Deposit-taking Business Code of Practice - Frequently asked questions regarding financial reporting and audit

Summary

This is a JFSC FAQ document explaining changes to deposit-taking business regulation stemming from a new Banking Business (Accounts, Auditors and Reports) (Jersey) Order and associated Code updates, which took effect from 1 August 2023. It clarifies practical questions on auditor appointment, financial statements, prudential reporting and declaration of compliance requirements for banks operating in Jersey, including Jersey Incorporated Banks (JIBs), Overseas Incorporated Banks (OIBs) and Jersey Branches of OIBs.

Auditor appointment clarifications

• Appointment process: Auditor appointments should be made by the OIB following its own processes; the Jersey Branch does not need to separately ratify the appointment, but notification to the JFSC can be made by either the OIB or the Jersey Branch.
• Existing auditors: Auditors already engaged when the Order comes into force are deemed appointed under it; retrospective notification is not required, and reappointment notifications are not needed since the JFSC already holds this information.
• Termination notifications: Notification of auditor termination, and the auditor's own statement on termination, may be made via the Jersey Branch.
• No formal clearance: The JFSC will not issue a formal no-objection on auditor appointment notifications, only an acknowledgement.

Reporting and audit scope

• Branch Auditor reports: Where an auditor is appointed at Group level with a defined Branch scope, that scope must be expanded (or a separate engagement arranged) so a Branch Auditor produces reports covering the year-end Prudential Return and the Declaration of Compliance.
• Consolidated reporting: A single Declaration of Compliance report may address both this Order and requirements under Orders issued under the Financial Services (Jersey) Law, provided it covers all relevant requirements.
• Existing variances: Banks with existing variances (e.g. for unaudited parent accounts, alternative accounting principles, or consolidation) must notify the JFSC within three months of the Order coming into force for these to continue; new variances may also be sought under Article 17.

Key obligations

• Engage a Branch Auditor to produce a report covering the year-end Prudential Return, even where a Group-level auditor scope exists
• Engage a Branch Auditor to produce a report covering the Declaration of Compliance, even where a Group-level auditor scope exists
• Submit the audited financial statements, the Prudential Return auditor's report and the Declaration of Compliance report together, within 3 months of financial year-end for JIBs and 4 months for OIBs
• Notify the JFSC of auditor appointments and terminations (which may be done via the Jersey Branch on behalf of the OIB)
• Notify the JFSC within three months of the Order coming into force if seeking to continue an existing variance regarding unaudited parent accounts, alternative accounting principles, or consolidation

Applies to

banks, deposit-taking businesses, Jersey Incorporated Banks (JIBs), Overseas Incorporated Banks (OIBs), Jersey Branches, auditors

Deadlines

• 1 August 2023: Effective date for the new Order and Code Requirements (Appointment of Auditor Code, Financial Statements Code, Prudential Reporting Code, Declaration of Compliance Code)
• 3 months after the financial year-end: Deadline for JIBs to submit audited financial statements, the Prudential Return report and the Declaration of Compliance report
• 4 months after the financial year-end: Deadline for OIBs to submit audited financial statements, the Prudential Return report and the Declaration of Compliance report
• within three months of the Order coming into force: Deadline to notify the JFSC in order to continue an existing variance (e.g. unaudited parent accounts, alternative accounting principles, consolidation)