15 DECEMBER 2011 NEW ZEALAND GAZETTE, No. 193 5667

(c) the auditor to check the semi-annual prospective financial statements to ensure that they do not disclose that the Company is likely to breach the capital adequacy requirements contained in clause 5(2) of this notice and that they disclose positive net cash inflows for each month;

(d) the auditor to check a sample of days on a semi-annual basis to:

(i) confirm that the calculations required under clause 6(5)(a) were performed on that day and signed off as reviewed by the compliance officer or the chief executive officer;

(ii) confirm that the results of the calculations agree to the logs provided to the auditor on a monthly basis;

(iii) confirm that the calculations were performed in compliance with clause 5; and

(iv) perform additional procedures, as set out in the agreed upon procedures, over the accuracy of the data used in the calculations; and

(e) the auditor to report to the Financial Markets Authority within 20 working days of the end of each month if:

(i) the Company fails to provide the auditor with the monthly report in accordance with clause 6(3) or semi-annual prospective financial statements in accordance with clause 6(8), or to include in any monthly report such information as it is required to;

(ii) the directors, or any of them, do not certify the truth of any of the statements required to be contained in the certificate under clause 6(4) without qualification;

(iii) the monthly report discloses a breach of the conditions in clause 5 by the Company;

(iv) the monthly report discloses a breach of the conditions contained in clauses 3(2)(i) and (j); and

(v) testing required under clause 6(2)(d) indicates any breach has occurred which was not reported at the time of the breach.

(3) Within 10 working days of the end of each month the Company must provide a monthly report to its auditor that contains the following:

(a) certification from the Company’s directors in terms of clause 6(4) of this notice;

(b) any memorandum, and any other documents or information, required by clause 6(6) of this notice; and

(c) the calculations required under clause 6(5).

(4) The certificate required by clause 6(3)(a) must be signed by all directors of the Company, and should state that, after due enquiry, and to the extent that the following statements are true, the directors of the Company are satisfied that:

(a) the Company currently has, and has maintained at all times during the previous month, the amount of surplus liquid funds required by clause 5(2);

(b) the calculations required under clause 6(5) are true and correct;

(c) the Company can reasonably be expected to maintain the required level of surplus liquid funds for at least the next quarter;

(d) the Company has made all payments it was obliged to make as they fell due;

(e) the Company can reasonably be expected to continue to pay its debts as they fall due for at least the quarter;

(f) there are no material matters which have, or are likely to, adversely affect the Company’s:

(i) financial position;

(ii) financial performance; or

(iii) cash flows; and

(g) the Company has complied with the conditions 3(3)(i) and (j) of this notice regarding handling client money (including any client money which is applied as margin in respect of a client’s contract) and property, and recording client money and property and client dealing.

(5) The Company must:

(a) calculate, in respect of 5.00pm (New York time) on each business day, by 4.00pm (New Zealand time) on the business day after the date in respect of which the calculation is made, its surplus liquid funds in accordance with clause 5 to ensure that the Company complies with clause 5(2);

(b) report to both the Financial Markets Authority and the auditor on the business day following the day in respect of which the calculation is made if the calculation performed in clause 6(5)(a) does not comply with clause 5(2) including an explanation of the cause of the breach and the remedial action planned;

(c) maintain a log of the calculations required under this condition and produce it to the auditor or the Financial Markets Authority upon request; and

(d) provide a copy of the log of these daily calculations to the auditor as part of the Company’s monthly report.

(6) If the directors are unable to certify that, after due inquiry, they are satisfied that each statement contained in 6(4) is true, the directors of the Company must prepare a memorandum to explain the circumstances which prevent the directors providing that certification, and that memorandum should contain or attach all information and documents which are necessary to fully explain those circumstances.

(7) The Company must prepare management accounts every two months.

(8) The Company must prepare prospective financial statements, which will be supplied to the auditor on a semi-annual basis, that:

(a) contain a forecast of cash flows over at least the next six months based on the reasonable expectations of the board of the Company as to what is likely to happen over this period;

(b) contain forecast statements of financial position as at the end of each of the next six months based on the reasonable expectations of the board of the Company as to what is likely to happen over this period;

(c) document the Company’s calculations and assumptions, and explain why the assumptions are appropriate;

(d) provide reasons when the forecast of cash flows shows a total net cash outflow in any month; and