Annex B

Scope of Audit on Annual Accounts and Report on Internal Controls

Audit of Annual Accounts

1. The auditor will be required to opine as to whether :
   1. The financial statements show a true and fair view of the financial transactions of the scheme during the year and of the disposition, at the last day of the year, of its assets and liabilities.

   2. The financial statements comply with the accounting and disclosure requirements of the MPF legislation.

   3. Proper books and records have been kept as regards all assets, liabilities and financial transactions of the scheme.

   4. The assets of the scheme are subject to any charge, pledge, lien, mortgage or other encumbrance as at the end of the financial period.

   5. The requirements in respect of forbidden investment practices, as defined in the MPF legislation have been complied with.

2. The auditor should also qualify in his audit report where :
   1. He has been denied access to the books and records of the scheme whether in the custody of the trustee or another party.

   2. He has not been given necessary information and explanations for the purposes of his audit.

Audit of Report on Internal Controls

1. The auditor will be required to opine as to whether :
   1. The report describes fairly, in all material respects, the internal controls and procedures in place.

   2. The internal controls and procedures as described in the report are suitably designed to provide reasonable assurance that the specified control objectives would be achieved if the described policies and procedures were complied with satisfactorily.

   3. The policies and procedures as described in the report are operating with sufficient effectiveness to provide reasonable assurance that the related control objectives were achieved.

   4. In the course of his review of the internal controls and procedures, he became aware of any control weaknesses which could potentially affect the financial position of MPF schemes under the trusteeship of the trustee to a material extent.