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Waarschuwing



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Datum25.10.2017
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Internal control assessment of credit institutions incorporated under Belgian law


Report of findings to the National Bank of Belgium in accordance with article 225, first paragraph, 1° of the Law dated 25 April 2014 regarding the internal control measures taken by (identification of the institution)

Engagement

It is our responsibility to assess the design of the internal control measures implemented by (identification of the institution) as determined in article 21, paragraph 1, 2° and by application of article 21, paragraph 1, 9°, 42 and 66 of the Banking Law and to report our findings to the NBB.

We assessed the design of the internal control measures implemented by the institution on (date) in order to provide a reasonable assurance regarding the reliability of the financial and prudential reporting process as well as the design of the internal control measures related to the management of the operational activities including the investment services and activities.

This report has been prepared in accordance with the provisions of article 225, first paragraph, 1° of the Law dated 25 April 2014 (the Banking Law) regarding internal control measures referred to in article 21, 2°, and by application of article 21, paragraph 1, 9°, 42 and 66 of the Banking Law.

In accordance with the instructions of the National Bank of Belgium (NBB) to the accredited auditors, the findings relating to the measures taken in order to preserve the clients’ assets in application of articles 77bis and 77ter of the Law dated 6 April 1995 and the related Royal decrees, are included in a separate report prepared in accordance with article 225, first paragraph, 5° of the Banking Law.

The responsibility for the setup of the internal controls and its operating effectiveness, as determined in article 21 of the Banking Law, resides with Management.

According to articles 56 and 58 of the Banking Law, the Board of Directors (“the Audit Committee”, as appropriate) is responsible, according to article 21, for controlling the operating effectiveness of the internal controls and its compliance with the legal and regulatory provisions, also the supervision of the integrity of the accounting and financial reporting processes, including the operational and financial control measures and the proper functioning of the independent control functions referred to in article 35 of the Banking Law.

Procedures performed

For the assessment of the internal control measures on (date) we have in accordance with the “Specific auditing standard regarding the collaboration on prudential supervision” and the instructions of the NBB to the accredited auditors performed the following procedures:



  • gaining sufficient knowledge of the entity and its environment;

  • review of the internal control system as foreseen in the International Standards on Auditing (ISA’s) and the “Specific auditing standard regarding the collaboration on prudential supervision” dated 8 October 2010;

  • updating of our knowledge of the relevant regulatory environment;

  • review of the minutes of the Management meetings;

  • review of minutes of the meetings of the Board of Directors (and Audit Committee, as appropriate);

  • review of documents regarding articles 21, paragraph 1, 42 and 66 of the Banking Law, and which have been transmitted to Management;

  • review of documents regarding articles 21, paragraph 1, 42 and 66 of the Banking Law, and which have been transmitted to the Board of Directors (and the Audit Committee, as appropriate);

  • requesting information from Management regarding articles 21, paragraph 1, 42 and 66 of the Banking Law, as well as the assessment of this information;

  • requesting information from Management regarding the way it elaborated the internal control reports;

  • review of the documentation supporting the Management’s report;

  • review of the internal control reports of Management in the light of the knowledge gained in the context of the statutory audit;

  • review that the reports, prepared by Management in accordance with Circular NBB_2011_09, including the Uniform Letter of the NBB dd. 16 November 2015, reflects the way management has performed its internal control assessment;

  • review that (identification of the institution) complies with Circular NBB_2011_09, including the Uniform Letter of the NBB dd. 16 November 2015, a special attention was given to the methodology adopted and the documentation prepared in support of the reports;

  • participation to meetings of the Board of Directors (Audit Committees, as appropriate) during which it discusses the statutory financial statements and the report of Management referred to in article 59, paragraph 2 of the Banking Law;

  • [to be completed with other procedures performed based on the professional judgement of the auditor]

Limits regarding the performance of the engagement

The assessment of the internal control measures has, to a very large extend, been based on the internal control reports prepared by Management and the knowledge gained during the audit of the statutory accounts and the periodic returns, and particularly of its internal controls over financial reporting.

An assessment of internal control measures whereby the accredited auditor relies on their knowledge of the entity and their review of the internal control reports prepared by Management is not an engagement that allows the expression of reasonable assurance as to the appropriateness of the internal control measures.

In order to be complete, we indicate that if we would have performed additional procedures, other findings could have been disclosed which could have been important to you.

Additional limits regarding the performance of the engagement:


  • the internal control reports prepared by Management contain elements that we have not assessed. It concerns namely: (“the operating effectiveness of the internal control measures, the compliance with laws and regulations, the integrity and reliability of management information, ….” To be modified as appropriate). For these elements, we have only verified that the internal control reports prepared by Management did not contain materially significant discrepancies with the information obtained within the context of the statutory audit;

  • we have not assessed the operating effectiveness of internal controls;

  • we are not expected to verify whether (identification of the institution) complies with all applicable legal provisions;

  • [to be completed with other procedures performed based on the professional judgement of the auditor]

Findings

We confirm that we have assessed the design of the internal control measures implemented by (identification of the entity) as determined in article 21, paragraph 1, 2° and by application of article 21, paragraph 1, 9° and 66 of the Banking Law.

Our assessment has been based on the outcome of the procedures as explained above.

Our findings, taking into consideration the limits explained above, are:

Findings relating to the compliance with Circular NBB_2011_09, including the Uniform Letter of the NBB dd. 16 November 2015:




Findings related to the financial reporting process:



Findings with respect to the investment services and activities, with exception of the findings with respect to the measures taken to preserve clients’ assets in application of articles 77bis and 77ter of the Law of 6 April 1995 and the related Royal decrees, are included in a separate report prepared in accordance with article 225, first paragraph, 5° of the Banking Law:



Other findings

-

The findings could not be valid anymore subsequent the date the assessments were made. Moreover, this report is valid only for the period covered by the internal control reports prepared by Management.



Restrictions on use and distribution

This report has been prepared in accordance with a special framework that requires the auditor to collaborate to the prudential supervision exercised by the NBB and may, therefore, not be used for other purposes.

A copy of this report has been transmitted to (“Management”, “the Board of Directors”, or “the Audit Committee”, as appropriate). We draw the attention to the fact that the report may not be communicated (in whole or in part) to third parties without our prior authorization.

Name of the accredited audit firm

Name of the person representing the audit firm

Address


Date

    1. Internal control assessment of credit institutions incorporated in Belgium regarding the internal control measures to preserve the client’s assets

Report of findings to the NBB according to article 225, first paragraph, 5° of the Law of 25 April 2014 regarding the internal control measures adopted by (identification of the institution) to preserve the client’s assets

Engagement


It is our responsibility to assess the design of the internal control measures implemented by (identification of the institution) to preserve clients’ assets, in application of articles 77bis and 77ter of the Law dated 6 April 1995 and articles 61 to 76 of the Royal decree of 3 June 2007 which determines detailed rules as to the implementation of the Market in Financial Instruments Directive and to report our findings to the supervisory authorities.

The responsibility for the setup of the internal controls and its operating effectiveness to preserve clients’ assets resides with Management.


Procedures performed


For the assessment of internal control measures taken to preserve client’s assets on (date), we have performed the following procedures in accordance with the “Specific auditing standard regarding the collaboration on prudential supervision” and the instructions of the NBB to the accredited auditors:

  • gaining sufficient knowledge of the investment services and activities as offered by (identification of the institution);



  • updating of our knowledge of the regulation concerning the internal control measures to be implemented to preserve the client’s assets in application of articles 77bis and 77ter of the Law dated 6 April 1995 and articles 61 to 76 of the Royal decree of 3 June 2007;




  • review of the minutes of the Management meetings;




  • review of the minutes of the Board of Director’s meetings (and Audit Committee, as appropriate);




  • review of documents regarding articles 77bis and 77ter of the Law dated 6 April 1995 and articles 61 to 76 of the Royal decree of 3 June 2007, and which have been transmitted to Management;




  • review of documents regarding articles 77bis and 77ter of the Law dated 6 April 1995 and articles 61 to 76 of the Royal decree of 3 June 2007, and which have been transmitted to the Board of Director’s (and Audit Committee, as appropriate);




  • request for information from Management regarding articles 77bis and 77ter of the Law dated 6 April 1995 and articles 61 to 76 of the Royal decree of 3 June 2007, as well as the assessment of this information;




  • review of the documentation supporting of Management’s report;




  • review of Management’s report in the light of the knowledge obtained during the performance of our assignment;




  • request for information from Management about the working method implemented in order to assess the respect of legal provisions regarding the preservation of client’s assets in application of articles 77bis and 77ter of the Law dated 6 April 1995 and articles 61 to 76 of the Royal decree of 3 June 2007, as well as the assessment of this information. A special attention was dedicated to the respect by (identification of the institution) of the provisions of Circular PPB-2007-7-CPB dated 10 April 2007 (administration of financial instruments);




  • review that the report prepared by Management in accordance with Circular NBB_2011_09, including the Uniform Letter of the NBB dd. 16 November 2015, reflects the way Management has performed its internal control assessment;




  • review that (identification of the institution) complies with the provisions of Circular NBB_2011_09, including the Uniform Letter of the NBB dd. 16 November 2015, a special attention was dedicated to the methodology implemented and to the documentation prepared in support of the report;




  • attendance of the meeting of the Board of Director’s (Audit Committee, as appropriate) during which it discussed Management’s report referred to in article 59, §2 of the Banking Law;

  • [to be completed with other procedures performed based on the professional judgement of the auditor]

Limits regarding the performance of the engagement


During the assessment of the internal control measures taken to preserve client’s assets, we did to a very large extent rely on Management’s report complemented with information obtained during the performance of our assignment.

The assessment of internal control measures whereby the auditors rely on their knowledge the entity and their review of Management’s report is not an engagement that allows the expression reasonable assurance as to the appropriateness of the internal control measures.

In order to be complete, we indicate that if we would have performed additional procedures, other findings could have been disclosed which could have been important to you.

Additional limits regarding the performance of the assignment:



  • the report prepared by Management contains elements that we have not assessed fully. It concerns namely: (to be completed, as appropriate). For these elements, we have only verified that the report prepared by Management did not contain materially significant discrepancies with the information obtained during the performance of our assignment;

  • we have not assessed the operating effectiveness of internal controls;

  • we are not expected to verify whether (identification of the institution) complies with all applicable legal provisions;

  • [to be completed with other procedures performed based on the professional judgement of the auditor]

Findings


We confirm that we have assessed the internal control measures implemented by (identification of the institution) to preserve client’s assets, in application of articles 77bis and 77ter of the Law dated 6 April 1995 and articles 61 to 76 of the Royal decree of 3 June 2007.

Our assessment has been based on the outcome of the procedures as explained above.

Our findings, taking into consideration the limits explained above, are:

Findings relating to the compliance with Circular NBB_2011_09, including the Uniform Letter of the NBB dd. 16 November 2015 provided that these findings are relevant in the context of assessment of the measures taken to preserve client’s assets in application of articles 77bis and 77ter of the Law dated April 6, 1995 and articles 61 to 76 of the Royal Decree of 3 June 2007:

-

Findings relating to the preservation of client’s assets, in application of articles 77bis and 77ter of the Law dated 6 April 1995 and articles 61 to 76 of the Royal decree of 3 June 2007:




The findings could not be valid anymore subsequent the date the assessments were made. Moreover, this report is valid only for the period covered by the internal control report prepared by Management.


Restriction on use and distribution


This report has been prepared in accordance with a special framework that requires the auditor to collaborate to the prudential supervision exercised by the NBB and may, therefore, not be used for other purposes.

A copy of this report has been transmitted to (“Management”, “the Board of Directors”, or “the Audit Committee”, as appropriate). We draw the attention to the fact that the report may not be communicated (in whole or in part) to third parties without our prior authorization.

Name of the accredited audit firm

Name of the person representing the audit firm



Address

Date



  1. ANNEX: TOE TE VOEGEN ONDER “BELANGRIJKE GEBEURTENISSEN EN AANDACHTSPUNTEN”




In het periodiek overleg tussen vertegenwoordigers van de Nationale Bank en de IREFI bestuursraad hebben de NBB vertegenwoordigers de verwachting uitgesproken dat de inhoud van de rapportering van de erkende revisoren niet zou beperkt blijven tot de standaardtekst.
In dat verband kan worden verwezen naar de circulaire NBB_2012_16 over de medewerkingsopdracht van de erkende revisor. Deze circulaire benadrukt dat, als onderdeel van de signaalfunctie, volgende elementen dienen aan bod te komen in de verslaggeving van de erkende revisor:


  1. informatie die een betekenisvolle invloed heeft of kan hebben op de financiële positie




  1. onmogelijkheid tot bevestiging van de periodieke rapporteringsstaten;

  2. ernstige waarderingsproblemen met betrekking tot het krediet- en het tegenpartijrisico;

  3. fraude die grote verliezen kan veroorzaken;

  4. uitkering van een interimdividend (door een instelling waarvan het eigen vermogen ontoereikend dan wel amper toereikend is);

  5. belangrijke geschillen;

  6. ernstige financiële problemen bij een bijkantoor of een buitenlandse dochter;

  7. toepassing van de artikelen 633 en 634 van het Wetboek van Vennootschappen (verlies van maatschappelijk kapitaal);

  8. aanzienlijke opvragingen door deposanten die aanleiding kunnen geven tot een liquiditeitsprobleem;

  9. grote fouten in de rapportering;

  10. toepassing van de artikelen 523 (bestuurder met een belangenconflict) en 524 (verrichting met een verwante onderneming) van het Wetboek van Vennootschappen;

  11. gewichtige feiten die leiden tot een melding aan de raad van bestuur met toepassing van artikel 138 van het Wetboek van Vennootschappen;

  12. andere belangrijke meldingen aan de raad van bestuur.




  1. Mededeling van informatie die een betekenisvolle invloed heeft of kan hebben op de administratieve en boekhoudkundige organisatie en de interne controle




  1. belangrijke ontwikkelingen in het bestuur van de instelling (internal governance);

  2. een belangrijke reorganisatie;

  3. een ernstig conflict binnen de effectieve leiding, in voorkomend geval het directiecomité en/of het bestuursorgaan;

  4. ernstige moeilijkheden binnen de zogenaamde transversale functies (interne auditfunctie, compliancefunctie en risicobeheerfunctie);

  5. ernstige moeilijkheden bij het beheren van de risico's eigen aan de instelling;

  6. herhaalde en aanzienlijke overschrijdingen van interne begrenzingen;

  7. een wijziging in het algemeen beleid van de instelling, met name de plotse ontwikkeling van een nieuwe activiteit waarvoor passende controlemiddelen ontbreken;

  8. het onverwachte vertrek van een medewerker met een sleutelpositie;

  9. belangrijke ontwikkelingen bij buitenlandse bijkantoren en dochters;

  10. belangrijke kwesties die bij de controleopdracht aan het licht zijn gekomen betreffende de naleving van de bepalingen inzake beleggingsactiviteiten en –diensten.

  1. Mededeling van informatie die kan wijzen op een overtreding van het Wetboek van Vennootschappen, de statuten, de toezichtswetten en -besluiten alsook de ter uitvoering daarvan genomen besluiten en reglementen




  1. Mededeling van informatie die kan leiden tot een afkeurende of onthoudende verklaring, dan wel tot een verklaring met voorbehoud en/of met een toelichtende paragraaf.

Om de toegevoegde waarde van de rapportering te verhogen is het aan te bevelen ook volgende punten aan bod te laten komen:




  • Relevante bevindingen van de interne audit afdeling, de compliance officer, de risk management afdeling;




  • De opvolging van aandachtspunten gedefinieerd door de NBB in het periodiek overleg met de bestuursraad van het IREFI;




  • Een bespreking van de belangrijkste evoluties in de financiële toestand;




  • De aan het auditcomité gerapporteerde bevindingen, eventueel door de verslaggeving aan het auditcomité integraal in bijlage op te nemen;




  • De opvolging van de aandachtspunten besproken in vorige verslagen.




1 Af te stemmen met de rapporteringsfiche. Voor beursvennootschappen naar Belgisch recht bijkomend te verwijzen naar tabel 15.

2 Af te stemmen met de rapporteringsfiche. Voor beursvennootschappen naar Belgisch recht bijkomend te verwijzen naar de tabel 15.

3 Voor bijkantoren in België van kredietinstellingen dienen de “Commissarissen, Erkende Revisoren, naar gelang” bijzondere aandacht te schenken aan de naleving van de principes 5 en 6 van circulaire PPB-2007-7-CPB van 10 april 2007.

4 Voor bijkantoren in België dienen de “Commissarissen, Erkende Revisoren, naar gelang” bijzondere aandacht te schenken aan de naleving van de principes 5 en 6 van circulaire PPB-2007-7-CPB van 10 april 2007.


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  • Engagement
  • Procedures performed
  • Limits regarding the performance of the engagement
  • Findings
  • Restriction on use and distribution
  • ANNEX: TOE TE VOEGEN ONDER “BELANGRIJKE GEBEURTENISSEN EN AANDACHTSPUNTEN”

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