FSCA FAIS NOTICE 82 OF 2015
FINANCIAL SERVICES BOARD
FINANCIAL ADVISORY AND INTERMEDIARY SERVICES ACT, 2002
(ACT NO. 37 OF 2002)
EXEMPTION OF ELIGIBLE FSPs AND ELIGIBLE FSPs LIMITED BY PRODUCT FROM REQUIREMENTS PERTAINING TO AUDITED FINANCIAL STATEMENTS, 2015
SCHEDULE
- Definitions
- Objective of exemption
- Extent of exemption
- Conditions of exemption
- Amendment and withdrawal of exemption and conditions
- Repeal
- Short title and commencement
- Annexure A
1. Definitions
In this Schedule, “the Act” means the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002), any word or expression to which a meaning is assigned in the Act shall have that meaning, and unless the context otherwise indicates-
“accounting officer” means a person contemplated in section 60 of the Close Corporations Act;
“audit” has the meaning set out in the Auditing Profession Act, 2005 (Act No. 26 of 2005);
“Close Corporations Act” means the Close Corporations Act, 1984 (Act No. 64 of 1984);
“Companies Act” means the Companies Act, 2008 (Act No. 71 of 2008);
“Fit and Proper Requirements” means the Determination of Fit and Proper Requirements for Financial Services Providers, 2008;
“friendly society benefit” has the meaning assigned to it in section 1(1) of the Fit and Proper Requirements;
“eligible FSP” means an authorised Category I FSP who does not receive or hold premiums (contemplated in the Shor-term Insurance Act, 1998, and the Long-term Insurance Act, 1998) or otherwise receive or hold clients’ money or other assets; or
“eligible FSP limited by product” means a Category I FSP authorised to render financial services in respect of financial products belonging to Long-term Insurance subcategory A and/or friendly society benefits only and who receives or holds premiums as contemplated in the Long-term Insurance Act, 1998, or otherwise receive or hold clients’ money or other assets;
“independent reviewer” means a person referred to In regulation 29(4) of the Companies Regulations, 2011;
“Long-term Insurance subcategory A” has the meaning assigned to it in section 1(1) of the Fit and Proper Requirements;
“Registrar” means the Registrar of Financial Services Providers.
2. Objective of exemption
(1) Section 19(1) of the Act requires financial services providers to maintain proper accounting records and prepare annual financial statements.
(2) Section 19(2)(a) provides that the financlal statements prepared In terms of section 19(1) must be audited. Section 19(4) to (6) deals with irregularity reporting, the appointment and termination of an auditor.
(3) The Registrar is satisfied that in the case of eligible FSPs and eligible FSPs limited by product that certain of the requirements are capable of causing financial or other hardship or prejudice (section 44(1)(b) of the Act) in so far as an auditor’s involvement Is Relaxation of the requirements, subject to certain conditions, would satisfy the requlrements of section 44(1)(c).
(4) The Companies Act and Close Corporations Act have different requirements regarding the submission of financial statements. The extent to which annual financial statements of companies and close corporations will have to be reviewed or audited depends on various criteria.
(5) In view of the aforesaid the Registrar is satisfied that there are reasonable grounds for relaxation of the application of the audit requirements to eligible FSPs and eligible FSPs limited by product and they are therefore relieved from the obligation to cause annual financial statements to be audited and reported on by an external auditor. However, the eligible FSPs and eligible FSPs limited by product remains responsible for the accounting and reporting obligations detailed in section 19 of the Act.
(6) Where the eligible FSPs and eligible FSPs limited by product are otherwise obliged by law to have financial statements reviewed, audited and reported on, or otherwise prepared, such statements must be submitted to the Registrar.
3. Extent of exemption
(1) An eligible FSP and eligible FSP limited by product are exempted from section 19(2)(a) of the Act unless it is obliged by any law or agreement in terms of which the eligible FSP is a party, to cause financial statements to be audited and reported on.
(2) The exemption referred to in subparagraph (1) does not apply to an eligible FSP and eligible FSP limited by product in respect of financial statements that had to be submitted to the Registrar on or before 30 April 2015 in terms of section 19(2)(b)(iii).
4. Conditions of exemption
The exemption referred to in paragraph 3 above is subject to the following conditions:
(1) An eligible FSP, where obliged by any law, must cause the financial statements referred to in section 19(1) of the Act-
(a) to be independently revieWed by an independent reviewer in accordance with the Companies Act; or
(b) to be certified and reported on by an accounting officer in accordance with the Close Corporations Act.
(2) An eligible FSP limited by product must-
(a) where obliged by any law, cause the financial statements referred to in section 19(1) of the Act to be independently reviewed by an independent reviewer in accordance with the Companies Act; or
(b) in the absence of an obligation referred to in subparagraph (a), cause the financial statements referred to in section 19(1) of the Act to be certified and reported on by an accounting officer in accordance with the Close Corporations Act.
(3) In the case of an eligible FSP, sections 19(4) to (6) of the Act applies with the necessary changes to the independent reviewer, accounting officer, any review, report or certification by that reviewer or officer and termination of appointment.
(4) In the case of an eligible FSP limited by product, sections 19(3) to (6) applies with the necessary changes to the independent reviewer, accounting officer, any review, report or certification by that reviewer or officer and termination of appointment.
(5) An eligible FSP and eligible FSP limited by product must annually submit to the Registrar, in addition and simultaneously with its financial statements, the annual return referred to in Annexure A.
(6) The condition referred to in subparagraph (5) does not apply to an eligible FSP and an eligible FSP limited by product in respect of the financial statements for the 2015 financial year-end where those statements were submitted to the Registrar on or before 31 July 2015.
5. Amendment and withdrawal of exemption and conditions
The exemption and conditions referred to in paragraph 3 and 4 above are subject to-
(a) amendment thereof published by the Registrar by notice on the official web site; and
(b) withdrawal in like manner.
6. Repeal
The Exemption of FSPs and FSPs limited by products from Audit Requirements, 2011, published by Board Notice 193 of 2011 in Government Gazette 34794, is repealed.
7. Short title and Commencement
This Notice is called the Exemption of Eligible FSPs and Eligible FSPs limited by product from Requirements pertaining to Audited Financial Statements, 2015, and comes Into effect on 31 July 2015.
