FSPs that hold money or assets on behalf of clients are required, in terms of section 19(3) of the FAIS Act, to maintain full and proper monthly accounting records in respect of such money or assets. They are also required to submit a separate auditor report to the FSCA together with the annual financial statements. This auditor report must be submitted to the FSCA in the form and manner which the FSCA prescribes.
The FSCA recently published FSCA Notice 46 of 2019: Determination of form and manner of section 19(3) Auditor Report which sets out the form and manner of this auditor report. The determination took effect on 1 July 2019 and has also repealed Board Notice 85 of 2008.
The Auditor Report must contain the following information:
- The amount of money and/or assets (which includes financial products) held on behalf of clients by the FSP at year end. The FSCA requires that money and assets held on behalf of clients by the FSP and related liabilities or obligations at the financial year-end be disclosed in the financial statements of the FSP. These may be included either in the notes to the financial statements or as an annexure.
- That such money and/or assets were, throughout the financial year, kept separate from those of the business of the FSP, and in the case of non-compliance the extent thereof.
- Any information required by the FSCA as set out in the two schedules attached to the report. The two schedules are
– Schedule A which sets out money and/or assets held on behalf of clients by the FSP at year-end.
– Schedule B which sets out work performed and findings in respect of the FSP’s key controls and procedures to meet the objectives of section 19(3) of the FAIS Act and section 10 of the General Code of Conduct for Authorised Financial Services Providers and Representatives.
FSPs that hold client money or assets should provide a copy of this Notice to their auditors to ensure that they are aware of the reporting format.