The Financial Reporting Council (FRC) has today issued an exposure draft, Providing Assurance on Client Assets to the Financial Conduct Authority, for consultation. The Assurance Standard has been developed to support and challenge auditors when reporting on compliance, by regulated firms, with the Financial Conduct Authority’s (FCA’s) Client Asset (CASS) rules designed to ensure the effective safekeeping of client assets and client monies. More than 1,500 firms hold more than £100 billion of client assets and £11 trillion of other custody assets.
The FCA has identified issues with the compliance of some firms and has strengthened its client asset regime. The proposed Assurance Standard will help ensure that the strengthened regime is underpinned by sound assurance where regulated firms fail to maintain the control regime required by the FCA’s rules, auditors will report these failings to the FCA.
Melanie Mclaren, Executive Director of Codes and Standards said:
“The effective safekeeping of client assets is an issue of significant public interest. Our proposed Assurance Standard will support auditors in providing high quality assurance over the control systems operated by regulated firms and will support auditor reporting to the FCA where regulated firms fail to fulfil their obligations.
The development of the Standard for consultation has been supported by the FCA. I encourage audit practitioners, regulated firms, investors and other interested stakeholders to read the draft, and to provide us with their views.”
The comment period on this proposal ends on 31 July 2015. Subject to consultation, the Standard would apply to periods commencing on or after 1 January 2016.
Notes to editors:
The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.