The Financial Reporting Council (FRC) is responsible for monitoring the financial; and non-financial reports of Public Interest Entities (PIEs) for compliance with accounting and financial reporting standards and the Code of Corporate Governance for Mauritius,
The Financial Reporting Monitoring Panel (FRMP) will advise and assist in the monitoring of financial statements of PIEs, refers non-compliance and deficiencies in such reporting and report the results of the monitoring activity to the Financial Reporting Council (FRC).
2.0 FRC Responsibilities in relation to the FRMP
The responsibility of the FRC, in collaboration with the FRMP will review the financial statements and reports of a public interest entity filed with the government department or authority to determine whether the financial statements and reports are in compliance with this IFRSs , Code of Corporate Governance and the Financial Reporting Act.
3.0 Specific Responsibilities of the Financial Reporting Monitoring Panel
The FRMP shall be responsible for the provision of guidance and advice in reviewing, analysing and identifying any failure on the part of any public interest entity (PIE) to comply with any financial reporting and accounting standard, code or guideline issued under this Act, and with such other financial reporting and accounting standards as may be specified under the relevant enactments.
FRMP will further ensure that policies and systems are developed to communicate issues of importance, as appropriate, to the stakeholders.
4.0 Establishment of the Financial Reporting Monitoring Panel
There will be established a Financial Reporting Monitoring Panel for the purposes of application of the Act.
It shall comprise a total of 7 individuals, suitably qualified and experienced in the field of business, finance, accountancy, audit or law preferably with knowledge of financial reporting in the private or public sector;
The FRC staff member designated, will attend and contribute to all FRMP meetings.
5.0 FRMP Meetings
The FRMP shall regulate its meetings and proceedings in such manner as it thinks fit.
The Panel shall meet as often as is necessary and at least once every 3 months at such time and place as the Chairperson shall determine.
Four members shall constitute a quorum.
6.0 FRC Approach to the Financial Reporting Monitoring
a. The policy of the FRMP shall comply with and be governed by the powers and responsibilities of the FRMP as set forth in its charter, the policies established by the FRC and the Financial Reporting Act of 2004 (the “Act”).
b. The FRMP shall review, at least annually, the financial and non-financial reports of public interest entities (PIE) and report the nature and results of such reviews in the manner proscribed in the Panel’s procedures.
c. The financial reports submitted pursuant to the requirement in (b) above shall be audited by a qualified auditor as defined in Section 83 (1) of the Act and shall be accompanied by the auditor’s report. In order for the financial report to be deemed an acceptable filing by the FRMP, the auditors’ report thereon cannot be qualified with regard to issues that can be corrected by the reporting entity through an adjustment of the financial statements, additional disclosure, and/or change in the scope of the audit (in cases where audit scope limitations have been imposed by the entity).
d. In order to facilitate meeting the objectives set forth in its charter, the FRMP will endeavor to establish a collaborative relationship with the PIEs and assist the PIEs to the extent feasible in complying with the reporting requirements set-forth herein.
This will require an open and constructive communication with a reporting entity with regard to financial reporting issues. Accordingly, questions regarding apparent deficiencies shall first be addressed with the directors and management of the reporting entity and shall remain confidential within the Panel. Communication of such issues outside the Panel may be permitted, on a “hypothetical” basis, in the event outside technical guidance is required.
This confidentiality policy does not apply where the reporting entity is requesting guidance from the FRC or where the reporting entity is not willing to correct a deficiency .
e. Notwithstanding the policy set-forth in paragraph (d) above, it will be the policy of the FRMP not to issue rulings or otherwise render opinions with regard to accounting treatments applied by a reporting entity to items that may not be specifically covered in the accounting standards. The request for such rulings/opinions will be forwarded to the FRC who will issue the ruling/opinion.
f. The financial statement review process will emphasis substantive issues revealed or omitted in the financial and non-financial information provided to the Panel and not just represent a “checklist” approach to disclosure compliance. Substantive issues include, but are not limited to:
i) Accounting policies used in the preparation of the financial report, particularly those policies related to asset valuation, revenue recognition, and the establishment/adjustment of valuation reserves.
ii) Inadequate disclosures of information on affiliates/subsidiaries, related parties, and policies on corporate governance.
iii) Recognition and/or disclosure of contingencies.
g. Notwithstanding the policy set-forth in paragraph (d) above, it is the policy of the Panel in its analysis not to render opinions with regard to the economic viability of the reporting entity, its financial performance, and/or is market value except to the extent that apparent insolvency and/or poor financial performance may affect the recoverable value of assets and that uncertainty is not adequately disclosed in the financial report and accompanying auditors report.
h. This policy confirms that it is the responsibility of the directors and management of the PIE to comply with the reporting requirements set out in the relevant acts. Accordingly, initial communication of non-compliance and/or deficiencies in the reporting of a PIE shall first be addressed with directors and management of said PIE and all reasonable attempts to resolve the issue with the reporting entity will be made.
i. All matters undertaken by the FRMP that pertain to the affairs of specific PIEs shall remain confidential within the FRC pursuant to the FRC’s Code of Ethics. Any release of information pertaining to such manners can only be authorised by the Council or by the EP pursuant to its policies and procedures.
j. This policy recognizes that matters can be brought to the attention of the FRMP from sources outside of its normal review procedures. Such sources include:
i) Notice of a material irregularity under Section 40 of the Act;
ii) Complaints from auditors and stakeholders;
iii) Other regulatory agencies; and
iv) News releases
If such matters pertain to the financial reports issued by a PIE or to its obligation to report information to the FRMP, then the issue of follow-up should be discussed with the FRC’s CEO and the Directors of Units and chairperson of Panels to determine the appropriate course of action.
7.0 FRMP Accountability, Transparency and Communications
The FRMP will report in writing on its activities quarterly to the CEO of the FRC. It will also provide to the CEO of the FRC an annual report on its activities by the end of July each year.
The FRMP will provide, report and maintain current information on its activities through contributions to the FRC Bulletin and to the FRC website.
In order to provide timely and cost effective information with constituents, communications as far as possible shall be in electronic format.
8.0 Receipts to and Payments by the Panel
All monies received and paid out in relation to FRMP activities shall be received and paid by the FRC to and from the General Fund established by the FRC such purpose.
9.0 Date of application
This policy is approved by the FRC and is effective on and from January 2008.