firm owners and mandatory auditor rotation every five years for unlisted companies.
During the debate, Labour and Legal Affairs Minister and Acting Parliament and Shura Council Affairs Minister Yousif Khalaf addressed concerns about delegating certain services to the private sector.
“Deputising the private sector to provide services on behalf of the Industry and Commerce Ministry does not mean the minister is evading responsibility,” Mr Khalaf said. “The concerned minister remains accountable at all times, whether services are delivered directly or indirectly. Sometimes the ministry lacks the tools or expertise, and delegating simply provides flexibility.”
The draft law was earlier endorsed by Parliament’s financial and economic affairs committee, chaired by MP Ahmed Al Salloom.
“The aim is not punishment for its own sake,” Mr Al Salloom said, “but to strike a balance between deterrence, professional development and protecting the public interest.”
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