Instruction No. 31/2005 on the Exercise of Statutory Audit by Approved Structures and Listed Companies on the UMOA Regional Financial Market

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

INSTRUCTION NO. 31/2005 ON THE EXERCISE OF STATUTORY AUDIT BY APPROVED STRUCTURES AND LISTED COMPANIES ON THE UMOA REGIONAL FINANCIAL MARKET

Having regard to the Convention of 3 July 1996 establishing the Regional Council for Public Savings and Financial Markets, hereinafter referred to as the Regional Council,

the Annex to said Convention, on the Composition, Organization, Operation and Powers of the Regional Council, particularly Articles 21 § 6, 22 § 4, 23 and 25 § 2,

the OHADA Uniform Act on Commercial Company Law and Economic Interest Groups, particularly Articles 694 to 734,

the resolutions of the Regional Council at its session on 27 November 2004,

The Regional Council resolves:

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CHAPTER 1 - Preliminary Provisions

Article 1
For the purposes of this Instruction, the term "approved structures" means:

• the Regional Securities Exchange (BRVM),
• the Central Depository/Settlement Bank,
• Management and Intermediation Companies,
• Wealth Management Companies,
• "Account-Keeping and Clearing" Banks,
• Business Introducers,
• Stock Investment Advisors,
• Sales Representatives,
• Management Companies for Collective Investment Schemes in Securities (SICAVs/FCPs),
• Common Investment Funds,
• Variable Capital Investment Companies (SICAVs),
• any other actor approved by the Regional Council.

The term "issuers" refers to companies listed on the Regional Securities Exchange (BRVM).

CHAPTER 2 - Conditions for the Exercise of Statutory Audit

Article 2

The audit of accounts for approved structures on the regional financial market and issuers is carried out by Statutory Auditors in accordance with the provisions of the Uniform Act on Commercial Company Law and Economic Interest Groups (GIE).

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Article 3

Statutory Auditors for approved structures on the regional financial market and issuers must be subject to approval by the Regional Council. This approval covers both principal Statutory Auditors and their alternates. It applies to both their initial appointment and the renewal of their term.

CHAPTER 3 - Approval Procedure for Statutory Auditors

Article 4

The approval procedure for Statutory Auditors authorized to audit the accounts of approved structures on the regional financial market and issuers is described as follows:

1) Approved structures on the regional financial market and issuers must submit to the Regional Council the file of the Statutory Auditor(s) they have selected or reappointed.

These Statutory and Certified Auditors must be listed on the official list(s) of Certified Accountants and Certified Auditors with the Court of Appeal of the relevant State or any other legally authorized body.

The application for approval of Statutory Auditors is addressed to the Secretary General of the Regional Council.

The file must include, in addition to the application, when it concerns a natural person:

• the curriculum vitae,
• the certificate of registration with the Order of Certified Accountants and Certified Auditors dated less than two months ago,
• the list of permanent technical staff and their qualifications (education, rank, professional seniority),
• the firm's commitment to comply with quality control standards initiated by the Order of Certified Accountants or the Regional Council,
• the official list(s) of Statutory Auditors in force in the country,
• the minutes of the General Meeting of Shareholders appointing the interested party.

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In the case of a legal entity, in addition to the official list(s) of Statutory Auditors in force and the minutes of the General Meeting appointing them, the file must include:

• a firm presentation brochure with a detailed description of human and technical resources,
• the curriculum vitae of the General Manager and/or signing Partners,
• the certificate of registration with the Order of Certified Accountants for the signing representative dated less than two months ago,
• the certificate of registration of the firm with the Order as an audit or statutory audit firm dated less than two months ago,
• the official list of accounting/audit firms or Statutory Auditors in force in the country,
• the list of permanent technical staff with their education, rank and professional seniority,
• the firm's commitment to comply with quality control standards initiated by the Order of Certified Accountants or the Regional Council.

In cases where multiple Statutory Auditors are appointed, the proposed persons must not belong to the same firm or to affiliated structures.

2) The Regional Council has a period of 45 days to object to the approval of the Statutory Auditor(s). Failure to respond by the expiration of this period constitutes acceptance.

In case of refusal, the approved structure or issuer, which cannot override it, must submit to the Regional Council the file of another Statutory Auditor.

Article 5

Approved structures on the regional financial market must ensure that approval by the Regional Council is obtained before Statutory Auditors exercise their functions.

Article 6

The Regional Council maintains a list of approved Statutory Auditors. This list is published in the Official Stock Bulletin and through all communication channels of the Regional Council.

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CHAPTER 4 - Specific Missions Assigned to Statutory Auditors

Article 6

The Statutory Auditor must, prior to any validation of accounts, precede their mission with a review of the company's internal control and draft a report on areas for improvement.

Article 7

Statutory Auditors certify that the consolidated financial statements are regular and fair, providing a true and fair view of the results of operations for the past financial year as well as the financial position and equity of the company at the end of that year.

Article 8

In their report to the Ordinary General Meeting, Statutory Auditors declare:

• either certifying the regularity and fairness of the consolidated financial statements,
• or attaching reservations to their certification or refusing it, specifying the grounds for these reservations or refusal.

Article 9

Statutory Auditors must pay particular attention to the general principles of their profession guiding their certification work.

Article 10

Statutory Auditors verify the fairness and consistency with the consolidated financial statements of information provided in the Board of Directors' or General Manager's management report, as applicable, and in documents regarding the financial position and consolidated financial statements addressed to shareholders.

They report their observations in their annual report to the Ordinary General Meeting of Shareholders.

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Article 11

The certification of accounts for approved structures must not, under penalty of notable deficiency, ignore the examination of the application of accounting methods prescribed by specific accounting rules applicable to approved structures on the regional financial market and issuers. It is compliance with these rules, combined with generally accepted accounting principles, that constitutes the necessary condition for obtaining a true and fair view. The fairness of accounts covers the good faith application of these defined rules.

Article 12

Statutory Auditors are required, in order to form their judgment independently, to describe and assess corporate governance, administrative organization, the internal control system, the information system, and the degree of compliance with regional financial market regulations in terms of prudential rules.

Article 13

Statutory Auditors must be able to present their verification schedules and working papers to the Regional Council. These must contain evidence of due diligence performed as well as, where applicable, a register of identified inaccuracies, irregularities, and infractions.

Chapter 5 - Certification of End-of-Year Documents

Article 14

Annual accounts finalized on December 31 must be certified as regular and fair by the Statutory Auditor(s).

Statutory Auditors declare:

• either certifying the regularity and fairness of the consolidated financial statements,
• or attaching reservations to their certification or refusing it, specifying the grounds for these reservations or refusal.

Reserved certification must be the exception. However, when it occurs, issued reservations must be subject to a detailed report addressed to the Regional Council.

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Article 15

The certification report must be dated and signed by the Statutory Auditor(s).
In case of multiple opinions, the report must state the position of each Statutory Auditor.

Article 16

The certification report must cover the following aspects:

1) administrative organization and corporate governance,
2) internal control,
3) opinion on the accounts,
4) compliance with prudential regulations of the Regional Council and regional financial market texts,
5) compliance with BCEAO prudential regulations for credit institutions,
6) other specific verifications and information.

Furthermore, Statutory Auditors must report on any other violations of legal and regulatory provisions they may have identified, without prejudice to their actual impact.

Chapter 6 - Final Provisions

Article 17

In case of non-compliance with the provisions of this Instruction, the Regional Council proceeds:

• to strike off the Statutory Auditor from the list established by the Regional Council for the exercise of statutory audit by approved structures and listed companies on the UMOA regional financial market;
• to publish this strike-off through all communication means it deems useful.

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Article 18

Approved structures on the regional financial market and issuers are required to ensure the dissemination of this Instruction among their Statutory Auditors.

Article 19

This Instruction repeals and replaces all other prior provisions, particularly those of Circular No. 6/2002 dated January 21, 2002.

Article 20

This Instruction shall enter into force as of its signature date and shall be published wherever necessary.

Done in Abidjan, on 07 June 2005

The President

Martin N. GBEDEY

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