The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

INVESTMENT Funds should have a qualified accountant confirm their records are up to international standards, says Securities Commission of The Bahamas (SCB) executive director.

Christina Rolle, speaking during a webinar yesterday said that under the Investment Funds Act, 2019 “Every three years a qualified accountant must confirm that the record books are being kept in accordance with IFRS (International Financial Reporting Standards) or US GAAP (Generally Accepted Accounting Principles).”

Ms Rolle was responding to how the SCB will monitor the process for audited financial statements to ensure it is in accordance with the Act. Within the Act, Investment Funds must maintain accounting records for up to six years in addition the SCB may require funds to have the auditor of a fund to submit the necessary information as the SCB deems necessary. In addition, an investment fund shall submit its audited financial statements within six months of the end of that financial year or within such extension of the period as the commission may reasonably allow.

Having had conversations with the board of the Bahamas Institute of Chartered Accountants (BICA) on the matter, Ms Rolle said: “The commission will likely require a filing to be made with the commission - that’s how we will monitor it.”

Explaining how licencees will be able to make these filings in a cost effective way was the main point that the SCB had with BICA. “There is a debate within BICA as to whether this requirement amounts to a full audit or not. There are some members of BICA who believe that it does amount to a full audit, other members believe that it doesn’t amount to a full audit, however certain procedures will have to be established as to how this confirmation takes place,” Ms Rolle said.

Ms Rolle said the last she had discussions with BICA, they had put it to an internal committee spearheaded by one of their members – Philip Galanis of HLB Galanis & Company – on how best they can establish protocols on how to achieve this confirmation.

Mr Galanis said yesterday The Bahamas should follow Cayman Islands example and that it should ensure that all Investment Funds are audited. He said: “That’s not a requirement here, I have always maintained as a few others have done that all Investment Funds really ought to be audited in The Bahamas by Bahamian accounting firms.

“While there are some firms who believe that it ought not be done, but I believe that if you want to get a very good indication of what the scope and depth of the industry is, one way of doing that is by referring to financial statements.

“We do the same thing with banks and trust companies as well as insurance companies, “Mr Galanis said.

“The regulators want to ensure that they have information that they can rely on that’s independently audited and that is verified so that when they say that the total value of the particular sector in the financial services industry is this, they can say that with authority because they refer to their audited financial statement.”

In the absence of any requirement to present audited financial statements the SCB would not be able to assess the health of the financial sector or any sub-sector, like Investment Funds.

“There is always the interest of looking after the shareholders of companies and the shareholders have the right to know whether or not the financial statements are being presented reasonably,” he added.

Dismissing concerns over the additional costs preparing audited financial statements may mean to Investment Funds, Mr Galanis said this has been a requirement in the Cayman Islands for some time and it “has not changed their industry” to any significant degree and further argued it has created “greater accountability” and has “strengthened the integrity of the jurisdiction”.