Instruction No. 58/CREPMF/2019 on the Exercise of Statutory Audit by Approved Entities and Listed Companies on the UMOA Regional Financial Market

West African Monetary Union crepmf Regional Council for Public Savings and Financial Markets

INSTRUCTION No. 58/CREPMF/2019 ON THE EXERCISE OF STATUTORY AUDIT BY APPROVED ENTITIES AND LISTED COMPANIES ON THE UMOA REGIONAL FINANCIAL MARKET

The Regional Council for Public Savings and Financial Markets,

Having regard to the Convention of 3 July 1996 establishing the Regional Council for Public Savings and Financial Markets (hereinafter the "Regional Council") and its Annex on the Composition, Organization, Operation and Powers of the Regional Council, particularly Articles 21 and 25;

Having regard to General Regulation No. 001/97 of 28 November 1997 on the Organization, Operation and Supervision of the UMOA Regional Financial Market;

Having regard to Regulation No. 9/2006/CM/UEMOA of the Council of Ministers of 26 June 2006 adopting Specific Accounting Rules applicable to approved participants on the regional financial market,

Having regard to the Uniform Act on Accounting and Financial Information of 26 January 2017,

Having regard to the OHADA Uniform Act on Commercial Companies and Economic Interest Groups of 30 January 2014, particularly Articles 694 to 734;

Having regard to Regulation No. 01/2009/CM/UEMOA of 27 March 2009 establishing a Permanent Council for the Accounting Profession in UMOA;

Having regard to Regulation No. 02/2009/CM/UEMOA of 27 March 2009 establishing a West African Accounting Council in UMOA;

Having regard to Decision No. CM/SJ/001/03/2016 of 24 March 2016 on the implementation of the monetary sanctions regime applicable on the UMOA Regional Financial Market;

Having regard to Decision No. CM/DAC/04/04/2017 of 14 April 2017 by the UMOA Council of Ministers appointing the President of the Regional Council;

Having regard to the deliberations of the Regional Council at its 33rd extraordinary session on 22 May 2019;

DECREES:

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Instruction No. 58/CREPMF/2019

CHAPTER 1 - PRELIMINARY PROVISIONS

Article 1: Definitions

In the context of this Instruction, the term "Approved Entities" refers to:

• the Regional Securities Exchange (BRVM),
• the Central Depository / Clearing Bank (DC/BR),
• Management and Intermediation Companies (SGI),
• Wealth Management Companies (SGP),
• Account-Keeping and Conservator Banks (BTCC),
• Business Introducers (AA),
• Stock Investment Advisors (CIB),
• Sales Representatives,
• Collective Investment Scheme Management Companies (SGO),
• Collective Investment Schemes (OPC),
• Listing Sponsors (LS),
• any other approved or authorized actor designated by the Regional Council, subject to the obligation to appoint one or more Statutory Auditors.

The term "Listed Companies" refers to companies, public or private entities whose securities are listed on the equity compartment of the Regional Securities Exchange (BRVM).

The term "OPC" refers to Collective Investment Schemes in Securities (CIS), Credit Securitization Common Funds (FCTC) or any other collective investment vehicle approved by the Regional Council. CIS take the form of Variable Capital Investment Companies (SICAV) or Mutual Funds (FCP).

The term "Regional Council" refers to the Regional Council for Public Savings and Financial Markets (CREPMF).

The Signing Partner is the Statutory Auditor registered on the roll of the Order of Chartered Accountants of one of the UMOA member states or in a recognized order representing the Statutory Auditor (legal entity) designated by the listed company or approved entity, and authorized to bind the liability of said Statutory Auditor.

Article 2: Purpose

This Instruction aims to present the approval procedure for Statutory Auditors, the content of mandate approval application files, the conditions for exercising their mandate, the specific diligence expected of them, as well as their relations with the Regional Council.

Article 3: Scope

This Instruction applies to the Statutory Auditors of entities approved by the CREPMF and Listed Companies as defined above.

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Instruction No. 58/CREPMF/2019

Article 4: Persons concerned

Statutory Auditors must be registered on the roll of the Order of Chartered Accountants of one of the UMOA member states and up-to-date with their obligations at that level.

CHAPTER 2 - APPROVAL PROCEDURE FOR STATUTORY AUDITORS

Article 5: Appointment of Statutory Auditors Case of listed companies and approved entities of the regional financial market

The Statutory Auditors of listed companies or approved entities other than non-legal entities are appointed in accordance with the provisions of the OHADA Uniform Act on Commercial Companies and GIEs or those specific to the activity sector of the company or approved entity:

• by the Ordinary General Meeting, for a maximum duration of six (6) years or any other duration set by the supervisory authority of the controlled entity;
• in the Articles of Association or by the Constitutive General Meeting, for a duration of two (2) years, covering the first two financial years.

Case of non-legal entities

The Statutory Auditors of non-legal entities such as Mutual Funds (FCP) or Credit Securitization Common Funds (FCTC) are appointed by the Boards of Directors of the Management Companies administering said entities.

Article 6: Letter of acceptance of mandate

The lead and deputy Statutory Auditors of listed companies or approved entities shall, upon their appointment by the competent bodies, send a letter accepting their mandate to the legal representative of the approved entity or company concerned.

Article 7: Conditions for approval of Statutory Auditors

After their appointment by an Approved Entity and/or a Listed Company and before exercising their functions, the lead Statutory Auditors as well as their deputies must be approved by the Regional Council.

No one may exercise the functions of statutory auditor for a listed company or approved entity without the approval of their appointment by the Regional Council, in accordance with the prevailing procedure.

Statutory Auditors must ensure the approval of their mandates by the Regional Council before exercising their functions. Otherwise, they commit a breach of this Instruction.

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Instruction No. 58/CREPMF/2019

To this end, upon acceptance by the Statutory Auditor(s) of the mandate(s), Listed Companies on the regional financial market and Approved Entities, with the exception of OPCs lacking legal personality, must transmit to the General Secretariat of the Regional Council, for approval, the file of the Statutory Auditor(s) they have appointed.

The approval procedure concerns the lead Statutory Auditors as well as their deputies. It applies both to their initial appointment and to the renewal of their mandate.

Lead and deputy Statutory Auditors cannot belong to the same firm or to structures having legal or interest links between them. The same applies to Co-Statutory Auditors.

Article 8: File processing

The Regional Council has a period of two months from the date of receipt of the complete application file for approval or mandate renewal to rule. In the absence of a response within the allotted time, the Regional Council's decision is deemed favorable.

If the Regional Council deems it necessary, it may request the entity that appointed the Statutory Auditor, the Order of Chartered Accountants, and any other interested party for additional information on the file under processing.

Furthermore, the Regional Council may also seek the opinion of other supervisory authorities if the controlled entity operates in a specific activity sector.

In both cases, the deadline indicated in the first paragraph of this article is suspended until the receipt of the required additional elements and notified to the applicant.

Article 9: Notification of the Regional Council's decision

The Regional Council notifies the Approved Entity or Listed Company of its decision.

In the event of rejection of the approval request, the Approved Entity or Listed Company, which cannot override it, must submit to the Regional Council the file of another Statutory Auditor.

The rejection of a mandate approval request is subject to a motivated notification. This rejection does not constitute a sanction against the Statutory Auditor.

Article 10: Establishment, updating and publication of the list of Statutory Auditors approved by the Regional Council

The approval of a Statutory Auditor by the Regional Council entails their registration on the list of approved Statutory Auditors maintained by the Body. This list is updated semi-annually.

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Instruction No. 58/CREPMF/2019

The list is subject to regular evaluation to ensure compliance by Statutory Auditors with the initial approval conditions.

This list is published in the Official Bulletin of the BRVM Listing as well as on the Regional Council's internet portal.

CHAPTER 3 - APPLICATION FILE FOR APPROVAL OF STATUTORY AUDITORS

Article 11: Content of the Statutory Auditor approval file

The content of the approval file for Statutory Auditors of Listed Companies and Approved Entities, with the exception of OPCs lacking legal personality, is described as follows:

1. Appointment of Statutory Auditors by an Approved Entity or Listed Company

The file must include, in addition to the request:

Case of a Statutory Auditor, natural person

• the minutes of the General Meeting of shareholders appointing the Statutory Auditor;
• the letter of acceptance of the mandate entrusted to them (indicating the prior relationship and the current mandate period),
• the dated and signed curriculum vitae;
• the certificate of registration with the Order of Chartered Accountants and Approved Accountants dated less than six months ago in the absence of the list provided by the Order of Chartered Accountants;
• the written commitment of the Statutory Auditor not to exercise directly or indirectly any incompatible activity or function and to avoid any conflict of interest;
• the written commitment of the Statutory Auditor to comply with the quality control standards for services issued by OHADA;
• the written commitment of the Statutory Auditor to respect the regional financial market regulations;
• the references of the Statutory Auditor in audit and statutory audit. References concerning companies listed on the BRVM and approved entities must be precise.

Case of a Statutory Auditor, legal person

• the minutes of the General Meeting of shareholders appointing the firm;
• the letter of acceptance of the mandate entrusted to them (indicating the prior relationship and the current mandate period concerning listed companies and approved entities);

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Instruction No. 58/CREPMF/2019

• the firm's presentation brochure with a detailed description of human (training, grade, seniority of permanent technical staff) and technical resources as well as its references in audit and statutory audit (indicating the prior relationship and the current mandate period concerning listed companies and approved entities);
• the curriculum vitae of the Managing Director, and of the Signing Partner(s);
• the certificate of registration with the Order of Chartered Accountants of the firm and those of the signatories;
• the written commitment of the firm not to exercise directly or indirectly any incompatible activity or function and to avoid any conflict of interest;
• the commitment of the firm and signatories to comply with the quality control standards for services issued by OHADA;
• the commitment of the firm to comply with the regional financial market regulations.

2. Renewal of the mandate of Statutory Auditors by an Approved Entity or Listed Company

Within forty-five (45) days following the holding of the General Meeting of shareholders that renewed the mandate of the Statutory Auditor(s), the Approved Entity or Listed Company must transmit to the Regional Council, under a simplified procedure, the following documents, whether for a natural or legal person:

• the minutes of the General Meeting of shareholders that renewed the mandate(s) of the Statutory Auditor(s);
• the letter of acceptance of the mandate entrusted to them;
• the commitment of the Statutory Auditor (including the manager or partners in the case of a legal person) not to exercise directly or indirectly any incompatible activity or function and to avoid any conflict of interest;
• the commitment of the Statutory Auditor to comply with the quality control standards for services issued by OHADA;
• the commitment of the Statutory Auditor to respect the regional financial market regulations;
• the firm's presentation brochure with a detailed description of human and technical resources in case of modification since the last approval.

Lead and deputy Statutory Auditors of OPCs lacking legal personality are appointed directly by the Board of Directors of the Management Company. To this end, the minutes of the General Meeting of shareholders that proceeded to the appointment or renewal of the mandate(s) of the Statutory Auditor(s) are replaced by the minutes of the Board of Directors of the management company setting the duration of the mandate of the lead and deputy Statutory Auditors. The content of the approval file is identical to that provided for in point 1 of Article 10.

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Instruction No. 58/CREPMF/2019

The initial lead and deputy Statutory Auditors must be approved at the time of the OPC's approval, whether it has legal personality or not.

Furthermore, the Regional Council may be required to request additional information regarding the resources available to the Statutory Auditor in the context of its missions in specific and/or regulated sectors.

3. Appointment of one or more Statutory Auditors appearing on the list held by the Regional Council

When an Approved Entity or Listed Company appoints one or more Statutory Auditors already registered on the list held by the Regional Council, it transmits to the Regional Council, under a simplified procedure, the same documents as listed in point 2 of Article 10, whether for a natural or legal person.

The registration of one or more Statutory Auditors on the list held by the Regional Council does not entail automatic approval in the context of the processing of files relating to current and future mandates.

Article 12: Maintenance of approval conditions

Statutory Auditors appearing on the list held by the Regional Council must inform it, as soon as possible, of any change in the elements constituting their approval file, particularly in the event of suspension by the Order of Chartered Accountants or removal from the roll of said Order, incapacity or personal bankruptcy, judicial reorganization and conviction by a court.

They are required to inform the Regional Council, within 30 days following the occurrence of the event, of any change in the signatory exercising the mission on behalf of a Statutory Audit firm, and of any addition of a co-signatory.

CHAPTER 4 - EXERCISE OF STATUTORY AUDIT

Article 13: General provisions

The control of financial information of Approved Entities on the regional financial market and Listed Companies is exercised by Statutory Auditors in accordance with the provisions of the OHADA Uniform Act on Commercial Companies and Economic Interest Groups (GIE) and specific texts, where applicable.

Statutory Auditors remain bound by compliance with the regulatory provisions provided by the Uniform Act and the Specific Accounting Rules, particularly regarding the report on annual financial statements and special reports under their charge.

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Instruction No. 58/CREPMF/2019

Article 14: Missions of lead and deputy Statutory Auditors

Statutory Auditors are entrusted with a general mission comprising an audit of financial and accounting information and specific verifications. They may also carry out specific missions provided for by the regulations of the entities where they exercise their statutory audit mandates.

Furthermore, in their capacity as Statutory Auditors, they carry out ancillary interventions related to their general mission, resulting from particular operations or events requiring their intervention.

In accordance with legal and regulatory requirements, Statutory Auditors conduct, with full independence, the appropriate diligence to assess the quality of the financial and accounting information made available to the public or transmitted to the Regional Council.

Article 15: Mandate rotation

The duration of a mandate with the same listed company or approved entity may not exceed three (03) successive mandates, including the current mandate as of the entry into force of this Instruction.

A probationary period equivalent to six (06) financial years must be observed before any new appointment by the same entity.

Statutory Auditors are required to ensure compliance with any stricter provision set by a financial market supervisory Authority to which they are subject.

CHAPTER 5 - STATUTORY AUDITOR'S OPINION ON FINANCIAL STATEMENTS

Article 16: Content of the annual audit report

The Statutory Auditor's opinion is materialized in a report that must be dated and signed by the Statutory Auditor whose appointment has been formally approved by the Regional Council. This report must be transmitted to the Regional Council no later than seven (7) days after the holding of the Ordinary General Meeting of Shareholders.

If several Statutory Auditors are in office, they may separately conduct their investigations, verifications and controls but they prepare a joint report.

In the event of disagreement between Statutory Auditors, the report indicates the different opinions expressed.

Statutory Auditors must examine, as part of the annual audit report, notably the internal organization, governance, functioning of corporate bodies, exercise of internal control, quality of the information and accounting system, compliance with specific regulatory requirements where applicable, as well as risk management and quality.

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Instruction No. 58/CREPMF/2019

The audit report of Statutory Auditors for listed companies and approved entities notably includes the following key points:

• the opinion;
• observations (mandatory in case of change in accounting method and uncertainty on the going concern, etc.);
• specific verifications provided for by law and regulatory requirements, notably the review of prudential rules, where applicable, depending on the activity sector.

The specific diligence of the Statutory Auditor on certain parts of the audit report is detailed in Chapter 6 of this Instruction.

Article 17: Report on first half-year financial statements

The Statutory Auditor conducts a review of the interim accounts of listed companies and approved entities excluding FCP and FCTC and transmits to the controlled entity within a period of two (2) months from the end of the first half-year, a limited review report on the first half-year-end financial statements according to prevailing limited review standards.

Article 18: Opinions

The financial, social and/or consolidated statements closed on 31 December must be examined by the Statutory Auditor(s), who:

• either issue an opinion indicating that the summary financial statements are regular and sincere and give a true and fair view of the results of the operations of the past financial year as well as the financial position and equity, at the end of this financial year;
• either express, with justification, a qualified or adverse opinion or indicate that they are unable to express an opinion.

When the opinion is qualified or when one is in a case of adverse opinion or inability to express an opinion, the Statutory Auditor, including those operating with OPCs excluding FCP and FCTC, must send a detailed report to the Regional Council within thirty (30) days following the issuance of the annual audit report.

Article 19: Duty to inform

When, during their mission, Statutory Auditors identify criminal facts or facts likely to jeopardize the going concern of a listed company or approved entity, they must, without delay, inform the Regional Council in writing, with a copy to the concerned listed company or approved entity.

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Instruction No. 58/CREPMF/2019

CHAPTER 6 - SPECIFIC DILIGENCE RELATED TO STATUTORY AUDIT

Article 20: Quarterly attestation of the detailed composition of OPC assets

The Statutory Auditor attests, by transmitting a report to the Regional Council, within 30 calendar days following the end of each quarter, the detailed composition of the OPC's assets as of the last trading day of the considered quarter. In the event of impossibility for the Statutory Auditor to carry out this diligence, they inform the Regional Council by detailed letter within the allotted time.

Article 21: Review of the Chairman of the Board of Directors' report on governance and internal control and risk management procedures

In application of the OHADA Uniform Act, the Statutory Auditor must, as part of their mission, examine the content of the Chairman of the Board of Directors' report on governance and internal control and risk management procedures implemented by the listed company and ensure that it does not contain inconsistencies or significant anomalies.

Article 22: Review of sector-specific regulations

The Statutory Auditor must ensure that the financial statements are prepared in accordance with the accounting framework and specific texts applicable to Approved Entities and Listed Companies.

Regarding companies operating in a specifically regulated sector, Statutory Auditors are required to conduct a review of compliance with the regulations to which these entities are subject.

CHAPTER 7 - RELATIONS BETWEEN THE REGIONAL COUNCIL AND THE STATUTORY AUDITOR

**Article 23: Obligation of d...