On the 6 April 2020, the Malta Financial Services Authority ( the “MFSA”), issued a Circular addressed to Investment Services Providers, making reference to Rule R4-3.2.7 (the “Rule”) of Part BI of the Investment Services Rules for Investment Service Providers which became applicable as from 3rd January 2018 (the "Circular"). The Rule states that “where a Licence Holder holds or controls clients’ assets, the letter of engagement shall also require a circularisation exercise by the Auditors in order to reconcile a representative sample of client’s assets in cases where the Licence Holder holds or controls client assets".
Further to the above, the MFSA noted that it had issued a circular on the 16 March 2020, providing guidance on the sample sizes and the minimum acceptable response rates required to be carried out when conducting a Circularisation Exercise. Through the Circular, the MFSA now made reference to the publication issued by the Malta Institute of Accountants entitled "Audit 01/2020 Technical Release" with the purpose to provide audit practitioners guidance on the methodology that needs to be applied with respect to compliance with the requirements derived from the Rule.
Feel free to contact us if you require any further information in relation to the Circularisation Exercise in terms of the Investment Services Rules for Investment Service Providers.