Instruction No. 31/2005 on the Practice of Statutory Audit for Approved Entities and Listed Companies on the UMOA Regional Financial Market

Regional Council of Public Savings and Financial Markets

West African Monetary Union

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

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

Having regard to the OHADA Uniform Act relating to Commercial Company Law and Economic Interest Groupings, particularly Articles 694 to 734,

Having regard to the deliberations of the Regional Council at its session on November 27, 2004,

The Regional Council adopts:

CHAPTER 1 - Preliminary Provisions

Article 1

For the purposes of this Instruction, the term "approved entities" refers to:

• The Regional Securities Exchange,
• The Central Depository/Settlement Bank,
• Management and Intermediation Companies,
• Wealth Management Companies,
• "Account Keeping and Clearing" Banks,
• Business Brokers,
• Stock Investment Advisors,
• Sales Representatives,
• Management Companies for Collective Investment Schemes in Securities,
• Common Investment Funds,
• Variable Capital Investment Companies,
• Any other actor approved by the Regional Council.

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

CHAPTER 2 - Conditions for the Practice of Statutory Audit

Article 2

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

Article 3

The Statutory Auditors of approved entities on the regional financial market and issuers must be subject to the approval of the Regional Council. This approval concerns both the principal Statutory Auditors and their alternates. It applies to their initial appointment as well as the renewal of their mandate.

CHAPTER 3 - Procedure for Approval of Statutory Auditors

Article 4

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

1. Approved entities on the regional financial market and issuers must transmit to the Regional Council the file of the Statutory Auditor(s) they have chosen or reappointed to their positions.

These Statutory Auditors and Approved Accountants must necessarily appear on the list(s) of Chartered Accountants and Approved Accountants with the Court of Appeal of the relevant State or by any legal body authorized to do so.

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

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

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

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

• the presentation brochure of the firm with a detailed description of human and technical resources,
• the curriculum vitae of the General Manager, the Partner(s) signing,
• the certificate of registration of the signing representative with the Order of Chartered Accountants dated less than two months old,
• the certificate of registration of the firm with the Order of Chartered Accountants as an audit firm or Statutory Auditor dated less than two months old,
• the official list of accounting audit firms or Statutory Auditors in force in the country,
• the list of permanent technical staff with their training, grade, and professional seniority,
• the commitment of the firm to comply with quality control standards initiated by the Order of Chartered Accountants or the Regional Council.

In the event of multiple Statutory Auditors, the proposed persons cannot belong to the same firm or to structures having links between them.

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

In the event of refusal, the approved entity or issuer, which cannot override this, must submit to the Regional Council the file of another Statutory Auditor.

Article 5

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

Article 6

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

CHAPTER 4 - Specific Missions Entrusted to Statutory Auditors

Article 6

The Statutory Auditor must, before any validation of accounts, precede their mission with a review of the company's internal control and draft a report on points to be improved.

Article 7

Statutory Auditors certify that the consolidated financial statements are regular and sincere and give a true and fair view of the results of the operations of the past financial year as well as the financial position and assets of the company at the end of that financial year.

Article 8

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

• either to certify the regularity and sincerity of the consolidated financial statements,
• or to qualify their certification with reservations or to refuse it, specifying the reasons for these reservations or this refusal.

Article 9

Statutory Auditors must pay particular attention to the respect of the general principles of their profession that should guide their certification work.

Article 10

Statutory Auditors verify the sincerity and consistency with the consolidated financial statements of the information provided in the management report of the Board of Directors or the General Manager, as the case may be, and in the documents on the financial situation and consolidated financial statements of the company addressed to shareholders.

They state their observations in their report to the Annual Ordinary General Meeting of shareholders.

Article 11

The certification of the accounts of approved entities cannot, under penalty of notorious insufficiency, ignore the examination of the application of accounting methods prescribed by the specific accounting rules applicable to approved entities on the regional financial market and issuers. It is the respect of said rules, associated with that of generally accepted accounting principles, that constitutes the necessary condition for obtaining a true and fair view. The sincerity of the accounts covers the good faith application of the rules thus defined.

Article 12

Statutory Auditors are required, in order to form their judgment in complete independence, to describe and assess corporate governance, administrative organization, the internal control system, the information system, and the degree of respect for the regulation of the regional financial market in terms of prudential rules.

Article 13

Statutory Auditors must be able to present to the Regional Council their verification schedules and their working papers. These must contain the justifications of the diligence carried out as well as, where applicable, the record of inaccuracies, irregularities, and infractions noted.

CHAPTER 5 - Certification of End-of-Year Documents

Article 14

The annual accounts closed on December 31 must be certified as regular and sincere by the Statutory Auditor(s).

Statutory Auditors declare:

• either to certify the regularity and sincerity of the consolidated financial statements,
• or to qualify their certification with reservations or to refuse it, specifying the reasons for these reservations or this refusal.

Certification qualified with reservations must be the exception. However, when it occurs, the reservations issued must be the subject of a detailed report addressed to the Regional Council.

Article 15

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

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. Respect for the prudential regulation of the Regional Council and the texts of the regional financial market,

5. Respect for the prudential regulation of the BCEAO for credit institutions,

6. Other specific verifications and information.

Furthermore, Statutory Auditors must report on any other violation of legal and regulatory provisions they may have had to note, without prejudice to their actual incidence.

CHAPTER 6 - Final Provisions

Article 17

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

• to the removal of the Statutory Auditor from the list established by the Regional Council for the practice of statutory audit for approved entities and listed companies on the regional financial market of the UMOA;

• to the publication of this removal by all communication means it deems useful.

Article 18

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

Article 19

This Instruction cancels and replaces all other previous provisions, particularly those of Circular No. 6/2002 of January 21, 2002.

Article 20

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

Done in Abidjan, on June 7, 2005

The President

Martin N. GBEDEY