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2004-07-01

COBAC Instruction I-2004/01 on the Compatibility of Certain Activities with the Audit Mandate of Credit Institutions

The Commission Bancaire de l’Afrique Centrale (COBAC) issued Instruction I-2004/01 to delineate the statutory audit mandate of credit institutions by explicitly prohibiting advisory and management-interfering activities while permitting non-conflicting support functions. The directive establishes a clear framework distinguishing incompatible tasks, such as day-to-day accounting preparation and human resources management, from compatible ones like tax return assistance and internal system evaluations. It further requires auditors or institutions to obtain COBAC's prior opinion on any unlisted activity before concluding service contracts, thereby preserving auditor independence and the reliability of financial statements.

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COMMISSION BANCAIRE DE L’AFRIQUE CENTRALE

COBAC INSTRUCTION I-2004/01 ON THE COMPATIBILITY OF CERTAIN ACTIVITIES WITH THE AUDIT MANDATE OF CREDIT INSTITUTIONS

The President of the Commission Bancaire de l’Afrique Centrale,

Having regard to Regulation No. 04/03/CEMAC/UMAC/COBAC on the duties of statutory auditors in credit institutions;

Having regard to Regulation COBAC R-2001/07 on internal control in credit institutions;

DECIDES:

Article 1.- Statutory auditors referred to in the first paragraph of Article 1 of Regulation No. 04/03/CEMAC/UMAC/COBAC on the duties of statutory auditors in credit institutions may not perform, within the institutions for which they have been approved, any task other than that referred to in Articles 710 to 717 of the OHADA Uniform Act on commercial company law and economic interest groups. They are particularly prohibited from performing any advisory activity that does not fall within the scope of this circumscribed mission.

Article 2.- In addition to the incompatibilities and prohibitions listed in Articles 378 and 697 to 700 of the OHADA Uniform Act on commercial company law and economic interest groups, activities that constitute an interference in management or are likely to alter the independence required to express an opinion on the regularity and fairness of consolidated financial statements—which must give a true and fair view of the results of the operations for the past fiscal year as well as the financial position and assets/liabilities of the institution at the end of the fiscal year—are incompatible with the exercise of the statutory auditor mandate in a credit institution. These include, among others, the following operations, performed directly or through an intermediary:

  • preparation of accounting entries within the framework of the institution's day-to-day management;
  • maintenance of accounting books;
  • preparation of financial statements;
  • performance of duties related to internal control, particularly those referred to in Articles 10 and 12 of Regulation COBAC R-2001/07 on internal control in credit institutions;
  • drafting or updating procedure manuals referred to in Articles 18, 19, 20 and 26 of Regulation COBAC R-2001/07 on internal control in credit institutions;
  • design, implementation and supervision of the institution's information system;
  • drafting legal instruments relating to the organization of the institution or its commitments towards third parties;
  • determination of the value of asset elements;
  • issuance of an opinion on projects for acquiring participations or financial instruments of any kind;
  • provision of personnel, regardless of the contract type (fixed-term or indefinite employment contracts, service agreements, etc.);
  • human resources management (search, recruitment, negotiation of personnel contracts, etc.);
  • issuance of opinions in areas outside the scope covered by the statutory auditor mission.

Article 3.- Activities that contribute, without interfering in management, to forming an opinion on the regularity and fairness of consolidated financial statements—which must give a true and fair view of the results of the operations for the past fiscal year as well as the financial position and assets/liabilities of the institution at the end of the fiscal year—are not incompatible with the exercise of the statutory auditor mandate in a credit institution. These include, among others, the following operations:

  • issuance of opinions on the accounting treatment of the institution's transactions;
  • issuance of opinions on valuation methods for the institution's asset elements;
  • assistance in preparing the institution's tax returns;
  • assistance or representation of the institution in its relations with the tax authorities;
  • evaluation of the information system and internal control system of the institution and its subsidiaries;
  • issuance of opinions on compliance with current laws and regulations of legal instruments relating to the organization of the institution or its commitments towards third parties;
  • review and certification of subsidiaries' accounts;
  • audit, within the framework of the so-called "due diligence" procedure, of companies acquired by the institution.

Article 4.- In case of doubt regarding the compatibility of an activity not listed in Articles 2 and 3 above with the exercise of the statutory auditor mandate in a credit institution, the concerned statutory auditor or institution must request the opinion of the Commission Bancaire before concluding any service contract relating to said activity.

Article 5.- This Instruction shall enter into force as of the date of its signature.

Done at Yaoundé, on 29 JUNE 2004

The President, Jean-Félix MAMALEPOT

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