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Taiwan Stock Exchange Corporation Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for Market Listing(2008.05.16) |
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Article 1
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These Guidelines are adopted by the Taiwan Stock Exchange Corporation (the "TWSE") in accordance with the provisions of Article 7 of the Procedures for Review of Securities Listings and Article 4-1 of the Operational Procedures for the Review of Foreign Securities for Listing of the TWSE.
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Article 2
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When the audit or review by a CPA making a listing application for a company applying for initial stock listing of the internal control system review reports, financial reports or financial forecasts attached to the application is discovered to be deficient under any of the following circumstances, the TWSE may report to the Securities Listing Review Committee and, upon approval of the Committee, may impose demerits once on the CPA and then report the CPA to the competent authority for discipline. If the CPA's certification report involves any misrepresentation or concealment, the TWSE may provide related evidence to the Securities and Futures Investors Protection Center for reference:
- The contents of the financial reports of the company applying for stock listing do not follow the Regulations Governing the Preparation of Financial Reports by Securities Issuers, Regulations Governing the Preparation of Financial Reports by Securities Firms, generally accepted accounting principles, or related laws and regulations, or established practices, or if the consolidated financial reports submitted by a foreign issuer applying for a primary stock listing do not follow Articles 28-3, subparagraphs 3 and 4 of the Rules Governing Review of Securities Listings or Article 4-1, paragraph 1, subparagraph 1, item 3 of the Operational Procedures for the Review of Foreign Securities Listing of the TWSE, thus resulting in errors or inaccuracy to the extent the amount affected reaches the amount specified in Article 6, paragraph 1, subparagraph 1 of the Securities and Exchange Act Enforcement Rules but is not disclosed.
- Failure to disclose the facts which shall be disclosed in the financial reports of the company applying for stock listing, and the failure is material and potentially misleading but is not disclosed.
- Failure to a material extent to conduct the audit in accordance with generally accepted auditing standards or the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants.
- Failure to follow Financial Forecast Review Guidelines when reviewing the applicant company's financial forecasts.
- Failure to indicate the material failure of the applicant company to follow the Regulations Governing Establishment of Internal Control Systems by Public Companies or related directives.
- Failure of the CPA to a material extent to conduct the required audit procedure in accordance with the Regulations Governing Establishment of Internal Control Systems by Public Companies.
- Failure of the CPA to issue an appropriate internal control system review reports in accordance with the Regulations Governing Establishment of Internal Control Systems by Public Companies.
- Material deficiencies in the written supplementary information issued during the period of review of the listing application in regard to the internal control system review reports, financial reports or financial forecasts.
- Other material deficiencies identified by the TWSE.
However, subparagraphs 5 to 7 of the preceding paragraph do not apply to CPAs handling applications for primary stock listing by foreign issuers.
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Article 3
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Before imposing demerits on a CPA pursuant to the preceding article, the TWSE must request the CPA to provide a written explanation with regard to the circumstances concerned, and submit said explanation together with information on the deficiency to the Securities Listing Review Committee for approval. The TWSE may then impose demerits on the CPA and also make a public announcement upon said approval of the Committee.
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Article 4
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If a CPA is given demerits, the TWSE may dismiss the financial reports of the applicant company which are certified by the CPA for six months starting from the first day of the month following the public announcement.
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Article 5
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The TWSE shall, once every three months, publish in the centralized securities exchange market the number of demerits a CPA has accumulated in the past year.
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Article 6
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These Guidelines shall take effect after having been submitted to and approved by the competent authority and publicly announced. Subsequent amendments thereto shall be effected in the same manner.
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