Section 19(1) of the FAIS Act requires financial services providers (FSPs) to maintain proper accounting records and prepare annual financial statements. Section 19(2)(a) requires that these financial statements are audited. FAIS Notice 82 of 2015 sets out that the Registrar is satisfied that there are reasonable grounds for the relaxation of the audit requirements to eligible FSPs and eligible FSPs limited by product.
This means that:
- eligible FSPs (Category I FSPs that do not hold or receive any premiums or funds of clients), or
- eligible FSPs limited by product (Category I FSPs only licenced for Long Term Insurance Category A and/or Friendly Society Benefits and does collect premiums)
do not have to have their annual financial statements audited – providing of course that they are not required by any other law, such as the Companies Act, or agreement to do so, in which case they do not qualify for the exemption.
Both eligible FSPs and FSPs limited by product must annually submit their financial statements and simultaneously, the annual return referred to in Annexure A. The Key Individual of FSPs that qualify for the exemption, must therefore ensure that the Annexure A is properly completed and submitted with its annual financial statements to the Registrar.
We recommend that FSPs carefully read through Annexure A to the Board Notice to make sure that they do in fact qualify for the exemption and that they are able to provide the necessary information to the Registrar.