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ANNUAL FINANCIAL STATEMENTS IN TERMS SECTION 15 OF THE PENSION
FUNDS ACT NO 24, 1956
AS AMENDED (PENSION FUNDS ACT)
NAME OF RETIREMENT FUND: ABACUS UMBRELLA PENSION FUND
FINANCIAL SERVICES BOARD REGISTRATION NUMBER:
37087
For the period: 01/09/2013 to 31/08/2014
CONTENTS Schedule
Page Schedule
Page
A Regulatory information* 2 G Statement of changes in
net assets and funds 14
B Statement of responsibility by the Board of Fund*
4 HA Notes to the financial statements
15
C Statement of responsibility by the principal officer *
6 HB Report of the valuator* 22
D Report of the independent auditors (if applicable)
7 I Report of the independent auditors / Board of Fund
(whichever is applicable) to the Registrar of Pension Funds
23
E Report of the Board of Fund*
9 IA Investment schedule pertaining to annual financial
statements*
33
F Statement of net assets and funds
13 IB Assets held in compliance with Regulation 28 Report of the
independent auditors on compliance with regulation 28 to the
Registrar of Pension Funds
34
* Not subject to any engagement by an auditor
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE A REGULATORY INFORMATION For the period ended
31/08/2014
Registered office of the fund
Postal address: PO Box 829, Wilgeheuwel, 1736 Physical address:
A3 Willow Crest Office Estate, Van Hoof Street, Roodepoort,
1724
Financial reporting periods
Current: 01/09/2013 To 31/08/2014 Previous: 01/09/2012 To
31/08/2013
Board of Fund
Full name E-mail address Capacity* Date appointed Date
resigned
Chairperson
Le Grellier, GD [email protected] C 13/03/2007
Trustees
Crawford, DL [email protected] I 29/10/2008
De Villiers, CM [email protected] I 21/08/2009
Le Grellier, CD [email protected] I 28/06/2005
Rollason, JD [email protected] I 03/04/2006
Schedule of meetings held by the Board of Fund in terms of the
rules of the Fund
Meeting date Place of meeting Quorum (yes/no)
27/11/2013 Brefco (Pty) Ltd Yes
26/02/2014 Brefco (Pty) Ltd Yes
08/07/2014 Brefco (Pty) Ltd Yes
Fund officers
Principal officer
Full name: From Date Postal address: Physical address: Tel
number:
Email address
De Villiers, CM 01/11/2009 PO Box 527, Pinegowrie, 2123
6 Mandeville Gardens, 65 Mandeville Road, Bryanston
(011) 704-1643
[email protected]
Monitoring Person
Full name: From Date Postal address: Physical address: Tel
number:
Email address
De Villiers, CM 01/11/2009 PO Box 527, Pinegowrie, 2123
6 Mandeville Gardens, 65 Mandeville Road, Bryanston
(011) 704-1643
[email protected]
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE A (Continued) REGULATORY INFORMATION For the period
ended 31/08/2014 Professional service providers
Actuary/Valuator
Full name: From Date Postal address: Physical address: Tel
number:
Email address
Hendriks, C (Argen Actuarial Solutions)
01/03/2008 PO Box 413266, Craighall, 2024
Marlborough Gate, Hyde Lane, Hyde Park
(011) 441-2700
[email protected]
Auditor
Full name: From Date Postal address: Physical address: Tel
number:
Email address
BDO South Africa Incorporated
01/09/2005
Private Bag X60500, Houghton 2041
22 Wellington Road, Parktown
(010) 060-5000
[email protected]
Benefit Administrator
Full name: From Date Postal address: Physical address: Tel
number:
Reg Number
Brefco (Pty) Ltd 01/03/2010 PO Box 829, Wilgeheuwel, 1736
Willow Crest Office Estate, Van Hoof Street, Roodepoort
(011) 958-0511
24/218
Investment administrator
Full name: Postal address: Physical address: Tel number: Reg
Number
Momentum Manager of Managers (Pty) Ltd
PO Box 330 Gallo Manor 2052
6 Merchant Place, Fredman Drive, Sandton
(086) 153-8732
19840
Investment advisor
Full name: Postal address: Physical address: Tel number: Reg
Number
Sasfin Financial Advisory Services (Pty) Ltd
PO Box 95104, Grant Park, 2051
Sasfin House, 29 Scott Street, Waverley
(011) 809-7500
57/11
Participating Employers
All the participating employers have terminated with the
Fund.
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE B STATEMENT OF RESPONSIBILITY BY THE BOARD OF FUND For
the period ended 31/08/2014
Responsibilities
The Board of Fund hereby confirm to the best of their knowledge
and belief that, during the period under review, in the execution
of their duties they have complied with the duties imposed by
Pension Funds Act legislation and the rules of the Fund, including
the following: ensured that proper registers, books and records of
the operations of the Fund were kept, inclusive of proper
minutes of all resolutions passed by the Board of Fund; ensured
that proper internal control systems were employed by or on behalf
of the Fund; ensured that adequate and appropriate information was
communicated to the members of the Fund,
informing them of their rights, benefits and duties in terms of
the rules of the Fund; took all reasonable steps to ensure that
contributions, where applicable, were paid timeously to the Fund
or
reported where necessary in accordance with section 13A and
regulation 33 of the Pension Funds Act; obtained expert advice on
matters where they lacked sufficient expertise; ensured that the
rules and the operation and administration of the Fund complied
with the Pension Funds
Act and all applicable legislation; ensured that fidelity cover
was maintained and that this cover was deemed adequate and in
compliance with
the rules of the Fund; and ensured that investments of the Fund
were implemented and maintained in accordance with the Fund’s
investment strategy. Approval of the annual financial
statements
The annual financial statements of Abacus Umbrella Pension Fund
are the responsibility of the Board of Fund.
The Board of Fund fulfils this responsibility by ensuring the
implementation and maintenance of accounting systems and practices
adequately supported by internal financial controls. These
controls, which are implemented and executed by the Fund and/or its
benefit administrators, provide reasonable assurance that: the
Fund’s assets are safeguarded; transactions are properly authorised
and executed; and the financial records are reliable. The annual
financial statements set out on pages 13 to 21 have been prepared
for regulatory purposes in accordance with the Regulatory Reporting
Requirements for Retirement Funds in South Africa, the rules of the
Fund and the Pension Funds Act. These financial statements have
been reported on by the independent auditors, BDO South Africa
Incorporated, who were given unrestricted access to all financial
records and related data, including minutes of all relevant
meetings. The Board of Fund believes that all representations made
to the independent auditors in the management representation letter
during their audit were valid and appropriate. The report of the
independent auditors is presented on pages 7 to 8. Notwithstanding
the above-mentioned information, the Board of Fund would like to
refer to paragraph 8.2 on page 11 and 12 of the Report of the Board
of Fund. Instances of non-compliance
We are not aware of instances of non-compliance with laws and
regulations, including the provisions of laws and regulations that
determine the reported amounts and disclosures in the financial
statements.
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE B (Continued) STATEMENT OF RESPONSIBILITY BY THE BOARD
OF FUND For the period ended 31/08/2014
These financial statements: were approved by the Board of Fund
on 5 February 2015
are to the best of the Board members knowledge and belief
confirmed to be complete and correct; fairly represent the net
assets of the Fund at 31 August 2014 as well as the results of its
activities for the
period then ended; and are signed on behalf of the Board of Fund
by:
___________________ ___________________ ___________________
Le Grellier, GD Rollason, JD Crawford, DL CHAIRPERSON BOARD
MEMBER BOARD MEMBER
05/02/2015 05/02/2015 05/02/2015
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE C STATEMENT OF RESPONSIBILITY BY THE PRINCIPAL OFFICER
For the period ended 31/08/2014
I confirm that for the period under review the Abacus Umbrella
Pension Fund has timeously submitted all regulatory and other
returns, statements, documents and any other information as
required in terms of the Pension Funds Act and to the best of my
knowledge all applicable legislation.
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE D REPORT OF THE AUDITOR TO THE BOARD OF FUND
INDEPENDENT AUDITOR’S REPORT TO THE BOARD OF THE ABACUS UMBRELLA
PENSION FUND
Report on the Financial Statements We have audited the annual
financial statements of the Abacus Umbrella Pension Fund (the
“Fund”) set out on pages 9 to 21, which comprise the statement of
net assets and funds as at 31 August 2014, the statement of changes
in net assets and funds for the period then ended, and the notes to
the financial statements which include the principal accounting
policies and other explanatory information. The financial
statements are prepared for the purpose of reporting to the
Registrar of Pension Funds. Board of Fund’s Responsibility for the
Financial Statements
The Board of Fund is responsible for the preparation of these
financial statements in accordance with the Regulatory Reporting
Requirements for Retirement Funds in South Africa. The Board of
Fund is also responsible for compliance with the requirements of
the Rules of the Fund and the Pension Funds Act of South Africa and
for such internal control as the Board of Fund determines is
necessary to enable the preparation of financial statements that
are free from material misstatements, whether due to fraud or
error. Auditor's Responsibility Our responsibility is to express an
opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on
Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from
material misstatement. An audit involves performing procedures to
obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the
auditor's judgement, including the assessment of the risks of
material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation of
the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal
control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion. Opinion In our opinion, the annual
financial statements of the Abacus Umbrella Pension Fund for the
period ended 31 August 2014 have been prepared, in all material
respects, in accordance with the Regulatory Reporting Requirements
for Retirement Funds in South Africa.
Emphasis of Matter Without qualifying our opinion above, we draw
attention to paragraphs 8.2 on page 11 and 12 of the Report of the
Board of Fund; where in the Board explain shortcomings due to
maladministration by the previous administrators for the periods
prior to March 2010 financial period end.
Financial Reporting Framework Without modifying our opinion, we
draw attention to the principal accounting policies in which the
applicable financial reporting framework is identified, as
prescribed by the Registrar. Consequently, the financial statements
and related auditor's report may not be suitable for another
purpose.
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE D (Continued) REPORT OF THE AUDITOR TO THE BOARD OF
FUND
Other Matters
The supplementary information contained in Schedule IA as set
out on page 33 to these annual financial statements, has been
extracted from the Fund’s underlying accounting records that were
the subject of our engagement. We have compared the totals
reflected in Schedule IA to the totals reflected in the underlying
Fund’s accounting records to determine whether such totals have
been correctly extracted. However, we have not performed any
additional procedures to substantiate the disclosures of the
individual totals included in Schedule IA. We do not express an
audit opinion on this schedule.
Report on Other Legal and Regulatory Requirements
The Statement of Responsibility by the Board of Fund describes
instances of non-compliance with laws and regulations, including
those that determine the reported amounts and disclosures in the
financial statements that have come to the attention of the Board
of Fund and the corrective action taken by the Board of Fund. There
are no additional instances of non-compliance with laws and
regulations that came to our attention during the course of our
audit of the financial statements.
Per MI Lockhat Director 23/02/2015
o O – O o End of Audit
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE E REPORT OF THE BOARD OF FUND For the period ended
31/08/2014 1. DESCRIPTION OF THE FUND
1.1. Type of fund
The Fund is a pension fund and is a defined contribution fund.
In terms of regulation 30(2)(t) (ii) of the Regulations to the
Pension Funds Act, the umbrella fund is registered as a type A
umbrella fund.
1.2. Benefits
1.2.1. Summary in terms of the rules of the Fund. The benefit
structure of this fund is based solely on the accumulation of
contributions plus investment income earned from the appropriate
investments. The Fund provides lump sum benefits to members of the
Fund when they retire or resign from their employer as well as
death benefits for their dependants should they die in service. The
benefits provided for are: (a) Retirement benefit: Share of Fund
(b) Withdrawal benefit: Share of Fund (c) Death benefit: Share of
Fund
1.2.2 Unclaimed benefits
1.2.2.1. Strategy of Board of Fund towards unclaimed
benefits.
Complete records are maintained from the date the member exits
the Fund. Any unclaimed benefit will earn the same return the Fund
declares unless specifically requested to invest in another
investment portfolio.
1.2.3 Beneficiary benefits
As there are no benefits for any beneficiaries of a former
member, the Board of Fund have not adopted a strategy towards
beneficiaries.
1.3. Contributions
1.3.1. Description in terms of the rules of the Fund.
1.3.1.1. Members’ contributions. The Fund is closed for new
membership and contributions.
1.3.1.2. Employers’ contributions. The Fund is closed for new
membership and contributions.
1.4. Rule amendment
There are no rule amendments for the period under review.
1.5. Reserves
In terms of rules a Reserve Account was established to allow
employers to contribute towards a reserve account which was used to
meet fund expenses. The amount in the Reserve Account was utilised
toward fund expenses. The Reserve Account is Nil at year end.
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE E (Continued) REPORT OF THE BOARD OF FUND For the
period ended 31/08/2014 2. INVESTMENTS
2.1. Investment strategy The investment strategy of the Fund is
set by the Board of Fund after taking due consideration of the
advice of the Fund’s investment and other professional advisors.
This investment strategy complies with the provisions of regulation
28 of the Pension Funds Act in South Africa. The investments are
managed according to the following principles: 2.1.1. General
Members are identified according to their “period to retirement”
and are then placed into a suitable mix of different asset classes,
which are selected in order to provide those members furthest away
from retirement with high growth potential, bearing in mind that
they are able to withstand a greater standard deviation of
investment returns, in that their investments have time to recover
from investment return fluctuations. Members closest to retirement
are placed in an asset mix that minimises the standard deviation of
returns over time and is designed to protect the capital
accumulated whilst delivering returns at least matching inflation
over short term periods until retirement. Members between these
extremes are moved progressively from portfolios at the longer
“period to retirement” end of the continuum through a series of
lower risk portfolios to the pre-retirement lowest risk
portfolio.
2.1.2. Individual members choice The Fund does offer individual
members an option of the investment products in which the Fund is
invested, if they do not wish to be invested in the default
portfolios.
2.1.3. Unclaimed benefits Complete records are maintained from
the date the member exits the Fund. Any unclaimed benefit will earn
the same return the Fund declares unless specifically requested to
invest in another investment portfolio.
2.1.4. Surplus apportionment Not applicable
2.1.5. Reserve accounts Not applicable
2.2. Management of investments
The Fund’s investments consist of various portfolios which are
managed on unitised principles. These portfolios were selected with
the aim of achieving an optimum return, taking into account
associated risks. Overall responsibility for investment and
performance lies with the Board of Fund including the appointment
of or changes to the investment manager(s). The Board of Fund meets
from time to time to discuss investment policies and to monitor the
asset allocation and performance of the investment managers.
3. MEMBERSHIP
Active members
Numbers at beginning of period 975
Adjustments* (2)
Members re – instated** 84
Withdrawals (141)
Retirements (22)
Deaths (3)
Numbers at end of period 891
Number at end of period (South African citizen) Not
available
Number at end of period (Non South African citizen) Not
available
Note on adjustments:
*Adjustments refer to members that were duplicated on the
membership records. **Members re-instated refer to members who
resigned and whose share of fund was not paid in full.
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE E (Continued) REPORT OF THE BOARD OF FUND For the
period ended 31/08/2014 4. ACTUARIAL VALUATION
The statutory actuarial valuation as at 31 August 2013 was
completed by the actuary on 29 August 2014. The valuation report
has been submitted to the Financial Services Board and was approved
by the Registrar on 10 February 2014. The valuators report on page
22, states:- “The Fund was in a sound financial position as at 31
August 2013”. The next statutory actuarial valuation of the Fund is
due as at 31
August 2016.”
5. SURPLUS APPORTIONMENT OR NIL SCHEME
In a letter dated 29 October 2010 the Registrar of Pension Funds
recorded that the Fund a) “does not have an actuarial surplus to
apportion as at the surplus apportionment date, i.e. 31
August 2004, b) noted the Fund's NIL returns at 31 August 2004
and c) does not require the submission of a surplus apportionment
scheme as envisage by section 15B(1)
of the Act.” 6. HOUSING LOAN FACILITIES
If requested by the Employer and approved by the Board of Fund,
the Fund was willing to provide to employees of that employer
surety for housing loans in terms of section19(5)(a) of the
Pensions Funds Act. From September 2011 all employers have
terminated and the Fund is not open to any new employers or
contributions therefore no guarantees for housing loans have been
granted. Please refer to note 2 on page 17 for further details of
the housing loans.
7. INVESTMENTS IN PARTICIPATING EMPLOYERS
The Fund holds no direct investments in the participating
employer.
8. SIGNIFICANT MATTERS
8.1. SIGNIFICANT MATTERS – CURRENT FINANCIAL PERIOD
There are no significant matters to report on in the current
financial year apart from those matters reported in prior years.
The following information is for ease of reference:
8.2. SIGNIFICANT MATTERS – PRIOR PERIOD
Pioneer Employee Benefits (Pty) Ltd was the appointed benefit
administrator for the Fund until 28 February 2009. Pioneer
outsourced the administration to Dynam-ique SA Fund Administrators
(Pty) Ltd and from 1 November 2007 Self Assurance Benefit
Administrators (Pty) Ltd became the outsourced administrator.
In late 2008 Pioneer Employee Benefits (Pty) Ltd advised the
Fund that it did not wish to continue its administration business.
During March 2009 it placed itself into liquidation. The Fund then
appointed Self-Assurance Benefit Administrators (Pty) Ltd (which
had been the outsourced provider) to continue with the
administration in terms of a direct contract with the Fund.
Self-Assurance Benefit Administrators (Pty) Ltd commenced with the
process of the reconstruction of data and financial records which
was never concluded by them. The reconstruction of the data and
financial records were required to fix errors arising from the
administration difficulties referred to below. In early 2010 they
advised the Fund that they were unable to continue with the
reconstruction of the data or the on-going administration. The
difficulties experienced by the previous administrators relating to
the Fund included a change in the outsourced administrator, a high
turnover of staff involved with the Fund, poor record-keeping and
poor financial reporting. All of these factors contributed to a
period of uncertainty with regards to the administration of the
Fund. The Board of Fund would like to place on record that certain
instances of poor administration and record-keeping were,
subsequent to year-end 31 August 2006, brought to their attention.
As a result, the trustees have concerns about the standard of
record-keeping and controls that were in fact implemented, executed
and maintained by the then administrators, Pioneer Employee
Benefits (Pty) Ltd and Self -Assurance Benefit Administrators (Pty)
Ltd.
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE E (Continued) REPORT OF THE BOARD OF FUND For the
period ended 31/08/2014
8.2 SIGNIFICANT MATTERS – BENEFIT ADMINISTRATORS PRIOR TO MARCH
2010 (continue)
The Fund then appointed Brefco (Pty) Ltd with effect from 1
March 2010 to do the reconstruction of the data
and financial records from 1 September 2005 and to deal with the
day to day administration of the Fund
The following outstanding items were identified as poor
administration prior to March 2010, which resulted
in the auditors qualifying the financial statements up to 31
August 2010.
a. The signed administration agreements between the Fund, the
administrator, and every participating employer were not made
available.
b. The Fund has previously accounted for reinsurance premiums
and administration fees on the basis
of actual contributions received. No rate confirmations from the
risk insurers were made available for audit purposes.
c. Various supporting documentation could not be located. d. Due
to the lack of documentation and the various changes in
administration, the Board of Fund
took a prudent decision to reconstruct member’s fund records
from March 2006. This resulted in member’s benefits being paid on a
partial basis, with a final agterskot payment to be made after the
completion of the rebuild process.
e. The Board of Fund instructed the administrator to commence
the process to make the final
agterskot payments due to members from early in 2014. The
process includes sending out letters to members for the required
information.
The above matters will however be carried forward and all
attempts to rectify these qualifications will
continue. None of the above matters have any significant effect
on the financial state of the Fund.
The Board of Fund are of the opinion that the reconstruction of
the data and financial records from 1
September 2005 by Brefco
1. Has been dealt with appropriately and correctly.
2. Has no significant impact on the financial status of the
Fund.
3. Has resulted in members’ benefit accounts being reflected
accurately
4. That no member’s benefit was jeopardised in the
reconstruction of the data and financial
records process.
8.3 During the year the Board of Fund reversed historical
balances, the net effect of which was a reduction of the Fund’s
return of R253,881.
9. ADDITIONAL DISCLOSURE – Claims against the previous
administrator
9.1 The Fund has issued summons against Santam Insurance Limited
as insurers of the previous
administrators Pioneer Employee Benefits (Pty) Ltd, for losses
incurred as a result of maladministration.
9.2 The Board of Fund is negotiating a settlement of a claim
against Self Assurance Benefit Administrators (Pty) Ltd.
10. SUBSEQUENT EVENTS
The Fund is closed to new entrants and monthly contributions
with effect from 30 September 2011. It is the
trustees’ intention to deregister the Fund after the members’
benefits are transferred and the statutory
requirements have been met.
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE F STATEMENT OF NET ASSETS AND FUNDS At 31/08/2014
Notes Current period
R Previous period
R
ASSETS
Non-current assets 148,164,754 152,105,196
Investments 1 148,164,754 152,105,196
Current assets 1,265,358 2,057,245
Accounts receivable 3 8,148 968,664 Cash at bank 1,257,210
1,088,581
Total assets 149,430,112 154,162,441 FUNDS AND LIABILITIES
Members’ funds and surplus account 143,941,563 145,665,264
Members’ individual accounts 143,938,241 145,662,026 Amounts to
be allocated 13 3,322 3,238
Total funds and reserves 143,941,563 145,665,264 Non-current
liabilities 921,679 1,944,789
Provisions 9.1 921,679 1,944,789
Current liabilities 4,566,870 6,552,388
Benefits payable 4 4,208,676 3,065,716 Accounts payable 5
358,194 3,486,672
Total funds and Liabilities 149,430,112 154,162,441
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE G STATEMENT OF CHANGES IN NET ASSETS AND FUNDS For the
period ended 31/08/2014
Notes
Members’ individual accounts Total Total
Accumulated funds Current period Previous period
R R R
Net investment income 6 23,801,206 23,801,206 14,034,920 Other
income (provide details) 7 134,479 134,479 0 Less: Expenses
Administration expenses 8 (1,057,231) (1,057,231) (893,324) Net
income before transfers and benefits
22,878,454 22,878,454 13,141,596
Transfers and benefits
Benefits 4 (24,602,155) (24,602,155) (4,609,910)
Net income after transfers and benefits
(1,723,701) (1,723,701) 8,531,686
Funds and reserves
Balance at beginning of period 145,665,264 145,665,264
137,133,578
Balance at end of period 143,941,563 143,941,563 145,665,264
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SCHEDULE HA NOTES TO THE FINANCIAL STATEMENTS For the period
ended 31/08/2014 PRINCIPAL ACCOUNTING POLICIES
The following are the principal accounting policies used by the
Fund, which are consistent with those of the previous period.
PURPOSE AND BASIS OF PREPARATION OF FINANCIAL STATEMENTS The
annual financial statements are prepared in accordance with
Regulatory Reporting Requirements for Retirement Funds in South
Africa, the rules of the Fund and the provisions of the Pension
Funds Act in South Africa. The financial statements are prepared on
the historical cost and going concern bases, modified by the
valuation of financial instruments and investment properties to
fair value, and the revaluation of property, plant and equipment to
market value.
FINANCIAL INSTRUMENTS Measurement
Financial instruments include cash and bank balances,
investments, housing loans, receivables and accounts payable.
Financial instruments are initially measured at cost as of trade
date, which includes transaction costs. Subsequent to initial
recognition, these instruments are measured as set out below.
Investments Investments are measured at fair value. The fair
value of marketable securities is calculated by reference to the
applicable Stock Exchange quoted selling prices at the close of
business on the statement of funds and net assets date
Collective Investment Schemes
Investments are measured at fair value. The fair value of
marketable securities is calculated by reference to the applicable
insurer, investment manager or the Stock Exchange quoted selling
prices at the close of business on the statement of funds and net
assets date.
Housing loans
The Fund did not grant any guarantees for loans or any direct
housing loans to its members in terms of Section19(5) of the
Pension Fund Act.
Other loans Not applicable
Insurance policies Insurance policies linked to listed
investments are valued at fair value and are therefore equivalent
to market value of the underlying assets as certified by the
Insurer concerned.
Accounts receivable Accounts receivable are stated at
realisation value.
Cash and cash equivalents Cash and cash equivalents are measured
at fair value.
Accounts payable
Accounts payable are stated at the actual amounts due.
PROVISIONS Provisions are brought into account for known
obligation as a result of past events, for which it will be
required to settle the obligation. A reliable estimate has been
made of the amount of the obligation.
CONTRIBUTIONS Contributions are brought to account on the
accrual basis.
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For
the period ended 31/08/2014
DIVIDEND INCOME, INSURANCE POLICY INCOME, INTEREST AND RENTALS
Interest is recognised when it is determined that such income will
accrue to the Fund. Insurance policy income and dividends are
recognised when declared by the insurer. Gains and losses on
investments are recognised during the period in which the change
arises.
TRANSFERS TO AND FROM THE FUND Transfers to or from the Fund are
recognised on approval being granted by the Financial Services
Board as required in terms of Section 14 and 13B of the Pension
Funds Act. Individual transfers are recognised when the individual
member’s transfer is received or paid.
o O – O o End of Acc Pol
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SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For
the period ended 31/08/2014 1. Investments
1.1 Investment summary
Local Foreign Total Fair value Total
Current
period Current
period Previous
period
R R R R R Insurance policies 113,243,090 34,921,664 148,164,754
148,164,754 151,986,825
Collective investment schemes 0 0 0 0 118,371
Total investments 113,243,090 34,921,664 148,164,754 148,164,754
152,105,196
2. Housing loan facilities
2.1 Housing loan guarantees
The Fund has granted guarantees to Standard Bank for outstanding
loans amounting to R177,008 for 9 members of the Fund.
The The amount of the guarantee may not exceed 70% of the
benefit that a member would
receive in terms of the rules of the Fund and Section 19(5) of
the Pension Funds Act if he or she had to terminate membership to
the fund voluntarily.
The total housing loan guarantee facility available to the Fund
is R2, 000,000. The facility is
renewable on 31 March 2015.
The Fund has not granted any new guarantees for loans to members
since April 2010. 3. Accounts receivable
Current period Previous period
R R
Income accrued 8,148 4,139
Risk premiums paid in advance 0 957,616
Tax(member) over paid - is recovered 0 6,909 TOTAL 8,148
968,664
4. Benefits
4.1 Benefits – current members
At beginning of period
Benefits for current period
Payments At end of
period
R R R R
Lump sums on retirements
Full benefit 0 13,856,283 (13,856,283) 0
Lump sums before retirement
Death benefits 0 340,644 (340,644) 0
Withdrawal benefits 3,065,716 10,405,228 (9,262,268)
4,208,676
TOTAL 3,065,716 24,602,155 (23,459,195) 4,208,676
Current period Previous period
Benefits for current period 24,602,155 4,609,910 Statement of
changes in net assets and funds 24,602,155 4,609,910
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE HA (Continued NOTES TO THE FINANCIAL STATEMENTS For the
period ended 31/08/2014
5. Accounts payable
Current period
R Previous period
R
Admin fees due to administrators 266,760 988,598
Auditors fees due 80,000 263,910
Contributions paid in advance 0 43,732
Risk premiums due to insurers 0 707,576
Loan account - Abacus Umbrella Provident Fund 10,820
1,482,856
Legal fee – member 614 0
Total accounts payable 358,194 3,486,672
6. Net_investment_income
Current period R
Previous period R
Income from investments 1,365,953 2,933,315
Dividends 266,800 561,962
Interest 1,099,153 2,371,353
Adjustment to fair value 23,296,073 12,064,446
Sub-Total 24,662,026 14,997,761
Less
Expenses incurred in managing investments (860,820)
(962,841)
Total 23,801,206 14,034,920
7. Other_Income
Current Period Previous Period
R R Final Liquidation payment from Pioneer Employee Benefits
134,479 0
Total other income 134,479 0
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For
the period ended 31/08/2014 8. Administration expenses
Notes
Current period R
Previous period R
Actuarial fees 43,200 55,753
Actuarial fees provision written back (86,094)
Administration fees 374,639 389,880
Audit fees 82,394 74,100
Fidelity Insurance 20,625 20,625
Legal Fees 318,479 240,000
Levies 92,284 19,138
Other 8.1 96,063 714
Board of Fund expenses 8.2 115,641 93,114
Total 1,057,231 893,324 8.1 Other admin expenses
Current Period Previous Period
Details of Other admin expenses R R Bank Charges 1,285 714
Historical contribution/risk balances written off 94,778 0
Total other income 96,063 714
8.2 Board of Fund expenses
Current period
R Previous period
R
Meeting allowances 1,109 1,440
Expenses 114,532 91,674
Total Board of Fund expenses 115,641 93,114
9. Financial liabilities and provisions
9.1 Provisions
Current Period Previous Period
R R Provision for actuarial fees 43,200 398,526
Provision for future liabilities 0 304,732
Provision for rebuild cost (legal fees) 878,479 583,765
Provision for rebuild cost (penalties) 0 632,766
Provision for rebuild cost (Trustees fees) 0 25,000
Total Provisions 921,679 1,944,789
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SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For
the period ended 31/08/2014
10. Risk management policies
Risk management framework
The Board of Fund has overall responsibility for the
establishment and oversight of the Fund’s risk
management policies.
The Fund’s risk management policies are established to identify
and analyze the risks faced by the
Fund, to set appropriate risk limits and controls, and to
monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to
reflect changes in market conditions
and the Fund’s activities.
Solvency risk
Continuous monitoring by the Board of Fund takes place to ensure
that appropriate assets are held where the Funds obligation to
members is dependent upon the performance of specific portfolio
assets and that a suitable match of assets exists for all other
liabilities.
Credit Risk
The Board of Fund monitors receivable balances on an on-going
basis with the result that the Fund’s exposure to bad debts is not
significant. An appropriate level of provision is maintained.
Legal Risk
Legal risk is the risk that the Fund will be exposed to
contractual obligations which have not been provided for. Legal
representatives of the Fund monitor the drafting of contracts to
ensure that rights and obligations of all parties are clearly set
out.
Cash Flow Risk
The Board of Fund agreed an amount with the administrators that
should be kept in the bank account to meet the Fund’s cash flows
requirements. If the agreed amount is insufficient, the
administrator must disinvest to meet the required cash flow.
Liquidity Risk
The Fund’s liabilities are backed by appropriate assets and it
has significant liquid resources.
Market Risk
Market risk is the risk that the value of a financial instrument
will fluctuate as a result of changes in market prices of market
interest rates.
Interest rate Risk
The Board of Fund monitors exposures to interest rate risk by
receiving regular reports of interest fluctuations.
Currency Risk
The Fund’s exposure to currency risk is mainly in respect of
foreign investments made on behalf of members of the Fund for the
purpose of seeking desirable international diversification of
investments. The Board of Fund monitors this aspect of the Fund’s
investments and limits it to SARB limits of total assets.
Investments
Investments in insurance policies are valued at fair value as
certified by the insurer. Investments are managed with the aim of
maximising the Fund’s returns while limiting risk to acceptable
levels within the framework of statutory requirements.
Continuous monitoring takes place to ensure that appropriate
assets are held where the liabilities are dependent upon the
performance of specific portfolios of assets and that a suitable
match of assets exists for all non–market related liabilities.
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SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For
the period ended 31/08/2014 11. Promised retirement benefits
As a defined contribution fund, the Fund in association with the
principal and participating employers provides the members a course
to save towards retirement. The Fund liability to the promised
retirement benefit is limited to the member’s equitable share of
his/her share of fund. The member’s share of fund is the member’s
retirement contributions plus the net return earned from the
appropriate investment.
12. Related party transactions
The Fund’s expenses to the value of R1,057,231. The
participating employer made contributions to the Fund for members’
retirement and towards the fund’s expenses to the value of R0. .
Principle Officer fees are included in the Board of Fund expenses.
During the current period administration fees were paid. Please
refer to note 8 on page 19 the Administration expenses.
13. Amounts to be allocated123
Current period R
Previous period R
Investment return to be allocated 3,322 3,238
Total amounts to be allocated 3,322 3,238
o O – O o End of AFS
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SCHEDULE HB REPORT OF THE VALUATOR
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SCHEDULE I REPORT OF THE INDEPENDENT AUDITOR OF ABACUS UMBRELLA
PENSION FUND OF FACTUAL FINDINGS TO THE BOARD OF FUND AND THE
REGISTRAR OF PENSION FUNDS
We have performed the procedures agreed with the Registrar of
Pension Funds (the “Registrar”) and set out below with respect to
the audited financial statements (“annual financial statements”)
and other information in the general ledger and management
information comprising the accounting records of the Abacus
Umbrella Pension Fund (the “Fund”) for the period ended 31 August
2014. Our engagement was undertaken in accordance with the
International Standard on Related Services (ISRS) 4400 Engagements
to perform agreed-upon procedures regarding financial information.
Our procedures were performed solely to assist the Registrar in
evaluating whether any instances of non-compliance with the
requirements of the relevant sections of the Pension Funds Act of
South Africa (the Act), regulations and rules of the Fund were
identified. The responsibility for determining the adequacy or
otherwise of the procedures agreed to be performed, is that of the
Registrar. Procedures and findings Our procedures performed are set
out in the numbered paragraphs (not bold) in the attached table,
which forms part of our report, together with our findings thereon.
Unless otherwise indicated, all balances, lists, schedules etc.
referred to in the table relate to the accounts/balances reflected
in the annual financial statements of the Fund for the period ended
31 August 2014. Because the procedures do not constitute an audit,
a review or other assurance engagement performed in accordance with
the IAASB’s International Standards we do not express any
assurance. Had we performed additional procedures, or had we
performed an audit, a review, or other assurance engagement, other
matters might have come to our attention that would have been
reported. Restriction on use and distribution Our report is solely
for the purpose set out in the first paragraph of this report and
for the information of the Registrar and accordingly may not be
suitable for any other purpose and distributed to other parties.
This report relates only to the information specified and does not
extend to the annual financial statements of the Fund taken as a
whole.
Per: MI Lockhat
Director
23/02/2015
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SCHEDULE I (Continued)
Procedures Findings
Statement of Net Assets and Funds
1 Investments
1.1 Inspect the list of investment balances reflected in the
general ledger of the Fund as at 31 August 2014 for any investments
in accordance with the terms of section 19(4) of the Act.
1.1.1 Agree details of the written confirmations obtained from
the investment managers/insurers to the investment balances
reflected in the general ledger.
Details of the written confirmations obtained from the
investment managers/issuers agreed to the investment balances
reflected in the general ledger.
1.1.2 Where investments held in the participating employer
exceed 5% of the total assets as reflected in the financial
statements, inspect the appropriate approval of the Registrar.
Not applicable, as the Fund does not have investments in the
participating employer.
1.2 Obtain the signed investment policy statement and, where
applicable, the portfolio management agreement/investment mandate
between the Fund and the investment administrator(s), and perform
the following procedures on a sample of10 mandates (comprising the
3 largest by value of investments at year end and 7 other randomly
selected mandates):
1.2.1 Inspect whether the underlying investments are in
compliance with the signed investment policy statement and, where
applicable, the portfolio management agreement/investment
mandate.
The underlying investments were in compliance with the signed
investment policy statement and, where applicable, the portfolio
management agreement/investment mandate.
1.2.2 Inspect whether the investment mandate and the investment
policy statement provide for securities lending transactions and
investments in hedge funds, private equity funds and derivatives,
as prescribed.
The investment mandate and the investment policy statement did
not provide for securities lending transactions and investments in
hedge funds, private equity funds and derivatives, as
prescribed.
1.2.3 Inspect whether the collateral and counterparty
requirements as prescribed are complied with.
Not applicable.
1.2.4 For segregated portfolios, confirm directly with the
investment administrator(s):
(a) whether scrip lending took place during the [period/year]
and, if so,
(b) whether there was collateral provided by the
counterparty/(ies) for any scrip lending activities and, if so,
(c) the percentage exposure covered by the collateral.
Report on the amount for a).
Not applicable, as the fund had no segregated portfolios.
2 Member individual accounts (defined contributions funds as
well as defined contribution section of hybrid funds)
2.1 Obtain a list of member individual accounts per
participating employer that agrees in total to the Statement of Net
Assets and Funds as at 31 August 2014.
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Procedures Findings
2.2 Select a random sample of the lesser of 50 or 10% of the
number of members (from participating employers selected in 8.1
below) from the list of members and perform the following
procedures:
Not applicable, as no contributions were received throughout the
period under review.
2.2.1 Compare the member and employer contributions received and
allocated for the members selected as reflected on the
administrator’s system, to information supplied by the
participating employers for those members selected, for a randomly
selected period of three months (including the last month of the
[period/year] under review).
Not applicable.
2.2.2 Compare the member and employer contribution rates for the
members selected as reflected on the administrator’s system, to the
rules of the Fund, for a randomly selected period of three months
(including the last month of the [period/year] under review).
Not applicable.
2.2.3 In respect of unitised investment products, for the three
months selected in 2.2.1 and 2.2.2, calculate the conversion of the
contributions at the unit price per the administration system on
the dates that the contributions were invested and compare the
units recalculated to the administration system units for the
selected members. Inspect that the units were added to the existing
units for that member.
Not applicable.
2.2.4 In respect of unitised investment products, calculate the
conversion of units at the end of the [period/year], at the
[period/year-end] unit price per the administration system and
agree the calculated amount to the member’s fund credit amount
recorded in each member's record.
The conversion of the units at period end was calculated
correctly at the period unit price per administration system and
agreed to the member’s fund credit amount recorded in each member's
record.
2.2.5 In respect of unitised investment products, compare the
unit price(s) as per investment manager/actuary/other authorised
party at the period-end to the unit prices on the administration
system used to calculate each member‘s credits at 31 August
2014..
The unit price(s) agreed to the unit prices on the
administration system as per investment manager used to calculate
each member’s credit at 31 August 2014.
2.2.6 In respect of non-unitised investment products, compare
the interim and/or final return allocated to each individual
member's account in the administrator's records for the
[period/year] under review to the return approved in accordance
with a resolution of the Board of Fund or the rules of the Fund or
approved recommendation by the investment consultant/asset
manager/fund valuator.
Not applicable.
2.3 Obtain a list of members who switched investment portfolios
during the [period/year] from the Fund/administrator, select a
random sample of the lesser of 50 or 10% of members who switched
between investment portfolios during the [period/year], and perform
the following procedures:
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Procedures Findings
2.3.1 Inspect evidence that the portfolios were switched in
accordance with notification of the member’s instruction/
investment strategy (including life stage models) of the Fund and
within a timeframe as specified in the service level agreement or
client mandate between the administrator and the Fund.
The portfolios were switched in accordance with notification of
the member’s instruction/investment strategy (including life stage
models) of the Fund and were switched within the timeframe as
specified in the service level agreement or client mandate between
the administrator and the Fund.
2.3.2 Inquire as to whether any fees relating to switches were
deducted, and if so, inspect evidence of the approval by the Board
of Fund and/or in terms of a service level agreement or client
mandate.
Fees were deducted in terms of the client mandate and Board
approval.
2.4 For investment products obtain the Asset Liability Match
(ALM) reconciliation per investment portfolio, excluding the
reserve accounts, for member individual accounts from the
administrator, and perform the following procedures:
2.4.1 Compare the investments per product on the ALM
reconciliation to the investment certificates in total.
The investments per product on the ALM reconciled agreed to the
investment certificates in total.
2.4.2 Compare the member individual accounts on the ALM
reconciliation per investment portfolio to the administration
system and to the total member individual accounts as disclosed in
the Statement of Net Assets and Funds.
The values of investments specified by the members investment
choice did not agree to the members liabilities per product for
that choice and reconciling items amounting to (R 4 226 513) were
noted.
2.4.3 Inspect whether the total mismatch (in Rand) for all
portfolios was within the range as prescribed by the Registrar.
The total mismatch for all portfolios was within the range as
prescribed by the Registrar.
3 Accumulated funds (for defined benefit funds as well as
defined benefit sections of hybrid funds)
3.1 Select a sample of the lesser of 50 or 10% of the number of
members from the list of members provided by the administrator and
perform the following procedures for each member selected:
Not applicable, as this a defined contribution fund.
3.1.1 Compare the member contributions received and allocated
for the members selected as reflected on the administrator’s
system, to information supplied by the participating employers for
those members selected, for a randomly selected period of three
months (including the last month of the [period/year] under
review).
Not applicable.
4 Surplus apportionment scheme
4.1 If a surplus apportionment scheme was approved by the
Registrar in the current [period/year] or if allocation and/or
payments to members were made during the [period/year], perform the
following procedures:
The fund had no surplus apportionment scheme.
4.1.1 Active members: Select a random sample of the lesser of 50
or 10% of number of active members to whom surplus has been
apportioned in the approved surplus apportionment scheme and
perform the following procedures:
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Procedures Findings
4.1.1.1 Agree the original surplus amount allocated to the
selected member to the individual allocation on the member records
per the administration system.
Not applicable.
4.1.1.2 Inspect whether the calculation of the relevant
investment return from surplus apportionment date to date of
allocation was in accordance with the requirements of the Act and
allocated to the member records in the administration system.
Not applicable.
4.1.2 Former members and pensioners: Select a random sample of
the lesser of 50 or 10% of number of former members and pensioners
as defined by the surplus apportionment scheme from the surplus
schedules attached to the approved surplus apportionment scheme and
perform the following procedures:
4.1.2.1 Agree the original surplus amount allocated to the
selected member and/or pensioner to the individual allocation on
the member records per the administration system.
Not applicable.
4.1.2.2 Inspect whether the calculation of the relevant
investment return from surplus apportionment date to date of
allocation was in accordance with the requirements of the Pension
Funds Act and allocated to the member records in the administration
system.
Not applicable.
4.1.2.3 Agree the total of the amount calculated in 4.1.2.1 and
4.1.2.2 to the surplus benefit paid per selected member and to the
applicable amount per the administration system and other
authorised supporting documentation.
Not applicable.
5 Member and employer surplus accounts
5.1 Obtain the analysis of the transactions in the member and/or
employer surplus account per the annual financial statements, and
perform the following procedure:
Not applicable, as the fund has no surplus accounts.
5.1.1 Inspect that the transactions are permitted in terms of
the registered rules of the Fund and/or the Act.
Not applicable.
6 Reserves
6.1 Obtain the list of reserves and other related accounts (e.g.
pensioner accounts) and the movements per the financial statements
and/or in the actuarial valuation, and perform the following
procedures:
Not applicable, as the fund has no reserve accounts.
6.1.1 Inspect whether the reserve and other related accounts
(e.g. pensioner accounts) held by the Fund and/or reflected in the
actuarial valuation are in accordance with the registered rules of
the Fund.
Not applicable.
6.1.2 Inspect that the movements in reserves as disclosed in the
annual financial statements are permitted in terms of the
registered rules of the Fund and/or the Act.
Not applicable.
7 Other assets, liabilities and guarantees
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Procedures Findings
7.1
Obtain the list of housing loans granted to members by the Fund
in terms of section 19(5) of the Act as at 31 August 2014, and
perform the following procedure:
The Fund does not grant direct housing loans.
7.1.1 Agree the total loans on the above list to the
corresponding account in the annual financial statements.
Not applicable.
7.2 From the list in 7.1, randomly select a sample of the lesser
of 50 or 10% of the number of members’ housing loans granted and
perform the following procedures:
Not applicable.
7.2.1 Inspect evidence that the value of the loan provided does
not exceed the amount permitted by the rules and the home loan
agreement.
Not applicable.
7.2.2 Inspect evidence that the loan has been granted in terms
of Section 19(5) (a).
Not applicable.
7.2.3 Inspect evidence that repayments are being made in
accordance with the loan agreement.
Not applicable.
7.2.4 Inspect the interest charged on the outstanding loan and
compare the rate used to the prescribed rate.
Not applicable.
7.2.5 If the Fund issued more than 100 loans or the total
principal debt of all outstanding loans exceeded R500 000, inquire
whether the Fund was registered as a credit provider under the
National Credit Act, 2005 (the NCA).
Not applicable.
7.3 Obtain the list of housing loan guarantees and select a
sample of the lesser of 50 or 10% of the number of housing loan
guarantees and perform the following procedures:
7.3.1 For the sample selected, determine that each selected
guarantee did not exceed the gross value of the benefit that the
member would become entitled to had they withdrawn, as at the
period end, in terms of the Act, the loan agreement and/or the
rules of the Fund.
For the sample selected, the guarantees did not exceed the gross
value of the benefit that the member would become entitled to had
they withdrawn, as at 31 August 2014, in terms of the Act, the loan
agreement and/or the rules of the Fund.
7.3.2 Inspect evidence that the guarantee has been granted in
terms of Section 19(5) (a).
The guarantee had been granted in terms of Section 19(5)
(a).
7.4 Obtain a list of other loans per the general ledger of the
Fund as at 31 August 2014 and perform the following procedure:
7.4.1 Confirm that no loans were granted and/or investments made
as prohibited in terms of section 19(5)B.
The Fund does not grant other loans.
Statement of Changes in Net Assets and Funds
8 Contributions
8.1 Select a sample of the lesser of 50 or 10% of the number of
participating employers or pay points (whichever is the lower) from
a list of participating employer/pay-points supplied by the
Fund/administrator, select three months and perform the following
procedures:
Not applicable, as no contributions were received throughout the
period under review.
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Procedures Findings
8.1.1 Compare, in total, the contributions received by or on
behalf of the Fund to the remittance advices from the participating
employer/pay-point.
Not applicable.
8.1.2 Inspect the bank statements for the date on which the cash
was received to determine whether the contributions were deposited
with a registered bank in accordance with section 13A of the Act
and whether late payment interest has been raised in terms of
regulation 33, where applicable.
Not applicable.
8.2 Select a sample of the lesser of 50 or 10% of the number of
participating employers or pay points which reflect arrear
contributions (whichever is the lower) at [period/year-end] from a
list supplied by the Fund/administrator and perform the following
procedure:
Not applicable.
8.2.1 Inspect the accounting records of the Fund to determine
whether amounts disclosed as arrear contributions at
[period/year-end] have been paid to the Fund within the prescribed
period in accordance with the requirements of section 13A of the
Act. Where the amounts were received after the prescribed period,
report the date of receipt and where they were not received,
indicate as such.
There were no arrear contributions as at 31 August 2014.
9 Benefits
9.1 Obtain a list from the administration system of lump sum
benefits reflected as expenses in the Fund’s Statement of Changes
in Net Assets and Funds for the year under review and perform the
following procedure:
9.1.1 Compare the list to the respective general ledger benefit
expense accounts reconciliation.
The list agreed to the respective general ledger benefit expense
accounts reconciliation.
9.2 Select a sample of the lesser of 50 benefits or 10% of the
total number of benefits from the list and perform the following
procedures:
9.2.1 Compare the benefit per selected member to the
administration system and authorised supporting documentation in
accordance with the procedures of the Fund.
The benefit per selected member agreed to the administration
system and authorised supporting documentation in accordance with
the procedures of the Fund.
9.2.2 For death benefits, where a portion of the benefit had
been reinsured by the Fund, inspect a bank deposit or an accrual
raised for the recovery from the insurer.
Not applicable, as no re-insurance proceeds were received or
accrued during the period under review.
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Procedures Findings
9.2.3 For a defined benefit fund and hybrid funds with a defined
benefit underpin Inspect that the calculation of the benefit
payment was done by the actuary in accordance with the requirements
of the rules of the Fund and/or the Act. For a defined contribution
fund Agree the opening fund credit for the member to the opening
fund credit report and determine whether contributions were added
every month until the date of exit (either by Rand amount or in the
case of unitised funds, by units). Agree the balance paid out to
the member (inclusive of late payment interest where applicable) to
the fund credit report or administration system as at the date of
exit.
The opening fund credit for the member agreed to the opening
fund credit report and contributions were added every month until
the date of exit. The balance paid out to the member (inclusive of
late payment interest where applicable) agreed to the fund credit
report or administration system as at the date of exit.
9.3 Obtain a list of all benefits not yet paid at
[period/year-end], select a sample of the lesser of 50 benefits or
10% of the total number of benefits from the list and perform the
following procedure:
9.3.1 Agree whether the benefits that are older than the period
as set out in the Act or a shorter period defined by the Rules are
classified as unclaimed benefits.
The benefits that were older than the period as set out in the
Act or a shorter period defined by the Rules were not classified as
unclaimed benefits, but have been included in the closing fund
credits until the claims are settled.
10 Transfers
10.1 Compare the list of total section 14 transfers to and from
the Fund to the corresponding accounts in the general ledger.
There were no section 14 transfers to and from the Fund
throughout the period under review.
10.2 From the list of section 14 transfers paid/received and
accrued to and from the Fund throughout the [period/year] select a
sample of the lesser of 50 or 10% of the number of transfers in and
the lesser of 50 or 10% of the number of transfers out, and perform
the following procedures:
Not applicable.
10.2.1 Agree the sample of section 14 transfers to and from the
Fund to: a) the section 14(1) documentation as
approved by the Registrar in respect of each transfer;
and/or
b) the section 14(8) documentation as prescribed.
Not applicable.
10.2.2 Inspect whether the transfers to and from the Fund were
received/paid within 60 days of Registrar approval for section
14(1) transfers and 180 days from application date for section
14(8) transfers and whether the growth and investment return had
been allocated from the effective date of the transfer to the date
of final settlement.
Not applicable.
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Procedures Findings
10.2.3 In respect of unitised funds, select a sample of the
lesser of 50 or 10% of the number of members transferred from other
funds and recalculate the purchase of units for the amount received
using the unit price per the administration system on the date of
receipt. (Where units were purchased after date of receipt,
investment return was added from the date of receipt to the date of
purchase).
Not applicable.
10.3 Individual transfers Obtain the list of individual
transfers throughout the [period/year] ended 31 August 2014, select
a sample of the lesser of 50 or 10% of the number of individual
transfers, and perform the following procedures:
There were on individual transfers to and from the fund
throughout the period under review.
10.3.1 Agree the transfers to the approved recognition of
transfer documentation.
Not applicable.
10.3.2 For individual transfers in selected In respect of
unitised funds, recalculate the purchase of units for the amount
received using the unit price per the administration system on the
date of receipt. (Where units were purchased after date of receipt
investment return was added from the date of receipt to the date of
purchase).
Not applicable.
11 Pensioners paid
11.1 Obtain a copy of the list of pensioners and amounts paid
for the [period/year] from the administration system and/or, for
outsourced pensioners, confirmation from the insurer and perform
the following procedure:
Not applicable, as the Fund does not have pensioners.
11.1.1 Agree the total pensions paid for the [period/year] ended
31 August 2014 to the corresponding account reconciliation to the
general ledger balance.
Not applicable.
11.2 Select a sample of the lesser of 50 or 10% of the number of
pensioners paid directly from the fund from the above list and
perform the following procedures:
Not applicable.
11.2.1 Inspect the pensioner increases for authorisation by the
Board of Fund.
Not applicable.
11.2.2 Inspect evidence obtained by the administrator/Fund
supporting the fact that the pensioners selected exist.
Not applicable.
11.3 Where the Fund has purchased an annuity in the name of the
Fund, obtain a written confirmation from the annuity provider
summarising movements from opening market value to closing market
value and perform the following procedures:
Not applicable.
11.3.1 Agree the closing market value of the annuity to the
annual financial statements.
Not applicable.
11.3.2 Agree the pensioner payment per the confirmation from the
insurer to the pensions paid disclosed in the notes to the annual
financial statements.
Not applicable.
General
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ABACUS UMBRELLA PENSION FUND
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Procedures Findings
12.1 Inspect evidence that the Fund’s fidelity insurance cover
was in place throughout the [period/year] ended 31 August 2014,
that the Fund’s fidelity insurance cover extends after
[period/year-end] and report the date to which the subsequent
fidelity insurance cover extends.
The Fund’s fidelity insurance cover was in place throughout the
period ended 31 August 2014, and the Fund’s fidelity insurance
cover extended after period-end. The subsequent fidelity insurance
cover extended to 31 May 2015.
12.2 Confirm with the Fund’s GLA insurer as to whether the GLA
policy has lapsed at period ended 31 August 2014.
Not applicable, as there is no risk premiums payable as at 31
August 2014.
12.3 Obtain the most recent statutory valuation signed and
submitted by the valuator as at 31 August 2013 and perform the
following procedures:
12.3.1 Report the funding status of the Fund per the report
(whether the Fund was under-funded or fully funded).
Per the report the Fund was fully funded.
12.3.2 Where the Fund is under-funded, obtain evidence as to
whether a scheme, as required in terms of section 18 of the Act in
South Africa, has been approved by the Registrar.
Not applicable.
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ABACUS UMBRELLA PENSION FUND
Page 33 of 39
SCHEDULE IA – INVESTMENT SCHEDULE As at 31/08/2014 INVESTMENT
SCHEDULE PERTAINING TO ANNUAL FINANCIAL STATEMENTS
InvestmentIA
Investments
Notes
Direct Investments
Compliant Investments
Total Local Total
Foreign
Total % foreig
n
TOTAL as per Regulation 28
R R R R R % R
Cash A 1,257,210 0 1,257,210 1,257,210 0 0 1,257,210
Insurance Policies :
0 148,164,754 148,164,754 113,243,090 34,921,664 23.57
148,164,754
- Linked Policies L 0 148,164,754 148,164,754 113,243,090
34,921,664 23.57 148,164,754
TOTAL INVESTMENTS
1,257,210 148,164,754 149,421,964 114,500,300 34,921,664 23.37
149,421,964
A CASH
Instrument Fair value Previous Period
R R
Local
Notes and coins, any balance or deposit in an account held with
a South African bank List issuers/entities which exceeds 5% of
total assets
Standard Bank of SA Ltd 1,257,210 1,088,581
TOTAL CASH 1,257,210 1,088,581
L CERTIFIED REGULATION 28 COMPLIANT INVESTMENTS
Instrument Local or Foreign
Fair value Previous Period R
Collective Invest Schemes – reg28(8)(b)(i) 0 0 118,371
Local 0 0 118,371
List issuers/entities which exceeds 5% of total assets
0 0
Coronation (Other) 0 0 67,409
Fraters (Other) 0 0 50,962
Instrument Local or Foreign
Fair value Previous Period R
Linked Policies – reg28(8)(b)(ii) 148,164,754 148,164,754
151,986,825
Local 148,164,754 148,164,754 151,986,825
List issuers/entities which exceeds 5% of total assets
148,164,754 148,164,754 151,986,825
Momentum High Equity 76,965,789 76,965,789 73,387,640
Momentum Low Equity 18,043,604 18,043,604 18,516,676
Momentum Medium Equity 37,204,239 37,204,239 38,848,918
Momentum Pre-Retirement 15,951,122 15,951,122 21,233,591
P RECONCILIATION BETWEEN THE INVESTMENTS IN SCHEDULE H2 AND
SCHEDULE IA
Cash at bank Compliant investments Total
Cash 1,257,210 1,257,210
Insurance Policies 148,164,754 148,164,754
TOTAL INVESTMENTS 1,257,210 148,164,754 149,421,964
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ABACUS UMBRELLA PENSION FUND
Page 34 of 39
SCHEDULE IB
ASSETS HELD IN COMPLIANCE WITH REGULATION 28 As at
31/08/2014
Fair value R A Total assets (Schedule IA -Total investments)
149,421,964 B1 Less: Reg 28 compliant investments
(certificate received from issuing entity):- 0
B.1.1 Collective Investment Schemes (Reg 28(8)(b)(i)) 0 B.1.2
Linked Policies (Reg 28(8)(b)(ii)) 0 B.1.3 Non-Linked policies (Reg
28(8)(b)(iii)) 0 B.1.4 Entity regulated by FSB (Reg 28(8)(b)(iv))
0
B2 Less: Reg 28 Excluded investments 0
B.2.1 Insurance Policies ( Reg 28(3)(c)) 0
C Less: Investments not disclosed /data not available for
disclosure [Refer
Schedule IAN] 0
D TOTAL ASSETS for REGULATION 28 DISCLOSURE 149,421,964
1
CASH
100%
18,981,176 12.71%
1.1
Notes, deposits, money market instruments issued by a South
African Bank, margin accounts, settlement accounts with an exchange
and Islamic liquidity management financial instruments
100%
18,574,455 12.44%
(a)
Notes and coins, any balance or deposit in an account held with
a South African bank
25% 18,553,827 12.43%
(b) A money market instrument issued by a South African bank
including an Islamic liquidity management financial instrument
25% 20,628 0.01%
1.2
Balances or deposits, money market instruments issued by a
foreign bank including Islamic liquidity management financial
instruments
406,721 0.27%
(a)
Any balance or deposit held with a foreign bank
5%
406,721 0.27%
2
DEBT INSTRUMENTS INCLUDING ISLAMIC DEBT INSTRUMENTS
25,386,958 16.99%
2.1
Inside the Republic
100%
20,865,341 13.96%
(a)
Debt instruments issued by, and loans to, the government of the
Republic, and any debt or loan guaranteed by the Republic
11,728,503 7.85%
(c)
Debt instruments issued or guaranteed by a South African Bank
against its balance sheet:-
75%
5,197,862 3.48%
(c)(i)
Listed on an exchange with an issue market capitalisation of R20
billion or more,
75% 25% 4,733,875 3.17%
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE IB (Continue)
ASSETS HELD IN COMPLIANCE WITH REGULATION 28 As at
31/08/2014
(c)(ii)
Listed on an exchange with an issuer market capitalisation of
between R2 billion and R20 billion, or an amount or conditions as
prescribed
75% 15% 152,089 0.10%
(c)(iv)
not listed on an exchange 25% 5% 311,898 0.21%
(d)
Debt instruments issued or guaranteed by an entity that has
equity listed on an exchange, or debt instruments issued or
guaranteed by a public entity under the Public Finance Management
Act, 1999 (Act No. 1 of 1999) as prescribed:-
50%
3,305,652 2.21%
(d)(i)
Listed on an exchange 50% 10% 3,290,829 2.20%
(d)(ii)
Not listed on an exchange 25% 5% 14,823 0.01%
(e)
Other debt instruments:- 25%
633,324 0.42%
(e)(i)
Listed on an exchange 25% 5% 462,609 0.31% (e)(ii)
Not listed on an exchange 15% 5% 170,715 0.11%
2.2
Foreign
4,521,617 3.03%
(b)
Debt instruments issued or guaranteed by the government of a
foreign country
3,581,538 2.40%
(c)
Debt instruments issued or guaranteed by a South African Bank
against its balance sheet:-
727,187 0.49%
(c)(i)
Listed on an exchange with an issue market capitalisation of R20
billion or more, or an amount of conditions as prescribed
645,838 0.43%
(c)(iv)
Not listed on an exchange
81,349 0.05%
(d)
Debt instruments issued or guaranteed by an entity that has
equity listed on an exchange, or debt instruments issued or
guaranteed by a public entity under the Public Finance Management
Act, 1999 (Act No. 1 of 1999) as prescribed:-
71,600 0.05%
(d)(i)
Listed on an exchange
45,109 0.03% (d)(ii)
not listed on an exchange
26,491 0.02%
(e)
Other debt instruments
141,292 0.09%
(e)(i)
Listed on an exchange
62,855 0.04% (e)(ii)
not listed on an exchange
78,437 0.05%
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ABACUS UMBRELLA PENSION FUND
Page 36 of 39
SCHEDULE IB (Continue)
ASSETS HELD IN COMPLIANCE WITH REGULATION 28 As at
31/08/2014
3
EQUITIES
88,611,798 59.30%
3.1
Inside the Republic
75%
58,794,570 39.35%
(a)
Preference and ordinary shares in companies, excluding shares in
property companies:-
75%
58,694,242 39.28%
(a)(i)
Issuer market capitalisation of R20 billion or more, or an
amount or conditions as prescribed
75% 15%
48,983,688 32.78%
(a)(ii)
Issuer market capitalisation of between R2 billion and R20
billion
75% 10%
9,033,662 6.05%
(a)(iii)
Issuer market capitalisation of less than R2 billion,
75% 5%
676,892 0.45%
(b)
Preference and ordinary shares in companies, excluding shares in
property companies, not listed on an exchange
10% 2.5% 100,328 0.07%
3.2
The Rest of the World (excluding Africa)
SARB
29,817,228 19.96%
(a)
Preference and ordinary shares in companies, excluding shares in
property companies:-
75%
29,716,733 19.89%
(a)(i)
Issuer market capitalisation of R20 billion or more, or an
amount or conditions as prescribed
SARB 15%
23,688,059 15.85%
(a)(ii)
Issuer market capitalisation of between R2 billion and R20
billion
SARB 10%
238,210 0.16%
(a)(iii)
Issuer market capitalisation of less than R2 billion,
SARB 5%
5,790,464 3.88%
(b)
Preference and ordinary shares in companies, excluding shares in
property companies, not listed on an exchange
10% 2.5% 100,495 0.07%
4
IMMOVABLE PROPERTY
9,643,558 6.45%
4.1
Inside the Republic
25%
9,467,460 6.34%%
(a)
Preference shares, ordinary shares and linked units comprising
shares linked to debentures in property companies, or units in a
Collective Investment Scheme in Property, listed on an exchange
25%
9,464,814 6.33%
(a)(i)
Issuer market capitalisation of R10 billion or more, or an
amount or conditions as prescribed
25% 15% 6,173,417 4.13%
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ABACUS UMBRELLA PENSION FUND
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SCHEDULE IB (Continue)
ASSETS HELD IN COMPLIANCE WITH REGULATION 28 As at 31/08/2014
(a)(ii)
Issuer market capitalisation of between R3 billion and R10
billion, or an amount or conditions as prescribed
25% 10% 2,827,327 1.89%
(a)(iii)
Issuer market capitalisation of less than R3 billion or an
amount or conditions as prescribed
25% 5% 464,070 0.31%
(b)
Immovable property, preference and ordinary shares in property
companies, and linked unis comprising shares linked to debentures
in property companies, not listed on an exchange
2,646 0.00%
4.2
Foreign 25%
176,098 0.12%
(a)
Preference shares, ordinary shares and linked units comprising
shares linked to debentures in property companies, or units in a
Collective Investment Scheme in Property, listed on an exchange
25%
171,995 0.12%
(a)(i)
Issuer market capitalisation of R10 billion or more, or an
amount or conditions as prescribed
25% 15% 158,065 0.11%
(a)(iii)
Issuer market capitalisation of less than R3 billion or an
amount or conditions as prescribed
25% 5% 13,930 0.01%
(b)
Immovable property, preference and ordinary shares in property
companies, and linked units comprising shares linked to debentures
in property companies, not listed on an exchange
15% 5% 4,103 0.00%
5
COMMODITIES
10%
6,798,474 4.55%
5.1
Inside the Republic
10%
6,798,474 4.55%
(a)
Kruger Rands and other commodities on an exchange, including
exchange traded commodities
10%
6,798,474 4.55%
(a)(i)
Gold (including Kruger Rands) 10%
6,798,474 4.55%
TOTAL (equal to the fair value of assets) 149,421,964 100%
o O – O o End of Reg28
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ABACUS UMBRELLA PENSION FUND
Page 38 of 39
SCHEDULE IB – CONTINUED ASSETS HELD IN COMPLIANCE WITH
REGULATION 28
As at 31/08/2014 INVESTMENT SUMMARY (REGULATION 28)
Local % of Fair
value
Foreign (Excluding
Africa) % of Fair value Total
% of Fair
value
R % R % R %
1
Balances or deposits, money market instruments issued by a bank
including Islamic liquidity management financial instruments
18,574,455 12.43% 406,721 0.27% 18,981,176 12.71%
2 Debt instruments including Islamic debt instruments
20,865,341 13.96% 4,521,617 3.03% 25,386,958 16.99%
3 Equities 58,794,570 39.35% 29,817,228 19.96% 88,611,798
59.30%
4 Immovable property 9,467,460 6.34% 176,098 0.12% 9,643,558
6.45%
5 Commodities 6,798,474 4.55% 0 0.00% 6,798,474 4.55%
TOTAL 114,500,300 76.63% 34,921,664 23.38% 149,421,964 100.%
BREACHES IN TERMS OF SUB REGULATION 3 OF REGULATION 28
Total (Inside &
Foreign) Percentage of
Fair value Regulation
28 limits
R %
Asset Limits in terms of sub regulation 3(f)
Other debt instruments not listed 249,152 0.17%
Equities not listed 200,823 0.13%
Immovable properties not listed 6,749 0.00%
TOTAL 456,724 0.30% 35%
Asset Limits in terms of sub regulation 3(g)
Equities not listed 200,823 0.13%
TOTAL 200,823 0.13% 15%
Asset Limits in terms of sub-regulation 3(h)
Cash and deposits with a South African Bank 18,553,827
12.42%
Debt instruments guaranteed by a South African Bank
5,197,862 3.48%
TOTAL 23,751,689 15.90% 25%
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ABACUS UMBRELLA PENSION FUND
Page 39 of 39
SCHEDULE IB – INDEPENDENT AUDITOR’S REPORT ON ASSETS HELD IN
COMPLIANCE WITH REGULATION 28 TO THE BOARD OF ABACUS UMBRELLA
PENSION FUND We have audited Schedule IB “Assets held in compliance
with Regulation 28” of Abacus Umbrella Pension Fund (the Fund) at
31 August 2014 (the Schedule) for compliance with the requirements
of Regulation 28 of the Pension Funds Act of South Africa (the
Regulation), as set out on pages 34 to 38. Our engagement arises
from our appointment as auditor of the Fund and is for the purpose
of assisting the Board of Fund to report to the Registrar of
Pension Funds (the ‘Registrar’). The information contained in
Schedule IB has been extracted from the Fund’s underlying
accounting records that were the subject of our audit engagement on
the annual financial statements and forms the subject matter of
this engagement. Our audit of the annual financial statements of
the Abacus Umbrella Pension Fund for the year ended 31 August 2014
was conducted in accordance with International Standards on
Auditing and in our report of 23 February 2015 we expressed an
unmodified opinion on the financial statements, prepared, in all
material respects, with the Regulatory Reporting Requirements for
Retirement Funds in South Africa.
The Board of Fund’s Responsibility for the Schedule
The Board of Fund is responsible for the preparation of the
Schedule in accordance with the Regulatory Reporting Requirements
for Retirement Funds in South Africa and in compliance with the
Regulation, and for such internal control as the Board of Fund
determines is necessary to enable the preparation of the Schedule
that is free from material misstatements, whether due to fraud or
error. Auditor’s Responsibility
Our responsibility is to express an opinion based on our audit
of the Schedule. We conducted our audit in accordance with
International Standards on Auditing. Those standards require that
we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the Schedule is free
from material misstatement. An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the
Schedule. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of
the Schedule, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
entity’s preparation of the Schedule in order to design audit
procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for
our audit opinion. Opinion In our opinion, Schedule IB “Assets held
in compliance with Regulation 28” at 31 August 2014 by Abacus
Umbrella Pension Fund has been prepared in all material respects in
accordance with the Regulatory Reporting Requirements for
Retirement Funds in South Africa and in compliance with the
Regulation. Restriction on Use