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Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002)

Chapter V : Duties of authorised Financial Services Providers

19. Accounting and audit requirements

 

 

1) Except to the extent exempted by the registrar, an authorised financial services provider must, in respect of the business carried on by the provider as authorised under the provider's licence
a) maintain full and proper accounting records on a continual basis, brought up to date monthly; and
b) annually prepare, in respect of the relevant financial year of the provider, financial statements reflecting—
i) the financial position of the entity at its financial year end;
ii) the results of operations, the receipt and payment of cash and cash equivalent balances:
iii) all changes in equity for the period then ended, and any additional components required in terms of South African Generally Accepted Accounting Practices issued by the Accounting Practices Board or International Financial Reporting Standards issued by the International Accounting Standards Board or a successor body; and
iv) a summary of significant accounting policies and explanatory notes on the matters referred to in paragraphs (i) to (iii).
2)
a) An authorised financial services provider must cause the statements referred to in subsection (1)(b) to be audited and reported on in accordance with auditing pronouncements as defined in section 1 of the Auditing Professions Act, 2005 (Act No. 26 of 2005) by an external auditor approved by the registrar.
b) the financial statements must –
i) fairly represent the state of affairs of the provider's business;
ii) refer to any material matter which has affected or is likely to affect the financial affairs of the provider; and
iii) be submitted by the authorised financial services provider to the registrar not later than four months after the end of the provider's financial year or such longer period as may be allowed by the registrar.

 

3) The authorised financial services provider must maintain records in accordance with subsection (1)(a) in respect of money and assets held on behalf of clients, and must, in addition to and simultaneously with the financial statements referred to in subsection (2), submit to the registrar a report, by the auditor who performed the audit, which confirms, in the form and manner determined by the registrar by notice on the official web site for different categories of financial services providers –
a) the amount of money and financial products at year end held by the provider on behalf of clients;
b) that such money and financial products were throughout the financial year kept separate from those of the business of the authorised financial services provider and, report any instance of non-compliance identified in the course of the audit and the extent thereof; and
c) any other information required by the registrar.

[Subsection 3 amended by section 191(a) of Act No. 45 of 2013]

 

4) Despite anything to the contrary contained in any law, the auditor of an authorised financial services provider must report to and inform the registrar in writing of any irregularity or suspected irregularity in the conduct or the affairs of the authorise d financial services provider concerned of which the auditor.

 

5) If the appointment of an auditor of an authorised financial services provider is terminated –
a) the auditor must submit to the registrar a statement of what the auditor believes to be the reasons for that termination; and
b) if the auditor would, but for that termination, have had reason to submit to the registrar a report contemplated in subsection (4), the auditor must submit such a report to the registrar.

 

6)
a) The registrar may by notice require an authorised financial services provider to terminate the appointment of an auditor of that provider, if the auditor concerned no longer complies with the requirements considered when the auditor was approved by the registrar in terms of subsection (2)(a) or otherwise fails to comply with any provision of this section in a material manner.
b) A notice contemplated in paragraph (a) takes effect on a date specified in such notice and may only be sent out after the registrar –
i) has given the authorised financial services provider and the auditor concerned the reasons why the notice is to be issued; and
ii) has given the authorised financial services provider and the auditor concerned a reasonable opportunity to be heard; and
iii) has considered any submissions made by or on behalf of the authorised financial services provider or the auditor concerned.

 

7)
a) A financial services provider may not change a financial year end without the approval of the registrar.
b) Despite paragraph (a), the approval of the registrar is not necessary where a change of a financial year end has been approved by another regulatory authority, other than the Companies and Intellectual Property Commission, regulating the financial soundness of the provider.

[Paragraph (b) amended by section 191(b) of Act No. 45 of 2013]

c) Where a change of a financial year end was approved by another regulatory authority as is contemplated in paragraph (b), the provider must inform the registrar of that approval within 14 days of the approval being granted.