FSA/PN/034/2011
25 March 2011
The Financial Services Authority (FSA) has today confirmed rules to improve the quality and consistency of auditors’ client assets reports.
The policy statement sets out ten new requirements for firms and their external auditors. In summary, these new rules will:
•Confirm and clarify the standards required for auditors’ client assets reports in order to provide clear focus of accountability;
•Increase the quality and consistency of information provided in the report so the FSA can better use it to undertake both firm and thematic reviews; and
•Improve firms’ governance oversight of their auditors and their compliance with the client assets rules.
Richard Sutcliffe, leader of the FSA’s client assets unit, said:
“We have seen serious failings in relation to auditors’ client assets reports. As a result we have referred a number of auditors to their relevant auditing bodies over the past year and are currently considering referring several other cases.
“Ultimately it is a firm’s responsibility to ensure they have adequate systems in place, but we rely on their auditors to provide some of the necessary independent assurance. These new rules make it crystal clear for firms what we require of their external auditors when it comes to producing high quality and consistent client assets reports.
“The rules confirm and strengthen our requirements in this area and also mean that should we fail to see improvements we will be able to take action more easily.”
This policy statement follows a review by the FSA’s specialist client asset unit into the quality and consistency of auditors’ client assets reports. A number of serious failings were identified including: auditors providing ‘clean’ reports despite firms committing serious breaches of client asset rules; auditors’ reports covering the wrong chapters of the client asset sourcebook; and auditors failing to provide adequate details on issues and exceptions identified in their report.
The failings indicated a general deficiency by auditors in applying the FSA requirements on client assets, prompting the steps the FSA has taken to improve the quality of auditors’ client assets reports.
This article is published courtesy of the Financial Services Authority
25 March 2011
The Financial Services Authority (FSA) has today confirmed rules to improve the quality and consistency of auditors’ client assets reports.
The policy statement sets out ten new requirements for firms and their external auditors. In summary, these new rules will:
•Confirm and clarify the standards required for auditors’ client assets reports in order to provide clear focus of accountability;
•Increase the quality and consistency of information provided in the report so the FSA can better use it to undertake both firm and thematic reviews; and
•Improve firms’ governance oversight of their auditors and their compliance with the client assets rules.
Richard Sutcliffe, leader of the FSA’s client assets unit, said:
“We have seen serious failings in relation to auditors’ client assets reports. As a result we have referred a number of auditors to their relevant auditing bodies over the past year and are currently considering referring several other cases.
“Ultimately it is a firm’s responsibility to ensure they have adequate systems in place, but we rely on their auditors to provide some of the necessary independent assurance. These new rules make it crystal clear for firms what we require of their external auditors when it comes to producing high quality and consistent client assets reports.
“The rules confirm and strengthen our requirements in this area and also mean that should we fail to see improvements we will be able to take action more easily.”
This policy statement follows a review by the FSA’s specialist client asset unit into the quality and consistency of auditors’ client assets reports. A number of serious failings were identified including: auditors providing ‘clean’ reports despite firms committing serious breaches of client asset rules; auditors’ reports covering the wrong chapters of the client asset sourcebook; and auditors failing to provide adequate details on issues and exceptions identified in their report.
The failings indicated a general deficiency by auditors in applying the FSA requirements on client assets, prompting the steps the FSA has taken to improve the quality of auditors’ client assets reports.
This article is published courtesy of the Financial Services Authority
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