General Provisions Applicable to Entities and Issuers Supervised by the CNBV that Hire External Audit Services for Basic Financial Statements

DOF: 26/04/2018

GENERAL PROVISIONS APPLICABLE TO ENTITIES AND ISSUERS SUPERVISED BY THE COMISIÓN NACIONAL BANCARIA Y DE VALORES THAT HIRE EXTERNAL AUDIT SERVICES FOR BASIC FINANCIAL STATEMENTS

A seal with the National Coat of Arms, which reads: United Mexican States.- Ministry of Finance and Public Credit.- National Banking and Securities Commission.

The National Banking and Securities Commission, with the prior agreement of its Board of Directors and based on the provisions of articles 21, second paragraph, 40, second paragraph, 101, fourth and fifth paragraphs, and 125 of the Credit Institutions Law; 53, third and fourth paragraphs of the General Law of Organizations and Auxiliary Credit Activities; 30 and 67, fourth and fifth paragraphs of the Credit Unions Law; 77, third and fourth paragraphs and 77 Bis 1, first paragraph of the Investment Funds Law; 18, third paragraph, 46 Bis, first paragraph and 118, fourth and fifth paragraphs of the Popular Savings and Credit Law; 31, fraction XI, and 34, fourth and fifth paragraphs of the Law to Regulate the Activities of Savings and Loan Cooperatives; 126, 210, fourth and fifth paragraphs, 243, first paragraph, 252, 279, first and last paragraphs, 318, first paragraph and 343 of the Securities Market Law; 52, first paragraph of the Organic Law of the National Financial Institution for Agricultural, Rural, Forestry and Fisheries Development; 33, first paragraph of the Law of the National Institute for the Consumption Fund of Workers; 19 Bis, fraction I and 66, fractions II and IV of the Law of the National Housing Fund for Workers; 190, second paragraph of the Law of the Institute for Security and Social Services of State Workers, as well as 4, fractions VI, XXXVI and XXXVIII, 16, fraction I and 19 of the Law of the National Banking and Securities Commission, and

CONSIDERING

That it is necessary to update the regulation regarding audited financial statements of various entities subject to the supervision of the National Banking and Securities Commission in order to improve the quality of external audit services hired by said financial entities and persons subject to the supervision of said Commission, since the financial information contained in their financial statements is the instrument through which their financial stability and solvency are verified, which allows for adequate supervision and, at the same time, for shareholders and other interested parties, to have relevant information about said entities and persons;

That it is necessary to strengthen the communication channels of the governing bodies of the various entities subject to the supervision of the National Banking and Securities Commission with the external auditor, with the objective of providing means and mechanisms that allow their constant and efficient interaction aimed at improving the content and quality of reports, including the disclosure of significant matters, and other documentation that said external auditors prepare, providing confidence and certainty to the Mexican financial system;

That it is essential that the audit committee of the aforementioned entities or to whom the corresponding functions are assigned, strengthens and documents its functions related to external audit, and that it is convenient to include the obligation of external auditors to present to said committee a report with significant information on the development of the external audit, which facilitates the evaluation of the performance of external audit functions;

That in order to safeguard independence in the exercise of the external auditor's work, it is indispensable to incorporate requirements that must be met for such purposes, as well as those applicable to the legal entity in which they work;

That with the object of strengthening the national financial system, it is required that external audit work comply with the highest quality standards, so that the information derived from them is accurate, transparent and reliable for the various financial entities and persons subject to the supervision of the National Banking and Securities Commission, as well as for financial authorities and the market in general, therefore norms are incorporated aimed at ensuring said end, and

That it has been considered indispensable to incorporate in a single normative instrument the provisions applicable to the financial entities and persons mentioned, in matters of external audit services that ensure the transparency and reliability of their financial information, systematizing their integration and homologating the terminology used, in order to thereby provide legal certainty regarding the normative framework to which said entities or persons must be subject in the development of external audit practices, which will also facilitate consultation, compliance and observance of the provisions applicable to them, has resolved to issue the following:

GENERAL PROVISIONS APPLICABLE TO ENTITIES AND ISSUERS SUPERVISED BY THE NATIONAL BANKING AND SECURITIES COMMISSION THAT HIRE EXTERNAL AUDIT SERVICES FOR BASIC FINANCIAL STATEMENTS

Chapter I
General Provisions

Chapter II
Of the requirements that Independent External Audit Firms and Auditors must meet

Chapter III
Of the norms applicable for the performance of external audit work, as well as the content of the External Audit Report and other communications and opinions

Chapter IV
Of the hiring of the Audit Firm

Chapter V
Of the substitution of the Audit Firm and the Independent External Auditor

Chapter VI
Of the follow-up of the work of the Audit Firm and the Independent External Auditor

Chapter VII
Of the evaluation of the work of the Audit Firm and the Independent External Auditor

Chapter VIII
Of the presentation of the External Audit Report, as well as other communications and opinions to the Commission

Chapter IX
Of the powers of the Commission

Chapter I
General Provisions

Article 1.- These provisions aim to establish the requirements that Independent External Audit Firms and Auditors must meet when providing external audit services for Basic Financial Statements to Entities and Issuers; the norms applicable for the performance of external audit work, the content of External Audit Reports and other communications and opinions referred to in article 15 of these provisions, prepared by said Audit Firms and Independent External Auditors, as well as the rules in matters of hiring, substitution, follow-up and evaluation of external audit work.

These provisions are applicable to the following Entities:

I.
General warehouses.

II.
Stock exchanges.

III.
Brokerage houses.

IV.
Exchange houses.

V.
Central counterparties for securities.

VI.
Development Entities.

VII.
National Financial Institution.

VIII.
Capital investment funds.

IX.
Development banking institutions.

X.
Multiple banking institutions.

XI.
Securities depository institutions.

XII.
Development Agencies.

XIII.
Savings and loan cooperatives, with operation levels I to IV, except those savings and loan cooperatives with operation levels I and II that are exempt from auditing their annual Basic Financial Statements, provided that the value of their assets is lower than what is determined in article 32-A of the Federal Tax Code as a case for legal entities to opt to audit their Basic Financial Statements for tax purposes under the terms of article 52 of said Code.

XIV.
Distributing societies of investment fund shares.

XV.
Regulated multiple-object financial societies.

XVI.
Popular financial societies and community financial societies with operation levels I to IV, as well as rural financial integration agencies.

These provisions shall not be applicable to popular financial societies, community financial societies with operation level I and rural financial integration agencies that are exempt from auditing their annual Basic Financial Statements, provided that the value of their assets and their accumulated taxable income is lower than what is determined in article 32-A of the Federal Tax Code as a case for legal entities to opt to audit their Basic Financial Statements for tax purposes under the terms of article 52 of said Code.

XVII.
Investment fund operating societies.

XVIII.
Investment fund share valuing societies.

XIX.
Credit unions.

Additionally, these provisions shall be applicable to Issuers.

Article 2.- For the purposes of these provisions, the following shall be understood:

I.
Independent External Auditor: the public accountant or licensed public accountant who meets the characteristics and requirements contained in Chapter II of these provisions, who signs the External Audit Report, other communications and opinions required in accordance with article 15 of these provisions, on behalf of the Audit Firm providing the external audit services hired by the Entity or Issuer.

II.
Commission: the National Banking and Securities Commission.

III.
Audit Committee: the committee constituted by the Board of Directors in accordance with the laws and provisions applicable to stock exchanges, brokerage houses, Development Entities, National Financial Institution, multiple banking institutions, development banking institutions, Development Agencies, savings and loan cooperatives, multiple-object financial societies that maintain links in terms of the General Law of Organizations and Auxiliary Credit Activities, credit unions, popular financial societies and community financial societies, as well as rural financial integration agencies.

In cases where the provisions specifically applicable to the Entities do not contemplate the obligation to have an Audit Committee, the functions referred to in these provisions shall be the responsibility of the Board of Directors of said Entities, which may assign them to the person or area it designates provided that it is independent of the general management or its equivalent, as well as of the Independent External Auditor and Audit Firm and has technical knowledge and experience in accounting and auditing matters.

IV.
Auxiliary Supervision Committee: the body of the Auxiliary Supervision Fund of Savings and Loan Cooperatives and Protection of their Savers or of the Federations responsible for exercising auxiliary supervision of savings and loan cooperatives, popular financial societies, community financial societies and rural financial integration agencies in terms of the Law to Regulate the Activities of Savings and Loan Cooperatives and the Popular Savings and Credit Law, respectively.

V.
Board of Directors: the board of directors or executive board of the Entities or Issuers.

With respect to Development Entities and Development Agencies, to the following bodies or administrative units:

a)
The Executive Board referred to in the Law of the National Institute for the Consumption Fund of Workers, or its substitute, for the case of INFONACOT.

b)
The Executive Commission or Board of Directors referred to in the Law of the Institute for Security and Social Services of State Workers, or their substitutes, according to the powers granted to these collegiate bodies in terms of said Law for the case of FOVISSSTE.

c)
The General Assembly or Board of Administration referred to in the Law of the National Housing Fund for Workers, or their substitutes, according to the powers granted to these collegiate bodies in terms of said Law for the case of INFONAVIT.

d)
The technical committee or equivalent body of the Development Entities, or its substitute as established in the applicable legal provisions.

With respect to Issuers of fiduciary development, real estate, indexed, investment project and energy and infrastructure investment certificates referred to in the General Provisions applicable to securities issuers and other market participants, published in the Official Gazette of the Federation on March 19, 2003 and its respective modifications, to the technical committee of the trust constituted in accordance with the applicable provisions.

With respect to Issuers that do not have any of the administrative bodies mentioned above, to the person or corporate body that has the competence to decide on the hiring of the Audit Firm in charge of the external audit of the Issuer in question.

VI.
Consortium: the set of legal entities linked to each other by one or more natural persons that, integrating a Group of Persons, have Control of the former.

VII.
Control: the capacity of a person or Group of Persons to carry out any of the following acts:

a)
Impose, directly or indirectly, decisions in the general assemblies of shareholders, partners or equivalent bodies, or appoint or remove the majority of directors, administrators or their equivalents, of a legal entity.

b)
Maintain ownership of rights that allow, directly or indirectly, to exercise voting rights with respect to more than fifty percent of the share capital of a legal entity.

c)
Direct, directly or indirectly, the administration, strategy or main policies of a legal entity, either through the ownership of securities or by contract or in any other form.

VIII.
Audit Firm: the legal entity whose activity is the provision of audit services for Basic Financial Statements, in which Independent External Auditors work.

IX.
Issuer: that considered as such in terms of the Securities Market Law.

X.
Entities: the entities referred to in fractions I to XIX of the previous article 1.

XI.
Development Entities: the public funds and trusts constituted by the Federal Government for economic development that carry out financial activities, referred to in article 3 of the Credit Institutions Law.

XII.
Basic Financial Statements: the consolidated basic financial statements or, if applicable, the individual basic financial statements that are required from Entities or Issuers in accordance with the provisions applicable to them.

XIII.
Audit Team: that considered as such in terms of the professional ethics code issued by the Mexican Institute of Public Accountants, A.C.

XIV.
National Financial Institution: the National Financial Institution for Agricultural, Rural, Forestry and Fisheries Development.

XV.
FOVISSSTE: the Housing Fund of the Institute for Security and Social Services of State Workers.

XVI.
Group of Persons: the persons who have agreements, of any nature, to make decisions in the same sense. It is presumed, unless proven otherwise, that they constitute a Group of Persons:

a)
Persons who have kinship by blood, affinity or civil up to the fourth degree, spouses, concubine and concubine.

b)
Societies that are part of the same Consortium or Business Group and the person or group of persons that have Control of said societies.

XVII.
Business Group: the set of legal entities organized under schemes of direct or indirect participation of share capital, in which the same society maintains Control of said legal entities. Likewise, financial groups constituted in accordance with the Law to Regulate Financial Groupings shall be considered as Business Groups.

XVIII.
INFONACOT: the National Institute for the Consumption Fund of Workers.

XIX.
INFONAVIT: the National Housing Fund for Workers.

XX.
External Audit Report: the opinion on Basic Financial Statements or the document prepared by an Independent External Auditor that expresses an opinion on the Basic Financial Statements as a result of an external audit performed in accordance with the ISA.

XXI.
ISA: the International Standards on Auditing issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants.

XXII.
Development Agencies: INFONACOT, FOVISSSTE and INFONAVIT, jointly.

XXIII.
SEDI: the electronic system for sending and disseminating information that is authorized by the stock exchanges in question to the Commission.

XXIV.
STIV-2: the Information Transfer System on Securities referred to in the General Provisions applicable to securities issuers and other market participants, published in the Official Gazette of the Federation on March 19, 2003 and its respective modifications.

The terms "associated", "parent" and "subsidiary" used in these provisions shall have the meaning established for that purpose by the Financial Information Standards issued by the Mexican Council for Financial Information Standards, A.C.

Article 3.- Entities and Issuers must hire the services of an Audit Firm that has Independent External Auditors who meet the requirements provided in these provisions, to carry out the external audit of their Basic Financial Statements and the issuance of the External Audit Report, as well as for the preparation of the communications and opinions referred to in article 15 of these provisions.

Entities, through their Audit Committee, as well as Issuers must monitor and document that, prior to the annual designation or ratification of the hiring of the Audit Firm that will provide said services, these adhere to what is established in these provisions.

In the case of capital investment funds, the hiring of the Audit Firm referred to in the first paragraph of this article shall be the responsibility of the investment fund operating society that administers its assets.

The provisions stated in this article shall not be applicable to the hiring of the Audit Firm or Independent External Auditor that is carried out for development banking institutions, National Financial Institution, Development Entities, INFONACOT and FOVISSSTE when these are designated by the Ministry of Public Function in accordance with the applicable provisions.

Chapter II
Of the requirements that Independent External Audit Firms and Auditors must meet

Article 4.- The Independent External Auditor who audits the Basic Financial Statements of Entities or Issuers must meet the following requirements:

I.
Be a partner of the Audit Firm hired by the Entity or Issuer to provide external audit services for Basic Financial Statements, which must comply with what is provided in articles 9 and 10 of these provisions.

II.
Have a valid registration issued by the General Administration of Federal Tax Audit of the Tax Administration Service or with the valid certification as a public accountant issued by the professional college recognized by the Ministry of Public Education to which it belongs.

III.
With respect to Entities, have a minimum professional experience of five years in external audit work related to the financial sector or ten years in other sectors. In the case of Issuers, have a minimum of ten years of experience in external audit work.

The provisions stated in this article shall not be applicable to development banking institutions, National Financial Institution, Development Entities, INFONACOT and FOVISSSTE when the Audit Firm or Independent External Auditor is designated by the Ministry of Public Function in accordance with the applicable provisions.

With respect to INFONAVIT, the requirements for the external auditor established by the Law of the National Housing Fund for Workers shall apply, without this article being applicable.

Article 5.- The Independent External Auditor, additionally to the date of celebration of the service provision contract, during the development of the audit or other assurance work required in accordance with these provisions and until the issuance of the External Audit Report, as well as the other communications and opinions referred to in article 15 of these provisions, must comply with the following requirements:

I.
Be independent in terms of article 6 of these provisions.

II.
Not have been expelled, nor be suspended from their rights as a member of the professional association to which they belong, if applicable.

III.
Not have been convicted by an irrevocable sentence for a property or intentional crime that warranted corporal punishment.

IV.
Not be disqualified from exercising commerce or for holding an employment, position or commission in the public service or in the Mexican financial system, nor have been declared bankrupt or in commercial bankruptcy without having been rehabilitated.

V.
Not have records of suspension or cancellation of any certification or registration required to function as an Independent External Auditor, for causes attributable to the person and that originated in intentional or bad faith conduct.

VI.
Not have been, nor have an offer to be, a director or executive of the Entity or Issuer or, if applicable, of its parent, subsidiaries, associates, entities with which joint control agreements are made or legal entities that belong to the same Business Group or Consortium.

VII.
Not have any pending litigation with the Entity or Issuer in question or, if applicable, with its parent, subsidiaries, associates, entities with which joint control agreements are made or legal entities that belong to the same Business Group or Consortium.

With respect to INFONAVIT, the requirements for the external auditor established by the Law of the National Housing Fund for Workers shall apply, without this article being applicable.

Article 6.- The Audit Firm, the Independent External Auditor and the persons who are part of the Audit Team

Audits performed by external audit firms on the Basic Financial Statements of Entities or Issuers must be and remain independent as of the date of execution of the engagement contract, throughout the development of the external audit, and until the issuance of the External Audit Report and the communications and opinions referred to in Article 15 of these provisions.

Independence shall be deemed non-existent when the Firm, the Independent External Auditor, and the persons forming part of the Audit Team fall under any of the following circumstances:

I.
The fees received by the Firm from the Entity or Issuer, or, where applicable, from its parent company, subsidiaries, affiliates, entities with joint control agreements, or legal entities belonging to the same Business Group or Consortium derived from the provision of their services, represent in aggregate 10% or more of the total fees of the Firm during the year immediately preceding that in which it intends to provide the service.

II.
The Firm, Independent External Auditor, or any partner or member of the Audit Team, has been an important client or supplier of the Entity or Issuer, or, where applicable, of its parent company, subsidiaries, affiliates, entities with joint control agreements, or legal entities belonging to the same Business Group or Consortium, during the year immediately preceding that in which it intends to provide the service.

An important client or supplier is considered one whose sales or purchases to the Entity or Issuer, or, where applicable, to its parent company, subsidiaries, affiliates, entities with joint control agreements, or legal entities belonging to the same Business Group or Consortium, represent in aggregate 10% or more of their total sales or, where applicable, total purchases.

III.
The Independent External Auditor or any partner of the Firm in which they work, are or have been during the year immediately preceding their appointment as Independent External Auditor, board members, general managers, or employees holding positions within the two levels immediately below the latter in the Entity or Issuer, in its parent company, subsidiaries, affiliates, entities with joint control agreements, or legal entities belonging to the same Business Group or Consortium.

IV.
Where applicable, the Firm, Independent External Auditor, any partner or member of the Audit Team, the spouse, concubine, common-law husband/wife, or economic dependent of the aforementioned natural persons, hold investments in shares or debt securities issued by the Entity or Issuer, or, where applicable, by its parent company, subsidiaries, affiliates, entities with joint control agreements, or legal entities belonging to the same Business Group or Consortium; hold credit instruments representing such values or derivatives having them as underlying assets, except where they involve fixed-term deposits, including withdrawable certificates of deposit on predetermined days, bank acceptances, or promissory notes with yield liquidated at maturity, provided that these are contracted under market conditions.

The provisions of this subsection shall not apply to:

a)
The holding of shares representing the share capital of variable income investment funds and debt instruments.

b)
The holding of shares representing the share capital of a joint-stock company, registered in the National Securities Register held by the Commission, through trusts constituted for that sole purpose in which there is no intervention in investment decisions, or in titles referring to indices or baskets of shares, or in credit instruments representing shares of the share capital of two or more joint-stock companies issued under the auspices of trusts.

V.
The Firm and the Independent External Auditor, any partner or member of the Audit Team, the spouse, concubine, common-law husband/wife, or economic dependent of the aforementioned natural persons, maintain with the Entity or Issuer, or, where applicable, with its parent company, subsidiaries, affiliates, entities with joint control agreements, or legal entities belonging to the same Business Group or Consortium, debts from loans or credits of any nature, except for credit card debts, financing intended for the purchase of durable consumer goods, mortgage credits for the acquisition of real estate, and personal and payroll credits, provided that they are granted under market conditions.

VI.
Where applicable, the Entity or Issuer, its parent company, subsidiaries, affiliates, entities with joint control agreements, or legal entities belonging to the same Business Group or Consortium, hold investments in the Firm conducting the audit.

VII.
Where applicable, the Firm or the Independent External Auditor, any partner or member of the Audit Team provides to the Entity or Issuer, in addition to the external audit of Basic Financial Statements, any of the following services:

a)
Preparation of the Basic Financial Statements including their notes, as well as the accounting of the Entity or Issuer, its parent company, subsidiaries, affiliates, entities with joint control agreements, or legal entities belonging to the same Business Group or Consortium, as well as the data used as support to prepare said Basic Financial Statements, their notes, or any item thereof, and any other type of service aimed at the preparation of said financial statements.

b)
Direct or indirect operation of financial information systems, or administration of technological infrastructure related to financial information systems.

c)
Design or implementation of internal controls over financial information, as well as policies and procedures for risk management.

d)
Supervision, design, or implementation of computer systems, whether hardware or software, that concentrate data supporting Basic Financial Statements or generate significant information for their preparation.

e)
Valuations, appraisals, or estimates, except those related to transfer pricing studies for tax purposes or those that do not form part of the evidence supporting the external audit of Basic Financial Statements.

f)
Where applicable, administration of the Entity or Issuer, temporary or permanent, participating in decision-making.

g)
Internal audit.

h)
Recruitment and selection of personnel to occupy positions of general manager or the two levels immediately below this, or any person whose position allows them to exercise influence over the preparation of accounting records or Basic Financial Statements on which the Independent External Auditor must express an opinion.

i)
Litigation before courts, or when the Firm, the Independent External Auditor, or any partner or employee of the Firm, holds a general power with faculties of dominion, administration, or litigation and collection granted by the Entity or Issuer.

j)
Preparation of opinions that, according to the laws regulating the Mexican financial system, require issuance by licensed lawyers.

k)
Any service provided whose documentation could form part of the evidence supporting the external audit of Basic Financial Statements or any other service that implies or could imply conflicts of interest regarding the external audit work of Basic Financial Statements, in accordance with what is stated in the ethical codes referenced in subsection X of this article.

Promoting joint-stock companies for stock market investment (SABs de C.V.) that, at the time of requesting registration in the National Securities Register held by the Commission, were receiving the services referred to in subitems b), c), and f) above from the Independent External Auditor auditing their Basic Financial Statements or from the Firm in which they work or any partner or member of the Audit Team, may continue to receive them during the fiscal year in which they obtain registration in said Register of their shares or credit instruments representing them; this term may be extended by the Commission for a single occasion and up to one additional year. Likewise, the litigation services before courts provided for in subitem i) above may be received until the total resolution of the dispute, provided that the procedure before the competent court had been initiated before the effects of registration as a promoting joint-stock company for stock market investment take place.

VIII.
The fees that the Firm receives or will receive for auditing the Basic Financial Statements of the Entity or Issuer depend on the result of the audit itself or on the success of any operation carried out by said Entity or Issuer that has the External Audit Report as its basis.

IX.
The Firm of which the Independent External Auditor is a partner has overdue accounts receivable from the Entity or Issuer for fees from audit services or any other service already provided to the Entity or Issuer, as of the date of issuance of the Audit Report.

X.
The Firm, the Independent External Auditor, or any partner or member of the Audit Team, falls under any of the circumstances provided for in the professional ethical code of the college of professionals recognized by the Ministry of Public Education to which they belong, or, in the absence thereof, that issued by the Mexican Institute of Public Accountants, A.C., or that which replaces it, or the circumstances contemplated in the Ethics Code issued by the International Federation of Accountants, "International Federation of Accountants", as causes of partiality in judgment to express their opinion, provided that such circumstances are more restrictive than those contained in these provisions.

XI.
When the Firm or the Independent External Auditor identify threats that are not reduced through safeguards to an acceptable level to provide the external audit service, in accordance with the ethical codes referenced in subsection X of this article.

The Firm and the Independent External Auditor shall be responsible for compliance with the independence requirements referred to in this article.

The Independent External Auditor must report to the Issuer and, in the case of Entities, to the Audit Committee, as soon as they become aware of these facts, the threats to independence arising during the development of the external audit of Basic Financial Statements, as well as the safeguards applied.

The provisions of this article shall not apply to development banking institutions, National Financial Institutions, Development Entities, INFONACOT, and FOVISSSTE, when the Firm or the Independent External Auditor is appointed by the Secretariat of the Civil Service in accordance with applicable provisions.

Regarding INFONAVIT, the provisions of the Law of the Institute of the National Housing Fund for Workers shall apply.

Article 7.- The Independent External Auditor in their capacity as a partner of the Firm in charge of the external audit of Basic Financial Statements of the Entity or Issuer concerned, as well as the quality control reviewer of the engagement and the manager of the Audit Team, may not participate in the external audit of Basic Financial Statements of any Entity or Issuer for more than five consecutive years, being able to be reappointed after a minimum interruption of two years. During the two-year period referred to, the Independent External Auditor, as well as the manager of the Audit Team, may not provide services other than the external audit of Basic Financial Statements to the Entity or Issuer so that they can be reappointed as such in the Entity or Issuer.

Regarding promoting joint-stock companies for stock market investment (SABs de C.V.), the five-year term referred to in this article shall begin to run from the date of registration in the register of the shares representing their share capital or credit instruments representing them. Nevertheless, said companies must disclose this situation in their public information prospectuses and, once the shares are placed, through their annual report.

Additionally, rotation of personnel involved in the execution of the audit must be carried out, at the discretion of the Independent External Auditor responsible for the external audit of Basic Financial Statements of the Entity or Issuer concerned.

Regarding INFONAVIT, the provisions of the Law of the Institute of the National Housing Fund for Workers shall apply.

Article 8.- The documentation and working papers owned by the Firm in charge of the external audit of Basic Financial Statements that support the External Audit Report, as well as all information and other elements of judgment used to prepare the corresponding report and other communications and opinions referred to in Article 15 of these provisions, must be preserved, physically or through images in digital format, on optical or magnetic media that allow their extraction and reading, for a minimum period of five years counted from the closing of the documentation and working papers of the external audit. The Firm and the Independent External Auditor shall have a maximum period of sixty calendar days, from the date on which the External Audit Report and other communications and opinions referred to are issued, to conclude the closing of the documentation and working papers of the external audit.

During the course of the audit and within the five-year period indicated, the Firm and the Independent External Auditor are obligated to keep available to the Commission the information contained in the documents and working papers or any other record with which the work of the external audit of Basic Financial Statements is documented and which supports the preparation of the External Audit Report and, where applicable, the other communications and opinions referred to in Article 15 of these provisions. Such information or records may be reviewed jointly with the Independent External Auditor or with the manager in charge of the audit, for which the Commission itself may request their presence in order to expand on the reports or supply the elements of judgment that served as the basis for the formulation of the opinion or report prepared in accordance with these provisions.

Article 9.- The Firm, in external audits of Basic Financial Statements, as well as in the issuance of communications and opinions referred to in Article 15 of these provisions, must maintain a quality control system referred to in International Standard on Quality Control 1 "Quality Control in Audit Firms that Perform Audits and Reviews of Financial Statements, as Well as Other Engagements That Provide a Level of Assurance and Related Services" and in International Standard on Auditing 220 "Quality Control for Audits of Financial Statements" or those that replace them, issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants, as well as in the "Quality Control Standard" or that which replaces it, issued by the Mexican Institute of Public Accountants, A.C., in accordance with what is provided in the methodologies contained in said standards.

The Firm and the Independent External Auditor must ensure that a quality control review of the audit engagement is carried out in accordance with the standards mentioned in the previous paragraph, prior to the issuance of the External Audit Report, as well as of the opinion referred to in subsection II of Article 15 of these provisions.

Such review must be documented in the working papers of the external audit referred to in the first paragraph of Article 8 of these provisions, and be available to the Audit Committee during the execution of the audit.

Regarding INFONAVIT, the provisions of the Law of the Institute of the National Housing Fund for Workers shall apply.

Article 10.- The Firm must have an updated manual on the quality control system referred to in the standards mentioned in Article 9 of these provisions, for the provision of the audit service and the attestation work required in accordance with these provisions.

The aforementioned manual on the quality control system must:

I.
Be approved by the person in charge of the quality control system and by the general manager or equivalent of the Firm.

II.
Contain the policies and procedures to ensure that all external audit work and the other communications and opinions referred to in Article 15 of these provisions are carried out in accordance with the standards referred to in the first paragraph of Article 14 of these provisions, as well as with the guidelines of the professional ethical codes referred to in subsection X of Article 6 of these provisions.

III.
Provide, at least, for the following policies, procedures, and mechanisms:

a)
Those applicable to all levels of personnel performing external audit work for the issuance of the External Audit Report and the other communications and opinions to be rendered, in accordance with what is stated in Article 15 of these provisions.

b)
Those necessary to assign appropriate professional personnel with the necessary capacity and competence and who possess knowledge of the business of the Entity or Issuer concerned and the standards applicable to them to perform the assigned tasks.

c)
Those that allow reasonable assurance that the work required in accordance with these provisions is performed consistently and in accordance with professional standards and applicable regulatory requirements, as well as to issue appropriate reports to the circumstances.

d)
Those corresponding to the objective evaluation, when required, of significant judgments made by the Audit Team, as well as of the conclusions reached for the formulation of the External Audit Report and other communications and opinions required in accordance with Article 15 of these provisions.

e)
Those relating to the preservation of evidential documents that demonstrate the implementation of the quality control system, as well as the timely closing of working papers after issuing the External Audit Report and the communications and opinions required in accordance with Article 15 of these provisions.

f)
Those that clearly determine the functions and responsibilities of the Independent External Auditor and the partners and employees in charge of carrying out the external audit, which include obtaining commitments of confidentiality from said persons.

g)
Those relating to the evaluation of the professional capacity and competence of personnel involved in the external audit.

h)
Those that provide reasonable assurance that the Firm and its personnel comply with applicable ethical requirements.

i)
Those relating to permanent communication between the personnel in charge of the quality control system with the Independent External Auditor, partners, and employees in charge of carrying out the audit, in order to request information that allows the Firm to identify the degree of adherence to the independence requirements established in these provisions.

j)
Those that allow verification that the information contained in the working papers or databases adequately supports the opinion, communication, or report issued.

k)
Those corresponding to the acceptance and continuance of clients and specific engagements.

l)
Those designed to provide reasonable assurance that internally generated consultations on complex or controversial issues are carried out and documented.

m)
Those applicable to quality reviews, establishing the nature, scope, and timing of such reviews and the documentation requirements, as well as the criteria for the eligibility of quality reviewers.

n)
Those that provide reasonable assurance that the quality control system operates effectively.

ñ)
Those that allow identifying that reasonable time is dedicated and sufficient resources are assigned for the adequate performance of external audit functions.

o)
Those that allow identifying and, where applicable, reporting to the Audit Committee the threats to independence and, where applicable, the safeguards applied.

p)
Those that allow identifying and reporting, where applicable, to the Audit Committee and the Commission, the failures of the Firm and the Audit Team to comply with professional ethical codes and independence standards established in these provisions.

q)
Those relating to disciplinary procedures that ensure compliance with the policies, procedures, and mechanisms indicated in this article.

r)
Those applicable to the rotation of members of the audit team.

Regarding INFONAVIT, the provisions of the Law of the Institute of the National Housing Fund for Workers shall apply.

Article 11.- The Firm must ensure that the quality control system referred to in the standards mentioned in the first paragraph of Article 9 of these provisions complies, at least, with the following:

Have sufficient resources for its development, as well as mechanisms that allow preserving the documentation generated by said system.

II.

Be adequate and proportional to the magnitude and complexity of its activities and those of the Independent External Auditor, as well as those of the Entities and Issuers audited.

III.

Ensure that, when contracting third-party external audit services is carried out, the quality control or the capacity of the competent authorities to supervise compliance with their obligations and those of the Independent External Auditor under these provisions is not affected.

IV.

Have systems that allow its partners and employees to have periodic information about the Entity or Issuer in question, regarding which they must maintain independence.

Include internal permanent training programs for its partners and persons who are part of the Audit Team, which ensure the acquisition of technical knowledge related to the audited sector, audit standards and the applicable financial information framework, ethical and independence standards, as well as those necessary to carry out the external audit work of the Entities and Issuers audited. Likewise, it must have a record of said programs with the necessary observations that allow identifying and following up on the development of each partner and employee.

The Firm must ensure that it has personnel in charge of the quality control system that monitors compliance with the requirements related to said system established in these provisions.

The provisions of this article will not apply to development banking institutions, National Financial Institution, Development Entities, INFONACOT and FOVISSSTE, when the Firm or the Independent External Auditor is appointed by the Secretariat of Public Function in accordance with applicable provisions.

Regarding INFONAVIT, the provisions of the Law of the National Housing Fund for Workers Institute shall apply.

Article 12.- The Firm must participate in a quality evaluation program that includes, at least, the following:

The degree of compliance with the ISA and, where applicable, with the Attestation Standards referred to in article 14 of these provisions.

II.

The content and degree of compliance with the manual referred to in article 10 of these provisions.

The provisions of this article will not apply to development banking institutions, the National Financial Institution, Development Entities, INFONACOT and FOVISSSTE, when the Firm or the Independent External Auditor is appointed by the Secretariat of Public Function in accordance with applicable provisions.

Regarding INFONAVIT, the provisions of the Law of the National Housing Fund for Workers Institute shall apply.

Article 13.- The Firm is responsible for ensuring that its personnel complies with the professional standards and quality requirements applicable, technical capacity and for the development of their work as referred to in the applicable provisions.

Additionally, the Firm is responsible, together with the Independent External Auditor, for the content of the External Audit Report, as well as for the other communications and opinions indicated in article 15 of these provisions.

In the event that threats to independence or non-compliance with the standards established in the ethical codes referred to in fraction X of article 6 of these provisions are identified, the Independent External Auditor must document them in the audit working papers.

Chapter III

Of the applicable standards for the performance of external audit work, as well as the content of the External Audit Report and other communications and opinions

Article 14.- Independent External Auditors, for the performance of external audit work on Basic Financial Statements of Entities and Issuers, as well as in the issuance of the opinions indicated in article 15 of these provisions, must adhere to the ISA issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants, as well as to the Framework for Assurance Engagements and the Attestation Standards, issued by the Audit and Assurance Standards Commission of the Mexican Institute of Public Accountants, A.C., as appropriate to the type of service provided.

The External Audit Report of Entities must communicate those matters that, in the opinion of the Independent External Auditor, are relevant to the audit, basing their determination on ISA 701 "Key Audit Matters in the Auditor's Report".

Article 15.- The Independent External Auditor will provide the Entity or Issuer in question with the communications and opinions described below:

Regarding Entities or Issuers, a communication of observations.

The Independent External Auditor must include in the communication required under this fraction the identification of observations corresponding to substantive procedures, the evaluation of internal control and other matters, ordered by relevance, in the opinion of the Independent External Auditor.

The Independent External Auditor of investment fund operating companies that manage equity and debt instrument investment funds will be obligated to provide a single communication containing the relevant information of said funds, in accordance with the requirements established in this fraction.

II.

Regarding investment fund operating companies that manage equity and debt instrument investment funds, an opinion on the reasonableness of the Basic Financial Statements of each fund managed by said companies.

The opinion required under this fraction must be prepared in accordance with the ISA and must communicate those matters that, in the opinion of the Independent External Auditor, are relevant, basing their determination on ISA 701 "Key Audit Matters in the Auditor's Report".

III.

Regarding investment fund share valuation companies, an opinion on compliance with the provisions established in the General Provisions applicable to investment funds and to the persons providing services to them, published in the Official Journal of the Federation on November 24, 2014 and its respective modifications, regarding the determination of the valuation price of the shares representing the share capital of the funds to which they provide services.

For these purposes, the Independent External Auditor must carry out sampling procedures that allow obtaining a reasonable basis from which to reach conclusions about the entire population.

The opinion required under this fraction must be prepared in compliance with the methodology established in Bulletin 7040 "Examinations on Compliance with Specific Provisions", or the one that replaces it, issued by the Audit and Assurance Standards Commission of the Mexican Institute of Public Accountants, A.C.

Once the communication referred to in fraction I of this article is received, the Entity must prepare an action plan containing preventive and corrective measures to address the observations, indicating the compliance deadline. Said action plan must be communicated to its Audit Committee, the Independent External Auditor and sent to the Commission, within ninety (90) natural days following receipt of the communication referred to in fraction I of this article. Issuers are obligated to prepare and inform their Audit Committee and the Independent External Auditor of said action plan within the mentioned ninety (90) natural days.

Chapter IV

Of the hiring of the Firm

Article 16.- The Council of general warehouses, stock exchanges, brokerage firms, exchange houses, central securities counterparties, multiple banking institutions, securities depository institutions, savings and loan cooperatives, investment fund share distribution companies, regulated multiple-object financial companies, community financial companies, popular financial companies, rural financial integration bodies, investment fund share valuation companies, investment fund operating companies and credit unions, as well as Issuers, and investment fund operating companies regarding the investment funds they manage, in relation to external audit services of Basic Financial Statements, must approve:

The appointment or, where applicable, annual ratification of the Firm in charge of the external audit.

II.

The replacement of the Firm or the Independent External Auditor in charge of the audit.

III.

The contracting of services other than external audit of Basic Financial Statements.

IV.

The amount of remuneration, both for the external audit service and for services other than external audit of Basic Financial Statements.

The matters that must be authorized by the Council under this article will be presented through the Audit Committee of the Entities.

Regarding development banking institutions, Development Entities, INFONACOT, FOVISSSTE and National Financial Institution, they will only be obligated to inform their Council about the appointment of the Firm and the Independent External Auditor carried out by the Secretariat of Public Function, which must be done through the Audit Committee or the General Manager. For the case of INFONAVIT, the provisions of the Law of the National Housing Fund for Workers Institute shall apply.

Article 17.- Entities must inform and send to the Commission through their General Manager, equivalent body or representative, no later than fifteen (15) business days following the hiring of the corresponding Firm, an authenticated copy by the Council Secretary, regarding the agreement by which said body approves the appointment of the Firm for hiring and, where applicable, its annual ratification.

Regarding Development Entities, development banking institutions, INFONACOT, FOVISSSTE and National Financial Institution, they must inform the Commission through their head, the appointment of the Firm, within thirty (30) business days following receipt of the notification of said appointment made by the Secretariat of Public Function.

Issuers, to comply with the provisions of the first paragraph of this article, must disclose to the stock exchange where their securities are listed through SEDI, and send within the same timeframe referred to in the first paragraph of this article to the Commission through STIV-2, the appointment of the Firm providing external audit services for Basic Financial Statements.

Regarding savings and loan cooperatives, popular financial companies, community financial companies and rural financial integration bodies, a copy of said agreement must additionally be sent to the Auxiliary Supervision Committee, within the timeframe and terms indicated in the first paragraph of this article.

Article 18.- Entities and Issuers must send to the Commission through their General Manager, equivalent body or representative, a copy of the contract for the provision of external audit services of Basic Financial Statements, as well as for the issuance of communications and opinions indicated in article 15 of these provisions, in which the fiscal year for which the Firm will provide its services is indicated.

The copy of the contract signed by the parties must be sent within thirty (30) business days following the date of its celebration.

The respective contract must expressly establish the following obligations on the part of the Firm:

That it must provide the Entity or Issuer in question with the information and documentation it requests and that allows it to demonstrate to the Commission compliance with the obligations established in these provisions.

II.

That in the event that the Entity or Issuer changes the Firm to which the Independent External Auditor belongs, this one in its capacity as predecessor auditor, according to the term defined in the ISA, must provide the Independent External Auditor in its capacity as successor auditor, in response to the request received by the Entity or Issuer in question, access to the working papers of the external audit of the last audited period, within thirty (30) business days following receipt of the request.

III.

That in the event that it decides to cease providing the external audit service, it must provide a report in the terms indicated in article 25 of these provisions.

Issuers are obligated to send the information referred to in this article to the Commission through STIV-2.

Regarding savings and loan cooperatives, popular financial companies, community financial companies and rural financial integration bodies, a copy of the contract must additionally be sent to the Auxiliary Supervision Committee, within the timeframe and terms indicated in the first and second paragraphs of this article.

The provisions of the third paragraph, fractions I to III of this article, will not apply to development banking institutions, National Financial Institution, Development Entities, INFONACOT and FOVISSSTE, when the Firm or the Independent External Auditor is appointed by the Secretariat of Public Function in accordance with applicable provisions.

Article 19.- Entities and Issuers must inform the Commission through their General Manager, equivalent body or representative, of the type of services other than external audit of Basic Financial Statements that they may have contracted with the Firm, as well as the amount of remuneration paid for said services, exposing the reasons why this does not affect the independence of the Firm and the Independent External Auditor. For this latter purpose, Entities and Issuers will take into account the importance that the result of the service provided might have on the Basic Financial Statements of the Entity and Issuer, as well as the remuneration paid for said services in relation to the corresponding remuneration for external audit services.

The information referred to in the previous paragraph must be provided to the Commission and, where applicable, to the Auxiliary Supervision Committee within thirty (30) business days following the Council session of the Entity in which said hiring is approved and prior to the provision of services other than external audit of Basic Financial Statements referred to in this article.

Issuers must disclose through STIV-2 the information referred to in the first paragraph of this article, within thirty (30) business days following the Council session of the Issuer in which the hiring of services other than external audit of Basic Financial Statements is approved and prior to the provision of these.

Article 20.- The Audit Committee of Entities, for the hiring of the Firm, must at least perform the following activities:

Validate, prior to the appointment of the Firm, that both it and the Independent External Auditor comply with the personal, professional and independence requirements established in applicable laws and these provisions for the provision of the mentioned external audit service and, where applicable, of services other than external audit of Basic Financial Statements.

II.

Obtain from the Firm, the statement on compliance with the quality control standard corresponding to the audited exercise, presented before the professional college recognized by the Secretariat of Public Education to which said Firm belongs or, when the college in question does not require such statement, the one issued by the Firm itself regarding compliance with the obligation referred to in article 10 of these provisions.

III.

Opine, prior to the appointment of the Firm, regarding whether the resources proposed to execute the external audit program are reasonable considering the scope of the audit, the nature and complexity of the operations of the Entity in question, as well as the structure of these latter.

IV.

Review the terms of the audit engagement, prior to signing the service provision contract.

The provisions of this article will not apply to the Audit Committee of Development Entities, development banking institutions, INFONACOT, FOVISSSTE and National Financial Institution, when the Firm or the Independent External Auditor is appointed by the Secretariat of Public Function in accordance with applicable provisions. Regarding INFONAVIT, the provisions of the Law of the National Housing Fund for Workers Institute shall apply.

Article 21.- The Audit Committee of Entities, for the purposes of the appointment or annual ratification of the Firm, must validate the knowledge and professional experience of the Independent External Auditor, the manager and audit supervisor who will participate in the external audit, as well as compliance with the requirements established in these provisions by the Firm, Independent External Auditor and personnel participating in the external audit, considering, additionally, the complexity of the audited Entity's business.

For the purposes of the appointment and annual ratification of the Firm, the Audit Committee must have a documented process, which is transparent and impartial and that allows it to evaluate compliance with the requirements referred to in the first paragraph of this article. In cases where the Audit Committee intends to propose the appointment of another Firm, it must previously evaluate, at least, two options and duly justify the preference for one of them, so that there is a possibility of choosing considering compliance with said requirements.

The provisions of this article will not apply to the Audit Committee of Development Entities, development banking institutions, INFONACOT, FOVISSSTE and National Financial Institution when the Firm or the Independent External Auditor is appointed by the Secretariat of Public Function in accordance with applicable provisions. Regarding INFONAVIT, the provisions of the Law of the National Housing Fund for Workers Institute shall apply.

Article 22.- The Audit Committee, for the development of the obligations contemplated in these provisions, may rely on persons from areas independent of the General Management or its equivalent.

The activities performed by the Audit Committee in accordance with these provisions and the results obtained from them must be documented.

Chapter V

Of the replacement of the Firm and the Independent External Auditor

Article 23.- The Audit Committee of Entities must evaluate the possible replacement of the Firm or, where applicable, the Independent External Auditor when they cease to meet the necessary requirements for the development of their work.

The provisions of this article will not apply to development banking institutions, Development Entities, National Financial Institution, INFONACOT and FOVISSSTE, when the Firm or the Independent External Auditor is appointed by the Secretariat of Public Function in accordance with applicable provisions.

Regarding INFONAVIT, the provisions of the Law of the National Housing Fund for Workers Institute shall apply.

Article 24.- The replacement of the Firm or the Independent External Auditor carried out by any Entity must be reported in writing to the Commission by the General Manager, equivalent body or representative, within five (5) business days following the Council session in which the replacement was approved, exposing the reasons motivating it and attaching the appropriate documentation to comply with these provisions.

Savings and loan cooperatives, popular financial companies, community financial companies and rural financial integration bodies must additionally inform the Auxiliary Supervision Committee within the same timeframe.

For the case of development banking institutions, FOVISSSTE, INFONACOT, Development Entities and National Financial Institution, the replacement of the Firm and the Independent External Auditor providing external audit services for Basic Financial Statements must be reported in writing to the Commission, within five (5) business days following the date on which said replacement was carried out by the Secretariat of Public Function, exposing the reasons motivating it.

Regarding Issuers, they must disclose to the stock exchange where their securities are listed through SEDI, and send within the same timeframe referred to in the first paragraph of this article to the Commission through STIV-2, the replacement of the Firm and the Independent External Auditor providing external audit services for Basic Financial Statements, indicating the causes of said replacement.

In the event that the replacement referred to in this article is carried out, the Commission and, where applicable, the Auxiliary Supervision Committee, may consult with the Firm or Independent External Auditor to know their point of view regarding the reasons motivating their replacement.

Regarding Issuers, the Commission may order that the causes of the replacement be made known to the investing public, through SEDI of the stock exchange where their securities are listed, when it deems it pertinent.

Article 25.- The Firm that decides to terminate the provision of external audit services referred to in these provisions, will inform the Commission, within ten (10) business days following the date on which it ceases to provide said service, the reasons that motivated its decision and will deliver to said Commission and to the Entity or Issuer in question, a communication of the works of

external audits carried out up to that point.

Regarding savings and loan cooperative societies, popular financial societies, community financial societies, and rural financial integration organisms, the report must additionally be sent to the Auxiliary Supervision Committee, under the terms indicated in the first paragraph of this article.

Chapter VI

On the Follow-up of the Work of the Firm and the Independent External Auditor

Article 26.- The Audit Committee of the Entities shall follow up on the external audit activities of Basic Financial Statements, as well as on the issuance of the communications and opinions indicated in Article 15 of these provisions, keeping the Board of Directors informed regarding the performance of said activities.

Likewise, the Audit Committee will monitor the activities of the Independent External Auditor, who, at the request of said Audit Committee, must report on the activities and progress of the audit.

Article 27.- The Audit Committee of the Entities, in the follow-up of external audit activities, will carry out, at least, the following activities:

Contribute to ensuring that the internal audit area or the internal auditor facilitate the development of external audit activities.

II.

Foster that the Entity has policies that allow it to have personnel in charge of the preparation, review, and authorization of accounting, as well as of the Basic Financial Statements and their notes, subject to external audit, and with knowledge of the accounting regulation applicable to said Entity.

III.

In relation to external audit:

Know, at the beginning of the external audit work, the review approach, taking into consideration the level of materiality, the scope of the planned audit, and the significant issues identified.

Monitor that, during the development of the external audit, the Independent External Auditor has all the necessary documentation in a timely manner to perform its functions, having access to documentation related to the work of third parties hired by the Entity in question, if such documentation is necessary for the performance of the external audit.

Maintain effective communication with the Independent External Auditor that allows informing the latter of any matter that, if applicable, has an impact on regulatory capital, as well as relevant matters for the development of the external audit.

During the course of the external audit, it must know the point of view of the Independent External Auditor regarding the important issues identified by the latter and how they impact the approach of the external audit.

Report to the Commission, when aware, of non-compliance or risks that affect the independence of the Firm and the Independent External Auditor, through a detailed report.

Summon the Independent External Auditor, as an invited guest with the right to speak but without vote, to the sessions of said committee, when deemed appropriate due to the topics to be discussed.

Review with the Independent External Auditor, prior to the issuance of the External Audit Report, the letter of representations issued by the General Manager or their equivalent or by any member of the Entity's administration, prepared in accordance with International Standard on Auditing 580 "Written Representations", placing special emphasis on matters where the Independent External Auditor required specific declarations on any item of the Basic Financial Statements.

Evaluate, prior to the conclusion of the external audit work, the compliance of the Independent External Auditor with the initial audit program, and in case there were changes, evaluate their reasonableness.

IV.

Monitor that corrective measures are implemented to address in a timely manner the findings and recommendations of the Independent External Auditor.

Article 28.- The Independent External Auditor may attend as an invited guest with the right to speak, but without vote, to the sessions of the Audit Committee, when the latter deems it appropriate due to the topic to be discussed, having to withdraw when the committee deems it convenient.

Article 29.- In cases where the provisions applicable to the Entities contemplate the obligation to have a responsible area for internal audit, said area must facilitate to the Independent External Auditor the information it has available due to its functions and that is necessary for the performance of the external audit, and keep at its disposal the report of the results of its reviews presented both to the Board of Directors and, if applicable, to the Audit Committee.

Article 30.- The General Manager or whoever performs the equivalent functions of the Entities must keep at the disposal of the Independent External Auditor the reports presented to the Board of Directors, regarding the deviations detected with respect to the objectives, guidelines, policies, procedures, strategies, and current regulations in credit matters, in case the Entity grants credits.

Article 31.- Entities that, under the terms of the law regulating them, may grant credits, must keep at the disposal of the Independent External Auditor the minutes or summaries of the credit committee, if they have them, as well as the documents signed by the persons of the Entity in question for the approval of credits specified in their credit manual.

Likewise, the reports that Entities are obliged to present to the Audit Committee, under the terms of the provisions applicable to them, regarding the deviations they detect with respect to the objectives, guidelines, policies, procedures, strategies, and current regulations in credit matters, must be at the disposal of the Independent External Auditor, who may request them at any time during the external audit work.

Article 32.- Entities and Issuers must obtain from the persons and officials responsible for signing their audited Basic Financial Statements, in terms of the provisions applicable to said Entities and Issuers, a declaration in which they manifest the following:

That they have reviewed the information presented in the audited Basic Financial Statements to which these provisions refer.

II.

That the audited Basic Financial Statements do not contain information on false facts, as well as that they have not omitted any relevant fact or event, of their knowledge, that could be necessary for their correct interpretation in light of the provisions under which they were prepared.

III.

That the audited Basic Financial Statements and the additional information to them, present fairly in all material aspects the financial situation and the results of the operations of the Entity or Issuer in question.

IV.

That internal controls have been established and maintained, as well as procedures related to the disclosure of relevant financial information.

That internal controls have been designed with the objective of ensuring that material aspects and information related to the Entity or Issuer in question, its parent, subsidiaries, associates, entities with which they carry out joint control agreements, or legal entities belonging to the same Business Group or Consortium are made known to the administration.

VI.

That they have revealed to the Firm, to the Independent External Auditors and, if applicable, to the Audit Committee, through timely communications, the significant deficiencies detected in the design and operation of internal control that could adversely affect, among others, the function of recording, processing, and reporting financial information.

VII.

That they have revealed to the Firm, to the Independent External Auditors and, if applicable, to the Audit Committee, any alleged fraud or irregularity that is of their knowledge and involves the administration or any other employee who plays an important role related to internal controls.

The declaration referred to in this article must be sent to the Commission by the Entities jointly with the External Audit Report, the audited Basic Financial Statements and their notes, within ninety (90) natural days from the closing of the fiscal year to which said report and the information in question correspond.

For the case of savings and loan cooperative societies, popular financial societies, community financial societies, and rural financial integration organisms, said declaration must additionally be sent to the Auxiliary Supervision Committee, within the deadline and under the terms indicated in the previous paragraph.

Regarding Issuers, said declaration must be sent to the stock exchange where they list their securities through SEDI, within the deadline established in fraction II of Article 36 of these provisions for its dissemination to investor public, and subsequently on the same date to the Commission through STIV-2 jointly with the External Audit Report corresponding to the immediate previous fiscal year.

Chapter VII

On the Evaluation of the Work of the Firm and the Independent External Auditor

Article 33.- The Audit Committee shall be responsible for establishing operating policies within the Entity in question, for the periodic evaluation of the Firm and the Independent External Auditor who provide external audit services for Basic Financial Statements and for the issuance of the communications and opinions indicated in Article 15 of these provisions, as well as the manner in which it will be carried out taking into account what is provided in Article 34 next of these provisions.

Article 34.- The Audit Committee of the Entities will carry out, at least, the following activities in the evaluation of external audit activities:

Evaluate, at the end of the external audit engagement, the performance of the Firm and the Independent External Auditor, as well as the quality of the External Audit Report and, if applicable, the communications and opinions indicated in Article 15 of these provisions, derived from the external audit service in compliance with these provisions.

II.

Review with the Independent External Auditor, the results of the communications and opinions indicated in the previous fraction, in order to understand their reasoning to reach their conclusions.

III.

Report annually to the Board of Directors, the following:

The evaluation of services other than external audit of Basic Financial Statements or complementary ones, if any, provided by the Firm in charge of performing the external audit.

The result of the evaluation regarding the compliance, by the Firm and the Independent External Auditor, of the independence requirements established in Article 6 of these provisions.

The results of the review of the External Audit Report and the Basic Financial Statements accompanying it, as well as of the communications and opinions of the Independent External Auditor indicated in Article 15 of these provisions.

The mention and follow-up of the implementation of preventive and corrective measures derived from the observations of the external audit, according to the action plan referred to in the last paragraph of Article 15 of these provisions.

The results of the evaluation of the performance of the Independent External Auditor, as well as of the quality of the External Audit Report and, if applicable, other communications and opinions, carried out in compliance with what is provided in the previous fraction I of this article.

Likewise, measures taken to guarantee the independence of the Firm and the Independent External Auditor, as well as of the personnel who participated in the audit, must be contemplated.

The measures adopted due to complaints made by shareholders, board members, relevant executives, employees, and in general, any third party on topics related to external audit.

The Audit Committee of the Entities may request from the Firm and the Independent External Auditor, the documentation that evidences the compliance with the obligations and requirements established in accordance with these provisions, in relation to the contracted audit service, without prejudice to the fact that said committee must meet with the latter, at least, once a year.

Article 35.- The Independent External Auditor is obliged to provide the Audit Committee of the Entities, as well as to the Issuers with a communication, prior to the issuance of the External Audit Report.

The scope of said communication must comprise at least the following:

The name of the Independent External Auditor and of the persons with a hierarchical level equal to or lower than this who participated in the external audit and, if applicable, the activities that formed part of the external audit that were carried out by specialists or other persons who do not belong to the Firm in charge of the external audit, as well as their names and organizations to which they belong.

II.

The description of the policies and procedures implemented to prevent and address threats to independence, as well as to guarantee the quality of the external audit.

III.

The quantitative level of materiality and tolerable error applied, both to the Basic Financial Statements as a whole, as well as to specific items of operations or account balances, as well as the qualitative factors considered for their determination.

IV.

The description of the nature, scope, and timing of the procedures performed in the external audit. Said description must contain at least the following:

The significant processes of the Entity or Issuer that the Independent External Auditor has evaluated, and their relationship with the item or concept of the Basic Financial Statements reviewed, including off-balance sheet accounts.

The risks of material misstatement, as this term is defined in the ISAs, identified, associated with the item or concept of the Basic Financial Statements, including off-balance sheet accounts, as well as the controls related to them, regarding which the Independent External Auditor has had knowledge, during the development of the audit.

The control tests performed by the Independent External Auditor, associated with the identified risks of material misstatement, as well as the description of the methodology for determining sample sizes and the results obtained.

The conclusion of the Independent External Auditor on the evaluation of the operational effectiveness of relevant internal controls and its effect on the design of the nature, timing, and scope of substantive procedures, as this term is defined in the ISAs, applied to the items or concepts of the Basic Financial Statements, including off-balance sheet accounts.

The conclusion of the Independent External Auditor on the evaluation of the congruence between the information contained in the systems or applications and the accounting records that have been subject to their review indicating the item or concept of the financial statements associated, including off-balance sheet accounts.

The substantive procedures, as this term is defined in the ISAs, performed by the Independent External Auditor on the items or concepts of the Basic Financial Statements, including off-balance sheet accounts, which in their opinion they consider significant and that contain the description of the methodology for determining sample size, scope or percentage of review and the results obtained from said procedures.

The substantive procedures related to the closing process of the Basic Financial Statements of the Entity or Issuer.

The description of transformations, mergers, spin-offs, or the carrying out of additional operations outside the normal course of business or that come from unusual circumstances during the audited period, as well as, if applicable, the accounting policies adopted for their recognition.

VI.

In relation to consolidated Basic Financial Statements, a list of subsidiaries and participation percentages and, if applicable, the exclusion criteria applied by the Entities or Issuers to non-consolidated entities, indicating if said criteria comply with applicable accounting standards.

VII.

The explanation of whether the indispensable information or documentation for the development of the external audit that were requested from the personnel of the Entities or Issuers was received, and if they were provided in a timely manner.

VIII.

The significant difficulties that have arisen in the execution of the audit and, if applicable, any refusal for the Independent External Auditor to issue an External Audit Report with a modified opinion, as this term is defined in the ISAs.

IX.

Those matters that in the opinion of the Independent External Auditor are relevant for the external audit based for its determination on ISA 701 "Communication of Key Audit Matters in the Auditor's Report".

The main observations made in the immediate previous fiscal year to the audited one, indicating if the deficiencies in question have been or have not been resolved by the Entity or Issuer in question.

XI.

The significant internal control deficiencies identified.

XII.

The nature and amount of audit adjustments proposed by the Independent External Auditor, without prejudice to whether they are incorporated or not into the audited Basic Financial Statements.

XIII.

The description of the nature, frequency, and scope of communications with the Audit Committee, the general management or equivalent and the Board of Directors or equivalent body, indicating the dates of the meetings, as well as the relevant agreements and conclusions obtained.

The Independent External Auditor of investment fund operating societies that administer variable income investment funds and debt instruments, is obliged to provide a single report containing the relative information of said funds, in accordance with the requirements established in this article.

The Independent External Auditor and the Firm are obliged to provide the Audit Committee with the information that said committee requests from them to comply with their obligations provided in these provisions.

Chapter VIII

On the Presentation of the External Audit Report, as well as other communications and opinions to the Commission

Article 36.- Entities and Issuers must present to the Commission the External Audit Report together with the declaration referred to in Article 32 of these provisions, including the audited Basic Financial Statements prepared, approved, and signed in accordance with applicable provisions and their relative notes, as well as the opinion referred to in fraction II of Article 15 and the communication referred to in Article 35 of these provisions.

Regarding savings and loan cooperative societies, popular financial societies, community financial societies, and rural financial integration organisms, they must additionally present the information indicated in the previous paragraph to the Auxiliary Supervision Committee.

The delivery of the External Audit Report, including the Basic Financial Statements and their relative notes, as well as the opinion referred to in fraction II of Article 15 and the communication referred to in Article 35 of these provisions, must be carried out:

Within ninety (90) natural days following the closing of the fiscal year, regarding the Entities.

II.

Within the deadline and through the communication means established in the General Provisions applicable to issuers of securities and other participants in the securities market, published in the Official Journal of the Federation on March 19, 2003, and their respective modifications, in the case of Issuers.

The communication referred to in Article 35 of these provisions must not be sent to SEDI nor revealed to the investor public in STIV-2.

Regarding Development Agencies and Development Entities, the foregoing shall be applicable unless the corresponding legal provisions provide for a longer deadline for the approval of the audited Basic Financial Statements, in which case they must be delivered no later than ten (10) business days following the expiration of said deadline.

Article 37.- Entities and Issuers must obtain from the Independent External Auditor a declaration in which they manifest the following:

That they comply with the requirements indicated in Articles 4 and 5 of these provisions, as well as that they are a public accountant or licensed in public accounting. Likewise, they must incorporate the numbers and date of issuance of the current records issued by the General Administration of Federal Tax Audit of the Tax Administration Service, including that of the Firm in which they work or, if applicable, the number of certificate issued by the professional college recognized by the Secretariat of Public Education to which they belong.

II.

That from the date on which external audit services are provided, during the development of the external audit and until the issuance of the External Audit Report, as well as of the communications and opinions required in accordance with what is indicated in Article 15 of these provisions, they comply with the requirements referred to in Articles 4 and 5, as well as that the Firm complies with what is provided in Articles 6, 9, and 10, in relation to Article 14 of these provisions.

III.

That the Firm has documentary evidence of the implementation of the quality control system referred to in Article 9 of the provisions and participates in a quality evaluation program that complies with the requirements contemplated in Article 12 of these provisions.

The Independent External Auditor, when formulating the declaration referred to in this article, will give their express consent to provide the Commission with the information it requests, in order to verify compliance with the aforementioned requirements. Likewise, the Firm must be obliged to conserve the information that supports compliance with the aforementioned requirements, physically or through images in

digital format, on optical or magnetic media, for a minimum period of five years counted from the date the audit concludes, and will indicate the number of years the Independent External Auditor has performed the audit of the Basic Financial Statements of the relevant Entity or Issuer, as well as the number of years the firm has provided external audit services.

The provisions of this article shall not apply to development banking institutions, National Financial Institution, Development Entities, INFONACOT, and FOVISSSTE, when the firm or the Independent External Auditor is designated by the Secretariat of the Public Function in accordance with applicable provisions.

Regarding INFONAVIT, the requirements established by the Law of the National Housing Fund for Workers for the external auditor shall apply, without the application of this article.

Article 38.- Entities shall obtain from the Independent External Auditor and provide to the Commission the declaration referred to in Article 37 of these provisions, together with the communications and opinions established in fractions I and III of Article 15, within one hundred twenty (120) natural days following the close of the fiscal year.

Regarding Issuers, they shall obtain from the Independent External Auditor the declaration provided for in Article 37 and the final communication of observations referred to in fraction I of Article 15 of these provisions, within five (5) months following the close of the fiscal year. Issuers shall provide the Commission, through STIV 2, the aforementioned declaration within five (5) months following the close of the fiscal year.

Issuers shall deliver to the stock exchanges in which their securities are listed, through SEDI, the declaration referred to in Article 37 for dissemination to the investing public within the timeframe established in the preceding paragraph of this article.

Article 39.- The firm and the Independent External Auditor of Issuers, on the date the prospectus, supplement, or informational brochure is presented, and, where applicable, the annual information referred to in the General Provisions applicable to securities issuers and other participants in the securities market, published in the Official Journal of the Federation on March 19, 2003, and their respective modifications, shall deliver to the relevant Issuer and, through them, to the stock exchanges in which the corresponding securities are listed, for dissemination to the investing public, a document in which they manifest their consent for the Issuer to include in the annual report and prospectus, supplement, or informational brochure, the External Audit Report issued for that purpose.

This is understood to be subject to the prior verification that the information contained in the Basic Financial Statements included in the prospectus, supplement, informational brochure, or annual report in question, as well as any other financial information contained in said documents whose source derives from the aforementioned Basic Financial Statements or from the External Audit Report presented for that purpose, coincides with the audited information, in order for such information to be made known to the public.

The Independent External Auditor may deliver to the Issuer a single document containing the information indicated in this article and that indicated in Article 37 of these provisions, provided that it meets all requirements and is signed on the date the External Audit Report is issued and for each fiscal year subject to review.

Article 40.- The firm and the Independent External Auditor, in all cases, when during the course of the audit they find irregularities or any other situation that, based on their professional judgment, could endanger the stability, liquidity, or solvency of the audited Entities, or if acts have been committed to the detriment of their assets, regardless of whether they have effects on the financial information, without prejudice to penalties or sanctions in accordance with applicable legislation, when they have knowledge of these facts, they must present a detailed report on the observed situation to the President of the Board or equivalent body, the Audit Committee, the Commission, and the Auxiliary Supervision Committee, as applicable. In the case of Issuers, they must inform the Commission at the same time indicated in this article when it concerns irregularities or any other situation that does not adequately reflect the financial situation or could affect the continuity of the business.

The following detected facts shall be considered, enumeratively but not limitatively, as irregularities: non-compliance with applicable regulations, destruction, alteration, or falsification of physical or electronic accounting records, and the performance of activities not permitted by applicable legislation, highlighting among these those related to credits whose resources have been destined for the payment of capital contributions, among others.

The good faith communication to the Commission by the firm and the Independent External Auditor of the irregularities or situations referred to in this article shall not constitute a breach of any contractual or legal restriction on the disclosure of information, and shall be considered confidential and reserved information by the Commission.

Chapter IX

Of the Powers of the Commission

Article 41.- The Commission may observe the firm and the Independent External Auditor regarding omissions or deviations from these provisions.

Article 42.- The Commission may, in terms of what is provided in the respective laws of the financial system, require the appearance of the Independent External Auditor once it has received notification from the Entity or Issuer of the hiring of the firm in terms of these provisions and prior to the start of audit work to share relevant information regarding the scope of the audit. This same requirement may be made before the External Audit Report is issued.

Article 43.- When, as a result of its supervisory powers over the financial information of the Entity or Issuer, as well as the review of the documents and working papers supporting the external audit of the Basic Financial Statements, in accordance with what is established in the law or general provisions that are applicable, the Commission detects that the Basic Financial Statements might not reasonably reflect the financial situation of the Entity or Issuer, said Commission may require the relevant Entity or Issuer to hire an independent third party that meets the characteristics and requirements contained in Chapter II of these provisions, in order to prepare a report on a specific item or concept or on the Basic Financial Statements as a whole.

The Commission must attend to the materiality of the items or concepts of the Basic Financial Statements and the gravity of the deficiencies identified in the External Audit Report, document the elements that support its finding, and determine the standard that will be applicable for the preparation of the report referred to in the preceding paragraph.

TRANSITORY PROVISIONS

FIRST. - These Provisions shall enter into force on August 1, 2018, except for Articles 1 and 25, which shall enter into force the day following the publication of this instrument in the Official Journal of the Federation.

SECOND. - Articles 24 and 40 of these Provisions shall enter into force the day following their publication in the Official Journal of the Federation regarding depository institutions for securities, stock exchanges, central securities counterparties, and securities issuers considered as such in terms of the Securities Market Law, as well as regulated multiple-object financial companies that maintain equity links with popular financial companies, community financial companies, savings and loan cooperatives, or credit unions.

THIRD. - Firms in which the independent external auditors that entities and issuers subject to the supervision of the National Banking and Securities Commission have hired for the auditing of their financial statements and the issuance of additional reports and opinions, in accordance with the provisions in force before August 1, 2018, work, shall be obligated to preserve, physically or through images in digital format, on optical or magnetic media that allow their extraction and reading, the documentation and working papers, as well as all the information and other elements of judgment used to prepare the corresponding report, for a minimum period of five years counted from the close of the documentation and working papers of the external audit.

The firm and the independent external auditor shall have a maximum period of sixty (60) natural days, from the date the opinion on the financial statements and other reports and opinions are issued in accordance with the provisions in force before August 1, 2018, to conclude the closing of the documentation and working papers of the external audit.

Additionally, during the course of the audit and within the five-year period indicated, the firm and the independent external auditor shall be obligated to make available to the National Banking and Securities Commission the information referred to in the preceding paragraph.

The documents prepared for the auditing of financial statements and the issuance of additional reports and opinions in accordance with the provisions in force before August 1, 2018, may be reviewed jointly with the independent external auditor, for which the National Banking and Securities Commission, in accordance with applicable laws, may require their presence in order for the auditor to supply or expand the reports or elements of judgment that served as the basis for the formulation of their opinion or report.

FOURTH. - The firm hired by entities and issuers subject to the supervision of the National Banking and Securities Commission for the auditing of their financial statements and the issuance of additional reports and opinions in accordance with the provisions in force before August 1, 2018, shall be responsible for ensuring that its personnel comply with professional standards and applicable quality requirements, technical capacity, and for the development of their work in accordance with applicable provisions, and shall be responsible, together with the independent external auditor, for the content of the opinion, as well as for the other additional reports and opinions that, in accordance with the provisions in force, must be delivered.

In the event that threats to independence or non-compliance with the norms established in the professional code of ethics are identified, which the auditor observes in accordance with applicable provisions, the independent external auditor must document them in the audit working papers.

FIFTH. - The National Banking and Securities Commission may require the appearance of independent external auditors hired by entities and issuers subject to the supervision of said Commission for the auditing of their financial statements and the issuance of additional reports and opinions in accordance with the provisions in force before August 1, 2018.

SIXTH. - Independent external auditors of entities and issuers subject to the supervision of the National Banking and Securities Commission must prepare the opinions and communications referred to in Articles 15 and 35 of these Provisions, for the 2019 fiscal year with the information from 2018 that they presented to said Commission.

SEVENTH. - From the day following the publication of these Provisions in the Official Journal of the Federation, when, as a result of the supervisory powers over the financial information of general depositories, stock exchanges, brokerage houses, exchange houses, central securities counterparties, funds, and public trusts constituted by the Federal Government for economic promotion that carry out financial activities, referred to in Article 3 of the Law of Credit Institutions, National Development Bank for Agriculture, Rural, Forestry and Fisheries, capital investment funds, development banking institutions, multiple banking institutions, depository institutions for securities, Housing Fund of the Institute of Security and Social Services for State Workers, National Institute for the Consumption of Workers, National Housing Fund for Workers, savings and loan cooperatives with operation levels I to IV, societies distributing shares of investment funds, regulated multiple-object financial companies, popular financial companies, and community financial companies with operation levels I to IV, rural financial integration bodies, societies operating investment funds, societies valuing shares of investment funds, credit unions, or securities issuers, as well as from the review of the documents and working papers supporting the external audit of basic financial statements, the National Banking and Securities Commission detects that the basic financial statements might not reasonably reflect the financial situation of the entity or issuer, said Commission may require the relevant entity or issuer to hire an independent third party that meets the characteristics and requirements contained in Chapter II of these Provisions, in order to prepare a report on a specific item or concept or on the basic financial statements as a whole.

The National Banking and Securities Commission must attend to the materiality of the items or concepts subject to the basic financial statements, document the elements that support its finding, and determine the standard that will be applicable for the preparation of the report referred to in the preceding paragraph.

Respectfully,

Mexico City, April 17, 2018. - The President of the National Banking and Securities Commission, José Bernardo González Rosas. - Signature.

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