BullionVault

Report on BullionVault’s DAILY AUDIT

Dated: 1 March 2021

Contents

Report by the Directors

The control objective of the Daily Audit

The control procedure of the Daily Audit

Reporting Accountants’ report on the ‘Daily Audit’ procedure

Description of work performed by Reporting Accountants

Independent Inspection and Audit Reports (PDF Downloads) (You will need Adobe Reader to open the Documents)


Report by the Directors

Definitions

Brink’s means Brink’s Global Services Ltd.

BullionVault means the service offered by Galmarley Ltd through website domains under BullionVault.com, and potentially other websites, whereby BullionVault Customers are able to buy, own, store and sell gold or silver bullion.

BullionVault Clients Ltd means company 08672704 registered in England and Wales.

BullionVault Customers means customers of Galmarley Ltd who have an account at BullionVault held open under the prevailing Terms and Conditions of the BullionVault service.

Galmarley Ltd means company 04943684 registered in England and Wales.

Lloyds means Lloyds Bank plc.

Loomis means Loomis International (UK) Limited.

Malca-Amit means Malca-Amit Global Limited.

Owners means both Galmarley itself and all BullionVault Customers who own gold or silver through the BullionVault service.

Wells Fargo means Wells Fargo Bank N.A.

Responsibilities of Directors

As the Directors of Galmarley Ltd we are responsible for the identification of control objectives relating to customer property and related transactions in the provision of custody services and the design, implementation and maintenance of control procedures to provide reasonable assurance on an ongoing basis that the control objectives are achieved.

We set out in this report a description of the control procedure known as the DAILY AUDIT on the BullionVault website – which operated during the period 1-November-2019 to 31-October-2020.

We confirm that

  1. the report specifies the control objective of the DAILY AUDIT
  2. the report describes fairly the control procedures of the DAILY AUDIT
  3. the control procedures described were operating with sufficient effectiveness to provide reasonable assurance that the related control objective of the DAILY AUDIT was achieved during the specified period.

PAUL TUSTAIN

For and on behalf of the Board of Directors

Dated:    1 March 2021

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The Daily Audit

The control objective of the Daily Audit

The control objective of the DAILY AUDIT is to verify the aggregate of customer-by-customer property records within BullionVault to third party documents.

The third party documents are provided by Loomis, Brink’s and Malca-Amit, who hold BullionVault Customers’ gold, silver and platinum, and Lloyds and Wells Fargo, who hold BullionVault Customers’ money.

The control procedure of the Daily Audit

Loomis, Brink’s and Malca-Amit provide bar lists which detail the gold, silver and platinum bullion held on behalf of BullionVault.  These are re-issued the day after any change in the amount of gold or silver stored.

Similarly Lloyds and Wells Fargo provide daily end-of-day bank statements with regard to BullionVault Customer money.

BullionVault maintains all the customer-by-customer records of gold, silver, platinum and money ownership.  These are modified by trading activity.  At all times the BullionVault accounting records should be in a position where the total amount of Owners’ gold equates exactly to the sum of gold on the Loomis, Brink’s and Malca-Almit’s bar lists, the total amount of Owners’ silver equates exactly to the sum of silver on the Loomis and Brink’s bar lists, the total amount of Owners’ platinum equates exactly to the sum of platinum on the Loomis bar lists, and the total amount of Owners’ money equates exactly to the sum of money on the bank statements for the customer segregated bank accounts.

The DAILY AUDIT procedure verifies this and posts the result on-line for public inspection.  However it disguises the identity of individual BullionVault Customers by listing their holdings of gold, silver, platinum and money against an alias, which is known only to BullionVault and the customer.

The DAILY AUDIT produces three important elements of verification:-

  1. It shows that the total of the BullionVault customer records match exactly to the balance evidenced by the statements or bar lists.
  2. It shows that the customer records contain no negative holdings.
  3. It shows that each individual customer’s records are included in the BullionVault records and form part of the totals.

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Reporting Accountants’ report on the ‘Daily Audit’ procedure

To the Directors of Galmarley Limited

This report is made solely for use of the Directors of Galmarley Ltd, and solely for the purpose of reporting on the procedure known as the ‘Daily Audit’ as described in your report on page 1, in accordance with the terms of our engagement letter dated 9 October 2020.

Our work has been undertaken so that we might report to the Directors those matters that we have agreed to state to them in this report and for no other purpose.  Our report must not be recited or referred to in whole or in part in any other document nor made available, copied or recited to any other party, in any circumstances, without our express prior written permission.

We permit the disclosure of this report, in full only, by the Directors at their discretion to customers of Galmarley Ltd using the BullionVault service and to the auditors of such customers, to enable customers and their auditors to verify that a report by Reporting Accountants has been commissioned by the Directors of Galmarley Ltd and issued in connection with the ‘Daily Audit’ procedure, and without assuming or accepting any responsibility or liability to customers or their auditors on our part.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Directors and Galmarley Ltd for our work, for this report or for the conclusions we have formed.

Subject matter

This report covers solely:

  • the operation of the ‘Daily Audit’ procedure of Galmarley Ltd as described in your report of 1 March 2021
  • The Independent Inspection and Audit Reports issued by Alex Stewart (International) Corporation on 11 November 2020 (1 report), 19 November 2020 (1 report), 20 November 2020 (3 reports), 1 December 2020 (1 report), 2 December 2020 (2 reports) and 17 December 2020 (1 report).

Respective responsibilities

The Directors’ responsibilities are set out on pages 1 and 2 of your report.  Our responsibility is to form an independent conclusion, based on the work carried out in relation to the operation of the ‘Daily Audit’ procedure of the company as described in your report for the period from 1 November 2019 to 31 October 2020 and report this to you as Directors of Galmarley Ltd.  Our responsibility is to report on whether the ‘Daily Audit’ procedure operated as described in your report and does not include any responsibility to evaluate the design and effectiveness of the procedure.

Criteria and scope

Our work was based on obtaining an understanding of the ‘Daily Audit’ procedure as described on page 3 of the report by the Directors, and included specific tests of the ‘Daily Audit’ procedure, to obtain evidence about the operation of this procedure.  The nature, timing and extent of the tests we applied are detailed on pages 8 and 9.

We also obtained confirmation in respect of the Independent Inspection and Audit Reports issued by Alex Stewart (International) Corporation on 11 November 2020 (1 report), 19 November 2020 (1 report), 20 November 2020 (3 reports), 1 December 2020 (1 report), 2 December 2020 (2 reports) and 17 December 2020 (1 report).

Our tests are related to Galmarley Ltd and its subsidiaries as a whole rather than planned to meet the needs of any particular customer.

Inherent limitations

Control procedures designed to address specified control objectives are subject to inherent limitations and, accordingly, errors or irregularities may occur and not be detected.  Such control procedures cannot guarantee protection against (among other things) fraudulent collusion especially on the part of those holding positions of authority or trust.  Furthermore, our conclusion is based on historical information and the projection of any information or conclusions in the attached report to any future periods would be inappropriate.

Conclusion

In our opinion:

  • In all material respects, the accompanying report by the Directors describes fairly the ‘Daily Audit’ procedure which was in place as at 31 October 2020.
  • In all material respects, the ‘Daily Audit’ procedure tested, as set out in the attachment to this report, was operating as described during the period 1 November 2019 to 31 October 2020.
  • The attached reports by Alex Stewart (International) Corporation are as originally issued by them.

Armstrong Watson Audit Limited
Third Floor
10 South Parade
Leeds
LS1 5QS

DATE: 1 March 2021

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Description of work performed by Reporting Accountant

  1. In the following report, we have used the same definitions as set out on page 1 of the report by the Directors, when explaining the tests conducted and the outcomes reached.
  2. We have obtained confirmation from Loomis that for the period 1 November 2019 to 31 October 2020, vaulting services were being supplied to Galmarley Ltd as detailed in the contract between Loomis and Galmarley Ltd, that no notice had been given to Galmarley Ltd to terminate the contract as at 30 November 2020.
  3. We have obtained confirmation from Brink’s that for the period 1 November 2019 to 31 October 2020, vaulting services were being supplied to Galmarley Ltd as detailed in the contract between Brink’s and Galmarley Ltd, that no notice had been given to Galmarley Ltd to terminate the contract as at 28 November 2020.
  4. We have obtained confirmation from Malca-Amit that for the period 1 November 2019 to 31 October 2020, vaulting services were being supplied to Galmarley Ltd as detailed in the contract between Malca-Amit and Galmarley Ltd, that no notice had been given to Galmarley Ltd to terminate the contract as at 30 November 2020.
  5. We have obtained confirmation from Loomis on a sample basis, that the bar lists supplied to us by the company as used in completion of the Daily Audit procedure are in accordance with their records for the period 1 November 2019 to 31 October 2020.
  6. We have obtained confirmation from Brink’s on a sample basis, that the bar lists supplied to us by the company as used in completion of the Daily Audit procedure are in accordance with their records for the period 1 November 2019 to 31 October 2020.
  7. We have obtained confirmation from Malca-Amit on a sample basis, that the bar lists supplied to us by the company as used in completion of the Daily Audit procedure are in accordance with their records for the period 1 November 2019 to 31 October 2020.
  8. We have obtained confirmation from Lloyds and Wells Fargo that the customer account bank statements for the four currencies operated by either Galmarley Ltd or BullionVault Clients Ltd supplied to us by either Galmarley Ltd or BullionVault Clients Ltd as used in completion of the Daily Audit procedure are in accordance with their records for three dates selected at random by us from the period 1 November 2019 to 31 October 2020.
  9. For all published dates during the period 1 November 2019 to 31 October 2020 we have obtained a copy of the Daily Audit directly from the website of the company and we have, for a sample of these dates:
    • For each vault location agreed the amount listed as ‘Gold vaults’, ‘Silver vaults’ and ‘Platinum vaults’ to the bar lists retained by the company and obtained confirmation of these balances for a sample of dates from Loomis, Brink’s and Malca-Amit (see points 5, 6 and 7).
    • For each currency agreed that the amounts listed as ‘Lloyds current and savings’, ‘Lloyds treasury’, ‘Wells Fargo current and savings’, ‘Lloyds unpresented’ and ‘Wells Fargo unpresented’ in total are consistent with bank statements from Lloyds and Wells Fargo, allowing for any valid reconciling items.
    • For a sample of letters and numbers, for each vault location and currency, agreed the total amounts shown on the Daily Audit for those letters and numbers to the accounting records of the company for that day, obtaining explanations for a sample of reconciling items. We have undertaken steps as we considered necessary in order to conclude that any reconciling items were valid reconciling items.
    • For a sample of letters and numbers, confirmed that the total of the Owners balances listed, for each currency and vault location, agrees to the total listed on the summary page of the Daily Audit.
    • Confirmed that the total shown at the bottom of the summary page of the Daily Audit is a true sum of the balances listed for that date
    • Confirmed that there are no customers showing overdrawn or negative holdings of either currency or bullion.
  10. For a sample of 30 aliases extracted from the listing of aliases we have confirmed that identification documentation was held.
  11. We have obtained written confirmation from Alex Stewart (International) Corporation of the inspection of bullion within the vaults
  12. The company displays the current insurance documents at bullionvault.com/secure/insurance/evidence­­-of-insurance.  We have obtained a copy of the document displayed in relation to Loomis from Loomis, a copy of the document displayed in relation to Brink’s from Brink’s and a copy of the document displayed in relation to Malca-Amit from Malca-Amit.

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The deadline for April 2021 claims is 14 May 2021, so please submit claims to jrs@armstrongwatson.co.uk.