Section 40: Material irregularity

40. Material irregularity (1) Where, during the course of the audit of a public interest entity, a licensed auditor is satisfied, or has reason to believe, that a material irregularity has taken or is taking place, he shall, without delay— (a) notify, in writing, the officers and all the members of the Board of the public interest entity of the irregularity, by giving particulars of the irregularity; and (b) request every person referred to in paragraph (a), either individually or collectively, to take such action as he may determine, and to acknowledge receipt, in writing, of the notice. (2) The licensed auditor shall, within 30 days of the issue of the notice referred to in subsection (1), notify the Council and the Mauritius Institute of Professional Accountants of the material irregularity referred to in subsection (1), together with such other information as he may determine, unless he is satisfied that the officers or the members of the Board of the public interest entity referred to in subsection (1) have taken adequate steps to remedy the irregularity. (3) For the purposes of this section— “material irregularity” means any unlawful act or omission committed by any person responsible for the management of a public interest entity, which— (a) represents a material breach of any fiduciary duty owed by such person to the public interest entity or the conduct or management thereof; (b) has caused or is likely to cause material financial loss to the public interest entity or to any partner, member, shareholder, creditor or investor of the public interest entity in respect of his or its dealings with that entity; or (c) is fraudulent or amounts to theft. [S. 40 amended by s. 12 (f) of Act 27 of 2012 w.e.f. 22 December 2012.] F9 – 19 [Issue 9] Financial Reporting Act