SUSEP Circular No. 616: New Rules for The Drafting of The Financial Statements Report by Independent Auditors

The Superintendence of Private Insurance (SUSEP) published on October 15, 2020, SUSEP Circular No. 616, with the purpose of inserting new provisions in SUSEP Circular No. 517/2015 and establishing new guidelines for the drafting of the independent auditor’s report on the financial statements of supervised companies.

This amendment had already been the subject of SUSEP Public Consultation No. 15/2020 and demonstrates the intention of the regulator to increase the transparency and quality of the financial statements report, in order to facilitate its supervision and the preventive identification of the insolvency conditions of the supervised companies.

Among the new rules included in the Circular, we highlight (i) the need for a detailed description of the materiality used in the work; (ii) the description of the materiality limit values; (iii) the communication of the main auditing matters; and (iv) the use, as one of its references, of the sufficiency of the supervised company’s capital in the report.

In addition, the auditor must submit the paperwork to SUSEP, i.e., it must reproduce “the audit documentation used to determine the materiality applicable to individual financial statements”, by September 30th of the same year and by March 31st of the following year.

The amendment of the Circular, with the insertion of specific rules to be followed in the Independent Actuarial Audit Report, is a beneficial measure, given that it provides greater certainty as to the requirements for the financial statements report issued by independent auditors. The draft of the Circular will come into force on January 4, 2021, and the new rules will become mandatory as from the financial statements for the fiscal year of 2021.

The Insurance & Reinsurance team will follow the procedure of SUSEP Circular 616 and is available to provide any clarifications on the matter.