Entire Section

  • Part 5: Part 5: Auditors of Domestic Funds

    • 35. Appointment and removal of auditors

      (1) The Operator of a Domestic Fund shall:
      (a) pursuant to Article 21(5) and subject to Article 35(7), appoint an auditor; and
      (b) at each annual general meeting appoint an auditor to hold office from the conclusion of that meeting to the conclusion of the next annual general meeting; or
      (c) at the beginning of each financial year appoint an auditor to hold office until the beginning of the next financial year.
      (2) The appointment of a firm as an auditor of a Domestic Fund is taken to be an appointment of all persons who are partners of the firm.
      (3) An Operator and, if appointed, the Trustee shall ensure that at all times the Fund has an auditor.
      (4) The Operator of a Domestic Fund shall not appoint an auditor under this Article unless:
      (a) the auditor has, prior to the appointment, consented in writing to serve as the auditor for the Domestic Fund;
      (b) the Operator and, if appointed, the Trustee is not, on reasonable inquiry, aware of any matter which should preclude the auditor from giving its consent under Article 35(5); and
      (c) the auditor is registered with the DFSA in accordance with Part 8 of the Regulatory Law 2004.
      (5) An auditor shall not consent to an appointment as an auditor of a Domestic Fund if:
      (a) the auditor has, or may reasonably be perceived to have, a conflict of interest of a nature prescribed in the Rules;
      (b) the auditor does not have, or may reasonably be perceived not to have, a requisite degree of independence from the Operator and, if appointed, the Trustee or other members of the Governing Body of the Domestic Fund as prescribed in the Rules; or
      (c) the auditor or any associate of the auditor in a firm or business undertaking has acted as an auditor of the Domestic Fund and, if appointed, the Trustee within such earlier period or frequency as prescribed in the Rules.
      (6) The Operator of a Domestic Fund may, subject to Articles 35(7) and 38, at any time remove an auditor notwithstanding anything in any agreement between it and the auditor.
      (7) In the case of an Investment Trust, the Operator must obtain the prior approval of the Trustee before carrying out any activities under Article 35 in relation to the appointment or removal of an auditor.
      (8) The Court may, on application made by the DFSA, order the removal of an auditor of a Domestic Fund.
      (9) Nothing in this Article is to be taken as depriving an auditor removed under it of compensation or damages payable to the auditor in respect of the termination of appointment as auditor.

    • 36. Auditor's reports

      (1) An auditor of a Domestic Fund must make an audit report.
      (2) The DFSA may make Rules in relation to:
      (a) the functions to be carried out by an auditor when auditing a Domestic Fund's accounts;
      (b) the scope of the auditor's audit report; and
      (c) the scope of ad-hoc reports of the auditor.

    • 37. Auditors' duties

      (1) An auditor shall, in preparing the audit report in relation to the accounts of a Domestic Fund, carry out such investigations as will enable the auditor to form an opinion as to the following matters:
      (a) whether proper accounting records have been kept by the Operator on behalf of the Domestic Fund;
      (b) whether the Domestic Fund's accounts are in agreement with the accounting records and regulatory returns;
      (c) whether the Domestic Fund's accounts have been prepared in compliance with the applicable accounting standards; and
      (d) whether the accounts of the Domestic Fund represent a true and fair view of the financial condition and state of affairs of the Domestic Fund.
      (2) If the auditor is of the opinion that proper accounting records have not been kept, or that the accounts are not in agreement with the accounting records and returns, or that the accounts do not comply with accounting standards, the auditor shall state that fact in the audit report.
      (3) If the auditor fails to obtain all the information and explanations which, to the best of the auditor's knowledge and belief are necessary for the purposes of the audit, the auditor shall state that fact in the report.
      (4) An auditor shall disclose to a person providing oversight of a Public Fund any information relevant to that person's role.

    • 38. Resignation of an auditor

      (1) An auditor of a Domestic Fund may resign from office by depositing a notice in writing to that effect together with a statement under Article 38(2) at the Domestic Fund's registered office and with the DFSA; and any such notice operates to bring its term of office to an end on the date on which the notice is deposited, or on such later date as may be specified in it.
      (2) When an auditor ceases for any reason to hold office the auditor shall deposit at the Domestic Fund's and, if appointed, the Trustee's registered office and with the DFSA:
      (a) a statement to the effect that there are no circumstances connected with the ceasing to hold office which the auditor considers should be brought to the notice of the Unitholders or creditors of the Domestic Fund; or
      (b) a statement of any circumstances as are mentioned above.
      (3) Where a statement under Article 38(2) falls within sub-paragraph (b) of that Article, the Operator, or failing which the other members of the Governing Body of the Domestic Fund or, if appointed the Trustee, shall send a copy of the statement to the DFSA along with any comments.

    • 39. Co-operation with auditors

      (1) A Domestic Fund, any member of its Governing Body, any person providing oversight, any officer, employee or agent of the Domestic Fund, its Operator or where appointed its Trustee, shall not knowingly or recklessly make to the auditor a statement (whether written or oral) which:
      (a) conveys or purports to convey any information or explanation which the auditor requires, or is entitled to require, as auditor of the Domestic Fund; and
      (b) is either:
      (i) false, misleading or deceptive in a material particular; or
      (ii) such that it omits information where the omission of such information is likely to mislead or deceive the auditor.
      (2) A Domestic Fund, any member of its Governing Body, any person providing oversight, any officer or employee of the Domestic Fund, its Operator or where appointed its Trustee, or any person acting under the direction or authority of such persons, shall not without reasonable excuse engage in conduct, including without limitation the:
      (a) destruction or concealment of documents;
      (b) coercion, manipulation, misleading, or influencing of the auditor;
      (c) failure to provide access to information or documents specified by the auditor; or
      (d) failure to give any information or explanation which the person is able to give;
      where the Domestic Fund, Operator, Trustee, member of the Governing Body, officer, employee or other person knows or ought to know that such conduct could, if successful:
      (e) obstruct the auditor in the performance of his duties under this Part; or
      (f) result in the rendering of the accounts of the Domestic Fund or the auditor's report being materially misleading.

    • 40. Obligation of disclosure to the DFSA

      (1) An auditor is subject to the obligations of disclosure under Article 40(3).
      (2) Without limiting the application of any other provision of this Law, an auditor does not contravene any duty to which the auditor is subject merely because the auditor gives to the DFSA:
      (a) a notification as required under this Article; or
      (b) any other information or opinion in relation to any such matter;
      if the auditor is acting in good faith and reasonably believes that the notification, information or opinion is relevant to any functions of the DFSA.
      (3) Subject to Article 40(4), an auditor shall disclose to the DFSA any matter which reasonably tends to show one of the following:
      (a) a breach, or likely breach of a provision of this Law or the Rules;
      (b) a failure, or likely failure, to comply with any obligation to which a person is subject under such legislation; or
      (c) any other matter as the DFSA may prescribe in Rules;
      which may be attributable to the conduct of the relevant Domestic Fund, the Trustee, the Operator or other member of the Governing Body including the Domestic Fund's, the Trustee's or the Operator's directors, officers, employees or agents.
      (4) Article 40(3) shall not apply to the extent that compliance with such requirement would disclose a Privileged Communication.
      (5) The Operator of a Domestic Fund shall establish and implement appropriate systems and internal procedures to enable it and its auditor to comply with Article 40(3).
      (6) Any provision in an agreement between a Domestic Fund and a director, officer, employee, agent or auditor is void in so far as it purports to hinder any person from causing or assisting the auditor to comply with an obligation under Article 40(3).
      (7) No person shall be subjected to detriment or loss or damage merely by reason of undertaking any act to cause or assist an auditor to comply with an obligation under Article 40(3).
      (8) A Court may, on application of an aggrieved person, make any order for relief where the person has been subjected to any such detriment or loss or damage referred to in Article 40(7).