CMFAS RES 1A Licensing & Business Operations question: withdrawn from the trust account to meet Meridian's own settlement obligation

CMFAS RES 1ALicensing & Business Operations

During the annual audit of Meridian Futures, a clearing member of an approved exchange, the auditor finds that customer moneys were withdrawn from the trust account to meet Meridian's own settlement obligation to a clearing house. What must the auditor do?

A Immediately send a written report to MAS, and send a copy to the approved exchange of which Meridian is a member
B Nothing, because the operation of the trust account is the licence holder's responsibility, not the auditor's
C Record the matter in the annual auditor's report, which is lodged with MAS within 5 months after the financial year end
D Report the matter to Meridian's board and allow it 14 days to respond before informing MAS

Show the answer and explanation

Answer: A. Immediately send a written report to MAS, and send a copy to the approved exchange of which Meridian is a member

An auditor who, while performing his duties, discovers a contravention of the SFA, a matter that may materially affect the holder's financial position, or an irregularity that may jeopardise customer moneys or assets, must immediately send a written report to MAS, with a copy to the approved exchange where the holder is a member. The annual accounts and auditor's report are separately lodged under SFA s.107 within 5 months after the financial year end.

Common mistake

The annual lodgement deadline does not buy time; a customer money irregularity is reported immediately.

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Original study material mapped to the public CMFAS RES 1A syllabus. Unofficial, not endorsed by MAS or IBF. Verify figures and rules against current guidance before relying on them.