Financial Markets Act, 2012 (Act No. 19 of 2012)RegulationsFinancial Markets Act RegulationsChapter VI : Central Counterparties18. Internal audit function |
| (1) | A central counterparty must establish and maintain an internal audit function, which is separate and independent from its other functions and activities, to— |
| (a) | establish, implement and maintain an audit plan to examine and evaluate the adequacy and effectiveness of the central counterparty's systems, internal control mechanisms and governance arrangements; |
| (b) | issue recommendations based on the result of work carried out in accordance with paragraph (a) and verify compliance with those recommendations; and |
| (c) | report internal audit matters to the controlling body. |
| (2) | The internal audit function of a central counterparty must— |
| (a) | have the necessary authority, resources, expertise and access to all relevant documents; |
| (b) | assess the effectiveness of the central counterparty risk management processes and control mechanisms in a manner that is proportionate to the risks faced by the different business lines; and |
| (c) | ensure that special audits may be performed on an event-driven basis at short notice. |
| (3) | A central counterparty must annually— |
| (a) | review the audit plan referred to in subregulation (1)(a) and submit the report to the Authority; and |
| (b) | engage a qualified independent third person approved by the Authority to conduct an independent review and prepare a report in accordance with established audit standards to ensure that it is in compliance with Regulation 13. 9. |
| (4) | A central counterparty must provide the report resulting from the review conducted under subregulation (3) to— |
| (a) | its controlling body or audit committee promptly upon the report's completion; and |
| (b) | the Authority not later than five business days after providing the report to its controlling body or audit committee. |