Clients’ Funds and Assets

Clients’ Funds and Assets

Compliance with Clients’ Funds & Assets Rules review is an assurance service provided by an independent auditor. It involves reviewing and assessing the compliance by CMA-licensed persons with the provisions and regulations set forth in Module Seven, “Client Funds and Assets”, of the Executive Bylaws of Law No. 7 of 2010 on the Establishment of the Capital Markets Authority and the Regulation of Securities Activities, as amended.

What is the Capital Markets Authority’s definition of Clients’ Funds and Assets?

Article 1-2 of Module 7 sets forth:

The client’s funds include all cash amounts received or held by any licensed person in favor or on behalf of a client in the course of carrying on any securities activity less the cash amounts allocated to settle the client’s obligations resulting from the transactions executed for their account, whether such obligations are payable, conditional or contingent.

Client’s assets are all non-cash money and Securities and other assets held or received by any Licensed Person for or on behalf of a Client in the course of any Securities Activity.

The licensed person’s fees shall not be included in the client’s funds if they are payable in accordance with their agreement.

Who are the licensed persons governed by the rules and provisions of Module 7 – Clients’ Funds and Assets?

The provisions of Module 7 of the Executive Regulations shall apply to the licensed persons who carry on the following activities:

  • Portfolio manager
  • Collective investment scheme manager
  • Custodian
  • Clearing agency
  • Qualified securities broker registered in the Bourse

What are the obligations of licensed persons regarding the Clients’ Funds and Assets?

A licensed person is required to take measures, which ensure that clients’ funds and assets are maintained, safeguarded, and only used for the intended purposes for which they are allocated; maintain complete segregation between deals and orders executed for its own account and those executed for the client’s account; ensure that the client is the beneficiary of all transactions related to their funds; and use best efforts to realize and promote its clients’ interests.

Can the auditor engaged to audit the annual financial statements be appointed, or should a different auditor be engaged?

Article 2-5 of Module 7 of the CMA Bylaws sets forth that a CMA-registered auditor shall be appointed, but it is not necessarily to be the auditor engaged to audit the company’s annual financial statements.

Will the licensed person or the independent auditor submit the assurance report on clients’ funds and assets to Capital Markets Authority?

The independent auditor shall submit the assurance report on clients’ funds and assets on the Capital Markets Authority portal not later than 1 March of every year as per the template developed by the CMA.

What legislation and international standards does the independent auditor adopt in preparing the Capital Adequacy Review Report?

  1. Capital Markets Authority legislation and regulations
  2. International Standards on Auditing (ISA)

What is the added value to business entities from Reports on Compliance with Clients’ Funds & Assets Rules?

  1. Comply with laws, regulations, resolutions, and instructions issued by Capital Markets Authority.
  2. Enhance the business entity’s reputation and increase all stakeholders’ confidence.
  3. Protect the clients’ funds and assets and promote their interests and investments.
  4. Contribute to optimizing regulatory compliance with respect to securities business.

What are the services offered by Baker Tilly Kuwait?

Prepare Assurance Report on Compliance with Clients’ Funds & Assets Rules

Why Baker Tilly?

  1. Baker Tilly in Kuwait is a member of Baker Tilly International network based in the UK, ranked amongst the top 10 global accounting networks.
  2. Auditors in Baker Tilly Kuwait are licensed by Ministry of Commerce and Industry and are registered with the regulatory authorities, e.g., Central Bank of Kuwait, Capital Markets Authority and Insurance Regulatory Unit.
  3. Extensive experience in providing Clients’ Funds and Assets service to companies operating across various business sectors in the State of Kuwait.
  4. Highly experienced bilingual team with specialized academic qualifications and professional certifications.
  5. Commitment to performing Clients’ Funds and Assets engagements according to predefined timelines, with no delays and responsiveness to client requirements.
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