Medical schemes engagements

 

The Committee for Auditing Standards (the CFAS) issued the Guide for Registered Auditors: Assurance Engagements on the Annual Financial Statements and Annual Statutory Returns of a Medical Scheme in March 2015.
The Council for Medical Schemes (CMS) published the various revised prescribed auditor report templates, which are included in this Guide as appendices, on 20 July 2016, by way of Circular 49 of 2016: Prescribed auditor report templates. The reports have been amended to be aligned to the new and revised Auditor Reporting Standards, as well as other revised International Standards on Auditing (ISAs).
These statutory required auditor reports have been developed by the CMS in consultation with the IRBA’s CFAS Medical Schemes Task Group, which includes auditors of medical schemes.

Guide

Title Date issued Effective date Download documents
Revised Guide for Registered Auditors: Assurance Engagements on the Annual Financial Statements and Annual Statutory Returns of a Medical Scheme (Updated for alignment to the IRBA Code of Professional Conduct (Revised November 2018)) 27 November 2019   PDF | Word
Revised Guide for Registered Auditors: Assurance Engagements on the Annual Financial Statements and Annual Statutory Returns of a Medical Scheme  06 December 2018 Effective for engagements on accounting periods ending on or after 31 December 2018 PDF | Word
Guide for Registered Auditors: Assurance Engagements on the Annual Financial Statements and Annual Statutory Returns of a Medical Scheme 29 July 2016 Effective for engagements on accounting periods ending on or after 31 December 2016

PDFWord

Warning to readers

Registered auditors are alerted to the fact that this Guide has not been updated for:

  •  International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, which is effective for assurance reports dated on or after 15 December 2015
  • The new Auditor Reporting standards, namely ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements; ISA 701, Communicating Key Audit Matters in the Independent Auditor's Report; ISA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report; ISA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report; ISA 800 (Revised), Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks; and ISA 810 (Revised), Engagements to Report on Summary Financial Statements; which are effective for audits of financial statements for periods ending on or after 15 December 2016
  • ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information, which is effective for audits of financial statements for periods ending on or after 15 December 2016;

except for Appendix 5 – Report on the Financial Statements (ISA 700 (Revised) Report); Appendix 6 – Report on Parts 4 to 10 of the Annual Statutory Return (combined ISA 800 (Revised) and ISRE 2410 Reports); Appendix 7 – Assurance Report on Compliance with Sections 36(5) and 36(8) of the Act (ISAE 3000 (Revised) Report); and Appendix 8 – Report on the Summary Financial Statements (ISA 810 (Revised) Report); which have been updated.

Reports

The revised reports are included in this Guide as appendices. For ease of reference the reports are listed here, as published by the CMS. These reports are effective for year-ends of medical schemes on and after 31 December 2016.

 

Section 37(2) of the Medical Schemes Act of South Africa (the Act) requires an auditor to report on a medical scheme’s annual financial statements (AFS).
Circular 65 of 2015 requires the auditors of medical schemes in terms of Section 36(5)(d) and 37(2) of the Act to report on Key Audit Matters.
The ISA 700 (Revised) report provides reasonable assurance that the AFS are fairly presented, in all material respects, in accordance with the International Financial Reporting Standards and the requirements of the Medical Schemes Act.
All non-compliance matters, which are considered to be material by an auditor, should be reported under the sub-heading “Report on Other Legal and Regulatory Requirements”. Where no material instances of non-compliance have come to an auditor’s attention, a statement to this effect should be made.

PDF | Word

 

This auditor report provides assurance through an audit of Parts 4 to 6.1 and 6.3 to 10 of the Annual Statutory Return (the Return), and a review of Part 6.2 of the Return of a scheme.
The ISA 800 (Revised) opinion provides reasonable assurance that Parts 4 to 6.1 and 6.3 to 10 of the Return are prepared in all material respects in accordance with the Act, related Regulations, the Guidance Manual for the completion of the Return and the applicable Circulars issued by the CMS.
The ISRE 2410 conclusion provides limited assurance that Part 6.2 of the Return is prepared in all material respects in accordance with the Act, related Regulations, the Guidance Manual for the completion of the Return and the applicable Circulars issued by the CMS.
This report originates from the following sections in the Act:
  • Section 36(8), which states that the auditor should certify whether any return or statement which he or she is required to examine in terms of Chapter 7 (Financial Matters) of the Act, complies with the requirements of the Act and whether it presents fairly the matters dealt with therein, as if such return or statement were a financial statement;
  • Section 37(2), which inter alia states that the AFS shall consist of “(e) such other returns as the Registrar may require”, which in this case is the Return;
  • As the Return is deemed to be part of the AFS, it is required to be audited in terms of Section 37(3); and
  • Section 39(3), which requires all documents that are submitted to be audited.
The auditor report is restricted to the financial information contained in Parts 4 – 10 of the Return.

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This auditor report is the format in which the CMS requires an auditor to report on all non-compliance matters by a medical scheme which have come to an auditor’s attention during the performance of the auditor’s functions as an auditor, as required by Sections 36(5)(b) and 36(8)(b) of the Act.
These sections are limited to the financial aspects of the Act which an auditor will address in the auditor’s normal audit procedures.
It should be noted that for purposes of this auditor report, materiality is set as one, as all non-compliance matters need to be reported to the CMS.

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Some schemes distribute summary AFS to their members in terms of the Scheme Rules. The format and disclosure contained in these summary AFS are prescribed in Circular 6 of 2013.
These summary AFS are subjected to an engagement conducted in terms of ISA 810 (Revised).

PDF | Word

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