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2018-03-26

CISCA Circular No. 9: Audit Committees for Collective Investment Scheme Managers

The Financial Services Board issued CISCA Circular No. 9 to require all managers of collective investment schemes to establish functioning audit committees. The directive provides detailed guidelines mandating committees of at least three members, predominantly independent, to oversee internal controls, financial reporting integrity, and compliance with the Financial Intelligence Centre Act. Managers must report their committee status or implementation timelines within thirty days of registration, with group subsidiaries exempt if covered by a holding company committee, thereby superseding the July 2004 circular.

South Africa

Financial Sector Conduct Authority

FINANCIAL SERVICES BOARD

Rigel Park 446 Rigel Avenue South Erasmusrand Pretoria 0181 South Africa
PO Box 35655 Menlo Park Pretoria 0102 South Africa
Tel +27 12 428 8000 Fax +27 12 347 0221 E-mail info@fsb.co.za
Toll free 0800 110443 Internet http://www.fsb.co.za

ENQUIRIES:	Ms Kedibone Dikokwe	D. DIALLING NO.:	(012) 428 8017
OUR REF:	15/5/1/1 Circular No.9	FAX:	(012) 347 1379
DATE:	23 January 2009	E-MAIL:	kedibond@fsb.co.za

CISCA CIRCULAR NO. 9 TO ALL MANAGERS OF COLLECTIVE INVESTMENT SCHEMES

AUDIT COMMITTEES

Ongoing changes in the financial services industry have increased the responsibilities of the boards of directors of all institutions involved in the industry. As the objectives of such institutions are set by the board of directors and responsibility for control over the achievement of these objectives rests with the board of directors, the control function requires that each board at all times satisfies itself about:

a) the integrity and ability of the management it has appoints; and
b) the adequacy and efficiency of internal financial and other controls, accounting practices, information and reporting systems and the auditing process.

[See also the provisions of the Financial Institutions (Protection of Funds) Act, 2001 (Act No. 28 of 2001).]

Such board can either involve itself directly in exercising this control or it can utilise an audit committee to carry out the necessary examinations and verifications and to report its findings on a regular basis to it.
The purpose of this Circular is to encourage the establishment of an audit committee for every manager and to propose guidelines for determining the powers, responsibilities and operations of such an audit committee. It is the view of the Financial Services Board and the Collective Investment Schemes Advisory Committee that every manager of a collective investment scheme should have an efficiently functioning audit committee to assist the board of directors in exercising its functions as set out above. However, an audit committee will not serve any useful purpose unless it functions effectively as part of the overall control process and gains appropriate authority and credibility within the manager of a collective investment scheme concerned.

Board Members Dr CDR Rustomjee (Chairperson) Mr AM Sithole (Deputy Chairperson) Mr BM Hawksworth
Ms H Wilton Prof PJ Sutherland Ms JV Mogadime Ms T Mokgabudi Prof M Ncube Ms Z Bassa Ms M Phetla-Lekhethe
Executive Officer Mr DP Tshidi

Guidelines for the envisaged audit committee are as follows:

a) Subject to the provisions of subparagraphs [c] and [d] below, the board of directors of a manager should appoint at least three of its members to form an audit committee.

b) The functions of the audit committee should be to:

i. assist the board of directors in its evaluation of the adequacy and efficiency of the internal control systems, accounting practices, information systems and auditing processes applied within that manager in the day-to-day administration of its business;

ii. facilitate and promote communication regarding the matters referred to in (i) above or any other related matter between the board of directors and the executive officers of, the external auditor for, and the employee charged with the internal auditing of the transactions of the manager;

iii. introduce such measures as in the committee’s opinion may serve to enhance the credibility and objectivity of financial statements and reports prepared with reference to the affairs of the manager; and

iv. establish and implement appropriate control procedures for monitoring compliance with the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001) (“FICA”) and to appoint a specific person(s) designated for monitoring compliance with the provisions of FICA.

c) All of the members of the audit committee may be, and the majority of such members should be, persons who are not employees of a manager of a collective investment scheme.

d) The board of directors of a manager of a collective investment scheme will be exempt from the duty to appoint an audit committee if such institution is a member of a group of companies in respect of which group annual financial statements are required to be made out in terms of section 288(1) of the Companies Act No. 61 of 1973, provided an audit committee has been appointed for the holding company in that group and such audit committee has assumed the responsibilities of an audit committee in respect of all the subsidiaries in that group.
It would be appreciated to receive confirmation within 30 days from date of registration as a manager:

a) whether there is an audit committee in operation and if so, submit in summary form, details of the composition, responsibilities and operations thereof; and

b) if there is no audit committee in operation, what steps are contemplated in accordance with this circular, for the implementation thereof and the proposed operative date.

A copy of this Circular is enclosed for the information of your auditor. Please acknowledge receipt and confirm that a copy of this circular has been handed to the auditor.
This Circular No. 9 hereby substitutes Circular No.1 dated JULY 2004.

DP TSHIDI
REGISTRAR OF COLLECTIVE INVESTMENT SCHEMES

ACKNOWLEDGEMENT OF RECEIPT

I acknowledge receipt of a copy of CISCA Circular No. 9

Signature	Name of Manager

| Date | |

I acknowledge receipt of a copy of CISCA Circular No. 9

Auditor
Name of Firm of Auditors
Date

Please return to:
Registrar of Collective Investment Schemes
P.O Box 35655
Menlo Park
Pretoria
0102